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  • Customers Rapidly Deserting Malls for Ecommerce, Says Former Toys ‘R’ Us CEO

    Customers Rapidly Deserting Malls for Ecommerce, Says Former Toys ‘R’ Us CEO

    Nordstrom is the class act of the department store segment and doing everything right says Former Toys ‘R’ Us CEO, Gerald Storch. Unfortunately, that is not enough according to Storch because customers are deserting malls for ecommerce.

    He predicts that only top-tier malls will survive and even those will have to adapt to attract millennials. For Nordstrom and other department stores to survive and thrive they will have to quickly need to learn how to make money on the internet.

    Gerald Storch, former CEO of Toys ‘R’ Us and CEO of Storch Advisors, discusses the death of most malls and the need for department stores like Nordstrom to do better at making money on the internet on Fox Business:

    Nordstrom “Doing Everything Right” But It’s Not Enough

    Nordstrom is the class act of the department store segment. They are doing everything right. Everything people say they should be doing but it’s not enough. Their stores are in great condition. They invest in their stores, they’re beautiful. They invest in their people, their service is the best in the industry. You love going to Nordstrom.

    They have great internet and have invested in their ecommerce sites. They have great data management and customer relationship management skills. They have great style, their merchandise is pretty good.

    Customers Rapidly Deserting Malls for Ecommerce

    But it’s not enough. There is a hole in the bottom of the boat and the water is pouring in and they can’t bail fast enough. That hole is that customers are deserting the malls and they are going to mass merchants off the malls and of course to ecommerce.

    I don’t think it is the demise of the department store. I think the all-channel model will still succeed. But in order to be profitable, a department store like Nordstrom needs to learn how to make more money on the internet. You can’t just say do all the things in the bricks and mortar store, make them more experiential, etc. They’ve been doing that and it’s not enough.

    You can see that in their results. Their high-end stores were up in sales only three-tenths of one percent over the holiday period. That includes their ecommerce which was up 18 percent. You don’t have to know a lot of algebra to know that their physical bricks and mortar stores were sharply negative during this season.

    You need to embrace the inevitable. You can’t just build a sort of fancier stagecoach in order to prevent the advent of the automobile. You have to build a profitable ecommerce site. That requires redoing their business system in order to be profitable online.

    Only the Best Malls Remain Viable Enough to Transform

    We talk about ‘A Malls’, ‘B Malls’, and ‘C Malls’. The ‘C Malls’ are gone. They will become doctors offices, insurance offices, places to get your nails filed, that kind of a thing. They’re done. Forget about them.

    The ‘B Malls’ are a mixed bag. Some of them will be fantastic mixed-used developments. They need to be repurposed. You can’t keep them the way they are. That’s for sure. You saw Google putting office space in there. I think you will see a lot of residential, apartment buildings along with streetscapes in those kinds of malls.

    The ‘A Malls’ are still viable and they will be. They’re putting in great restaurants, theaters, entertainment, and successful concepts which attract young people, millennials, who have not really been going to the mall.


  • Former Walmart CEO says Amazon is “Predatory” Almost by Definition

    Former Walmart CEO says Amazon is “Predatory” Almost by Definition

    Former Walmart CEO Bill Simon says that Amazon has been “predatory” by selling goods below cost subsidized by profits from their cloud and advertising businesses. Simon says that this strategy put major competitors like Circuit City and Toys R Us out of business allowing Walmart to then raise the price of Prime without losing their customers.

    Bill Simon, a former Walmart CEO, discussed Amazon, Walmart, and Alibaba in an interview on Fox Business which can be watched below:

    Amazon Behavior Has Been Predatory by Definition

    I’ve not been an advocate of breaking Amazon up. I’ve been an advocate of really looking at them hard and maybe having them report more details in segment reporting. They just sort of smush everything up into one number and report and I don’t think that gives clarity to the investor. If you really think about it their behavior has been predatory almost by definition. In 2014 they took the price of Prime up right after Circuit City and some others went out of business. They took another price increase to $129 for Prime and Toys R Us is gone.

    The consumer loves them, it’s awesome, I use them all the time, it’s really great to have the stuff delivered. But you see them putting people out of business and raising their price, and then again putting people out of business and raising their price, and that’s just not right.

    Didn’t Walmart Put Competitors Out of Business? Walmart did it for years and years by being a good retailer, not by selling below cost and subsidizing it from income from the cloud and from advertising. Walmart just bought well, moved it well, shipped it well, sold it well, and did it better than anybody else. That’s a different play. It’s sort of like if Exxon decided to get into the restaurant business and used oil revenue to drive restaurant companies out of business.

    How Does Alibaba Compare to Amazon? I love Alibaba. I’ve been in their stock for a while and it is just a terrific business. They’ve got a little bit of a different business model than Amazon. They built it differently because they have much more population density across their key markets than Amazon does other than the main metro’s in the US. I think they have a better opportunity to move the product and eventually, one day make money. I don’t think Amazon has that.

    Walmart Successfully Went After Digital Business

    Walmart stated a couple of years ago that they were really going to go after the digital business and they’ve done that. They have done it really well. They bought Jet, they just invested in Flipkart, they bought Bonobos, and they’ve bought a lot of other things. It sort of puts some juice back in the business.

    On the other hand, three years ago they delivered $29 billion in operating income, last year they delivered $20 billion, and they have already sort of warned that they are going to be below that this year. It’s come at a really steep price but they are doing exactly what they said they are going to do and if you are an investor who likes that strategy you’re buying.

    People Don’t Want Their Groceries Delivered

    Grocery is hard, it’s really hard. It took Walmart 20-25 years to get average at it, nevermind good. When Amazon bought Whole Foods, they not only bought a grocer, they bought a premium fresh grocer. That’s really hard to deliver and to deliver consistently and I think they are finding that out. Part of the problem is that people generally don’t want to have their groceries delivered.

    Most cities, other than New York and San Francisco and older cities, were built in and around the time and grew with the interstate highway system. So people in Dallas commute to and from work and they pass 20 grocery stores. They don’t need it delivered to them. They don’t want it sitting on their doorstep but it would be really nice if they could pick it up on their way home and not have to shop for it. That’s the theory behind Click and Collect and I think that’s a winner.

  • Toys R Us Opening Thanksgiving Day

    Toys R Us is among the group of retailers who have decided to open for business on Thanksgiving Day. The toy chain will open their stores at 5:00 P.M. on the holiday, meaning employees in their stores will have to leave their family gatherings early and head to work.

    “We had incredibly positive feedback with customers who shopped with us on Thanksgiving last year,” Chief Merchandising Officer Richard Barry said in a recent interview.

    Toys R Us, along with other big-box retailers, have opened their stores earlier and earlier each year in an effort to get shoppers into their stores for the Black Friday rush. With so many online establishments offering good deals on Thanksgiving Day, brick and mortar stores quickly realized they were losing out on a distinct group of paying customers.

    “We saw that people really enjoyed the early opening, and frankly we saw the sales on Black Friday itself being very strong,” Barry said. “There wasn’t as much pressure on that 10 p.m. or midnight time. It was more spread out and people had a more civilized shopping experience.”

    Toys R Us also unveiled a few other initiatives on Thursday aimed to make the shopping experience smoother during the busy holiday season. The company is placing employees–each will be called a “Guru for Play Stuff,” at the front of the store to help assist customer navigation. New express lanes will help speed up the checkout process for those buying two items or less. Employees will also have the ability to scan items inside a cart and get their customers out the door quickly.

    Toys R Us seems to have thought of everything with regard to the Black Friday rush. It is actually beating stores like Macy’s, J.C. Penney, and Kohl’s, who are also opening Thanksgiving Day, but not until later in the evening. The one thing the store hasn’t addressed–at least not publicly–is how its employees feel about working on this holiday.

  • Breaking Bad’s Aaron Paul Gets Over 50,000 Signatures To Keep Toys On Shelves

    Aaron Paul has taken the fight to keep Breaking Bad action figures on Toys R Us shelves to everyone’s favorite battleground: Twitter.

    A few weeks ago, a Florida Mom named Susan Schrivjer decided that it was inappropriate for Toys R Us to sell action figures based on characters of Walter White and Jesse Pinkman from Breaking Bad. “It’s about drugs, you’re selling it in a children’s toy store?” She told her local Fox 4 TV Station.

    She also started an online petition on Change.org which gained 9,298 signatures. Because of this, Toys R Us pulled the action figures from their shelves, saying they had gone on “an indefinite sabbatical”, according to ABC News.

    Aaron Paul would not stand for this.

    He’s not wrong. According to Professor of Psychology Aurora M. Sherman of Oregon State University, “Playing with Barbie has an effect on girls’ ideas about their place in the world. It creates a limit on the sense of what’s possible for their future. While it’s not a massive effect, it is a measurable and statistically significant effect.”

    Another petition has started on Change.org to keep the action figures on Toys R Us shelves. As of this writing, it now has 57,885 supporters, which is more than six times the number who signed the petition to get rid of the toys.

    As for Aaron Paul, he’s currently waiting for a response from Toys R Us:

  • $7 Million Shoplifting: One Family Went Wild In Multiple Stores Over Several Years

    It is hard to imagine how one family could go on a $7 million shoplifting spree without being caught first, but somehow the Bogdanov family was able to do it. The family was finally arrested earlier this week at their Northbrook home, a suburb of Chicago.

    The shoplifting by the Bodanov family lasted for over a decade, and they were finally caught after multiple stores including Barnes & Noble and Toys R Us made contact with the secret service with a complaint that described a “huge loss of merchandise.”

    Branko Bogdanov, 58, Lela Bogdanov, 52, and their 34-year-old daughter, Julia Bogdanov, are charged with one count each of interstate transportation of stolen property. They made their initial appearances in court on Wednesday in Chicago, but did not enter pleas. They will remain in detention at least until their hearing next week, which will determine who much time they will each serve.

    Lela Bogdanov was able to conceal many of the items that she stole in her clothes, and she would often wear and long skirt with an inner lining that could hide several items.

    After leaving from their home in Chicago, the three hit business around the country that included Maryland, Tennessee, and Florida. Their big loot is said to have contained a variety of items including toys, dolls, cosmetics, and other valuables.

    During the $7 million shoplifting spree, the family would collect all sorts of items that they did not plan to use themselves, and took them to eBay to sell the merchandise for cash. On their own, the Bogdanov family sold more than $690,000 in merchandise through eBay.

    In addition to their sales on eBay, they had help from another unnamed cooperating witness, who bought items from them at their home. Years later, authorities traced stolen items to the online trading account of the cooperating witnesses, who, in turn, agreed to help in the investigation of the Bogdanovs.

    A conviction of interstate transportation of stolen property, the crime that the Bogdanov family has been charged with, can carry a sentence of up to 10 years. How did they keep it going for such a long time before getting caught?

    Image via Youtube

  • Pure Nostalgia: The 1996 Toys ‘R’ Us Holiday Catalog

    It’s a bit glorious and immensely nostalgic to witness remnants of the past, looking at relics that once were stationed on our living room rugs – memories of which our youth embellished all products marketed towards us; it was part of childhood. A time unlike now, where controllers were funky and wired, grey cartridges were a standard, TV’s were fat and heavy, and multiplayer meant having friends physically next to you like they were human beings or something. In the 90’s we were unraveling our three foot fruit roll ups, sucking on Capri Suns, unzipping our Jansport backpacks to reveal an extra controller, a rumble pack, or a connecting cord that would allow us to trade our Pokémon.

    In 1996, we were spoiled with an embellished catalog from Toys ‘R’ Us. It looked like this:
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    Kids (and adults) all over America went to Toys ‘R’ Us lining up behind the kiosks to play Super Mario 64. Back then, you’d make your way to the video game section and see rows of little clear plastic pouches filled with yellow slips. Above the yellows lips were flaps that laminated the front cover of the video games we were interested in. On the back, there were screenshots, details and a description of the game. Sometimes, as if experiencing a lottery, you’d pick the last slip. You’d then take that slip and give it to the cashier who would staple a receipt on it after you paid $59.99 for it. Afterwards, you walked to some magical corner of Toys ‘R’ Us where a man behind a glass case would hand you your game. Inside this magical hut were stacks upon stacks of video games, all sealed and minty fresh. In fact, it looked like the whole room was built with videogames.

    This picture does the yellow slip memory no justice, but the concept is the same:

    (image)

    To this day, you still have fans everywhere discussing which console was the best back then.

    N64 was known for its star entourage of first party platformers, alongside accessories like the RumblePak which made you “feel the game”. Goldeneye 64, much like Doom before it, (l’est we forget Maze War) set a standard for the shooter genre that we see so overly manufactured and produced today.

    PlayStation had an immense library of 2,418 games that came in CD form. Many games contained full motion videos (FMVs) which provided a cinematic experience. Roleplaying games (RPGS) were groundbreaking. The PlayStation’s startup sound was that of heavenly ascension.

    Witness the beautiful, dark and ominous high production value of commercials for video games back then. It was Y2K that entertained the doomsday idea of the world ending, which only made our hearts heavier when it actually happened the following year:

    Curious of what Sony’s E3 booth looked like in 1996? The PlayStation was the first console that shipped 100 million units worldwide:

    Marketing was rather creative, there was always some sense of competition among our favorite video game companies, and seeing them in real life was really out of this world:

    http://www.youtube.com/watch?v=3Eu6cJXpmME

    http://www.youtube.com/watch?v=-cIvo8flaBc

    Before the mark of the new millennium, the sky fell, and Mario attacked one of his own:

    Now hang your head in shame knowing that marketing has been geared towards horny frat boys under the motif that “there’s a soldier in all of us”:

    http://www.youtube.com/watch?v=MNxh7umVOZ0

    (Pictures via BusinessInsider, CNet, ozon3d, WikiCommons)

  • Educational Toys Top Indian and American Toy Lists

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    If toy-makers are looking to grab Indian parents’ toy-budgeting funds, recent press indicates their R&D ought to be aimed toward educational toys. A New Kerala article is catching notice this week, saying that “edutainment” toys (those promoting learning through play) have the potential for 15 percent year-on-year growth over the next five years.

    Much of what US parents see in this year’s top toy lists leans toward tech-heavy toys. Though not out for this holiday season, Google is putting its toy-hopes (and potential hiring future) in the hands of Play-i, which will release its programmable robots in 2014. The gadgets, nicknamed Bo and Yana, are round robots which can be programmed through a smartphone and tablet and are being promoted for kids 5 and older.

    Toy-maker VTech is garnering high awards (20 based on this count) and topping holiday shopping lists for its developmental, electronic learning toys. Highest acclaim going to the VTech InnoTab 3S Learning Tablet, which is being promoted by, “respected toy industry lists,” such as Parents Magazine, Dr. Toy, and Amazon.com among others.

    20131112toy3_13111365

    The educational toy list provided by Shyam Makhija, director of Pegasus ToyKraft business development, is a little more tactile, “The categories which fit the bill most appropriately are educational jigsaw puzzles, tile puzzles, memory-based games, do-it-yourself art and craft kits, builder blocks and construction sets.”

    In India, the industry uses seminars for parents, teachers, psychologists and social scientists to educate on educational toy prerequisites. Indian toy experts advocate toys that are boredom-resistant and curiosity-stimulating, but also age and gender appropriate; gender alone having become a hot topic in the toy industry.

    And just in case parents on any continent need additional guidance for tots to teens, Toys “R” Us is debuting a Toy Channel (YouTube-based), “for exclusive, original and entertaining programming for kids and families on all things toys.”

    [Images via Toys “R” Us, VTech, and ToyKraft official Facebook pages.]

  • This Toys ‘R’ Us Ad Outraged Even Stephen Colbert

    Last week, environmentalist Peter Gleick penned an editorial about a Toys “R” Us commercial from October that, frustratingly, decries hard science in favor of running amok in a toy store.

    “My wife and I were relaxing, watching TV when we saw this advertisement from Toys “R” Us. We were struck speechless with shock and anger,” he writes. “The camera pans around the bus at bored, tired, yawning kids. Then, surprise! He reveals they are not going on a natural science field trip at all, but to… Toys “R” Us! Celebration! Confetti littering the ground as the kids run from the bus into the store!”

    Gleick condemned the commercial for its demeaning presentation of science, and for the frustrating irony in that our society is currently fighting low STEM interest. He argues that it reinforces the values that permitted the United States to fall behind in those fields.

    Here is the controversial commercial from Toys ‘R’ Us:

    Gleick’s column was a little late to the discussion, since former Jon Stewart correspondent and legendary satirist Stephen Colbert referred to the commercial during a “Tip of the Hat/Wag of the Finger” segment of his nightly news satire show, The Colbert Report.

    “Toys ‘R’ Us has really captured the magic of having a stranger take your kids on a bus, lie about where they’re going, then take off their clothes and promise them toys,” Colbert joked on Nov. 6. “This commercial shows kids the ‘great outdoors’ is nothing compared to the majesty of a strip mall. And they still get some nature because, remember, that confetti used to be a tree!”

    Gleick believes Colbert nailed the commercial’s message, and that something needs to be done immediately. “My wife is an overworked, underpaid science educator, teaching university students how to teach science to elementary school children… It is an uphill battle because the resources our society devotes to science education are pathetic,” he said.

    The editor of Grist, Jess Zimmerman, had a comment as well, although she chose to air on the side of brevity. “You heard it here, kids,” she wrote. “Consumerism is great, nature is lousy, who cares about trees, let’s go buy a princess doll.”

    [Image via that commercial]

  • Toys “R” Us, UK, to Stop Gender-Based Marketing

    Toys “R” Us, UK, this week joined a number of other British retailers in supporting the Let Toys Be Toys campaign with plans to stop explicit gender-based marketing. Toys “R” Us Managing Director Roger McLaughlan said, “We will work with the Let Toys Be Toys team to ensure we develop the best plan for our customers.”

    Let Toys Be Toys is a consumer campaign organization that is supported mainly by parents who are concerned with how sexist stereotypes affect children. The campaign specifically asks retailers, “to stop limiting children’s interests by promoting some toys as only suitable for girls, and others only for boys.” They sponsor a petition on their website for concerned consumers to speak to retailers.

    Member of the group, Megan Perryman, stated, “We’re delighted to be working so closely with a major toy retailer and believe that there is much common ground here. Even in 2013, boys and girls are still growing up being told that certain toys are ‘for’ them, while others are not. This is not only confusing but extremely limiting, as it strongly shapes their ideas about who they are and who they can go on to become. We look forward to seeing Toys “R” Us lead the way to a more inclusive future for boys and girls.”

    The retail giant, with corporate headquarters in Wayne, NJ, plans to draft a set of principles applying to in-store signage, adding images of boys and girls playing with the same toys.

    Other international franchises of the Toy “R” Us brand have already adopted gender-inclusive approaches or are considering it. Swedish school children complained and prompted the affiliated Top Toy catalog to use photographs of boys and girls in non-traditional roles (below).

    Top Toy Catalog

    Just today, French-based Toys “R” Us stores reported that their Christmas catalog would abstain from dividing toys by gender, as inspired by their UK neighbors.

    Other UK retailers— Boots, Sainsbury’s, Tesco, The Entertainer and TK Maxx—have agreed to eliminate signs indicating toys for “girls” or “boys” in stores in support of the campaign. Boots was the first to sign on in May. The Let Toys Be Toys followers went into action against UK Boots retailers when a member posted this photo (below) of gender separated toy aisles. Boots replied to the pressure a few days later saying they were, “taking immediate steps,” to integrate the signage, not having intentionally stereotyped their toys.

    Boots Stores UK

    The mammoth department store Harrods and some other toy vendors moved toward inclusive marketing without prompting by the campaign. Last summer, Harrods reorganized their toy department by theme, not gender.

    What about the US? A website aimed at empowering young girls, A Mighty Girl, has initiated a petition to get US Toys “R” Us stores to change their marketing. In this case, it seems toy manufacturers such as Roominate, GoldieBlox and LEGO are the ones leading the charge to show that girls enjoy building just as much as boys do.

    [Images via Top Toy website, Let Toys Be Toys and Toys “R” Us Facebook.]

  • Tabeo Tablet From Toys “R” Us Gives Parents A Lot Of Control

    Toys “R” Us unveiled a new tablet device geared specifically towards kids today. It’s called the Tabeo, and comes with nearly 20 games, learning apps, storybooks, and other kid-friendly entertainment apps. There are 50 free apps pre-installed. It runs on Android 4.0 Ice Cream Sandwich.

    The device comes with safety features and parental controls, obviously. Kids can browse the Internet, but there is a full suite of customizable parent controls. Parents can set tailored levels of security for up to eight, so kids of different ages can all use it without too having more restrictions than parents deem appropriate.

    The Tabeo has its own filter, which can be set to block 27 predetermined categories of content, and parents can choose additional sites to block as well. They can also select specific online content to unblock. Kids can actually send requests to their parents to unblock sites if they come across something they want to check out.

    Parents, if they so choose, can even limit their child’s online time, by setting Tabeo to allow access only on certain days or during certain hours. If kids bypass the default browser, parents will get email alerts to notify them that their child may be browsing unfiltered content.

    “Over the past year, we’ve spent considerable time talking to parents and children to determine what features and functions they really want in a kids’ tablet, resulting in tabeo,” said Troy Peterson, VP, Divisional Merchandise Manager at Toys “R” Us, U.S.

    “We are proud that tabeo offers robust and flexible parental controls that can help protect children as they surf the Internet, and we are pleased to offer the tabeo App Store, which features only kid-safe content carefully curated by the Toys “R” Us team,” he added.

    Here’s a look at the specs:

    Tabeo Tablet Specs

    The tablet comes with a green bumper to protect it from drops, as well as a USB cable and USB power adaptor. Toys “R” Us is also launching a suite of accessories, including different colored bumpers, cases, docks, and cables.

    The Tabeo will be released on October 21, and will sell for $149.99. It’s currently available for pre-order at Tabeo.com and ToysRUs.com.

    Tabeo tablet

    Tabeo tablet

    Tabeo tablet

  • Toys ‘R’ Us to Sell Tablet For Kids

    Toys ‘R’ Us to Sell Tablet For Kids

    This past year has seen the tablet market flooded with different tablets featuring a variety of sizes, features, and operating systems. It seems now that Apple has proven that consumers actually want tablets, every OEM believes it must have at least one on the market. And if parents have told their children that the iPad or Kindle Fire aren’t kid-friendly enough, today’s news is sure to have them scrambling for a different excuse as to why Santa isn’t bringing a tablet this year.

    Toys ‘R’ Us today announced that it is releasing its own tablet. Designed specifically with kids in mind, the tabeo tablet is a 7-inch Android tablet that will come with 50 free, pre-installed apps to entertain children. Toys ‘R’ Us stated that the design of the tabeo focused on “safety” for children. It comes with integrated parental controls for filtering internet access and a special tabeo store with “safe” apps for kids.

    “Over the past year, we’ve spent considerable time talking to parents and children to determine what features and functions they really want in a kids’ tablet, resulting in tabeo,” said Troy Peterson, divisional merchandise manager for Toys“R”Us. “We are proud that tabeo offers robust and flexible parental controls that can help protect children as they surf the Internet, and we are pleased to offer the tabeo App Store, which features only kid-safe content carefully curated by the Toys“R”Us team.”

    The tablet itself has a 7-inch, 800 x 480 screen, 4GB of memory, a microSDHC slot, 1GHz ARM processor, and a front-facing camera. It will run a version of Android 4.0 Ice Cream Sandwich. Toys ‘R’ Us will begin selling the tabeo for only $150, exclusively through its stores and website starting October 21. The company is already taking pre-orders for the tablet through its website.