TRU finding success toying with format

Last summer when Toys 'R' Us began testing a new retail concept in a handful of stores, the hope was that results would provide the steam needed to roll out the program across all its 64 Canadian outlets.

Last summer when Toys ‘R’ Us began testing a new retail concept in a handful of stores, the hope was that results would provide the steam needed to roll out the program across all its 64 Canadian outlets.

One year later, it’s full speed ahead thanks to a 15% spike in sales over last summer in what are now 20 test stores in the program, according to marketing director Mary Zanette. Stores to adopt the new format include locations in Anjou, Que. and Markham, Ont.

The upgrade comes on two fronts – extensive in-store renovations and a renewed focus on customer service.

With stiff competition from the likes of Zellers and Wal-Mart, the Concord, Ont.-based retailer needed to modernize its approach to remain competitive and grow. The chain has also expanded its lines of TRU exclusives, such as its Animal Ally plush toys, and broadened its demographic target by expanding its baby, clothing and video game lines.

According to Zanette it is the customer service initiatives – an emphasis on providing relevant information to customers, such as gift-giving ideas or the benefits of one item over another – that is the linchpin to the success of the tests.

‘There’s a definitive link between customer service information and sales,’ she says. ‘We can see it.’

The CS program includes staff training, monitoring, post-training interviews with staff and customers and follow-up assessments. With such an intensive program, coupled with extensive store renovations, it is not surprising that chain-wide implementation has a completion target of some time in 2004.

Store renovations include creating distinctive store-in-store areas, such as an Imaginarium department, focusing on science and education, R-Zone, containing video games and electronics, and an expanded Baby’s ‘R’ Us department.

Shelf heights are also being lowered in an effort to alter the retailer’s reputation as a warehouse store, Zanette says. ‘In the old days…the mantra was ‘stack ‘em high and watch ‘em fly.’ It was very warehouse oriented. The shelving was way up to the ceiling and it was just chock full of toys,’ she says. ‘Now, when you walk into one of our new store formats, you get a sense of shops or boutiques.’

While the success and necessity of the changeover is not in question, some industry observers point out that the retailer was extremely slow off the mark.

‘They got broadsided in the U.S., and to a similar degree in Canada by Wal-Mart,’ says John Williams, president of Toronto-based retail consultancy J.C. Williams.

According to J.C. Williams’ National Retail Report, in the leisure toys and games category, Zellers, TRU and Wal-Mart stand neck and neck in market share. But Wal-Mart has the momentum – it came up from way back in a few short years, Williams says.

Clearly the pressure is on TRU, the once dominant player in the category to protect its share.

Toys ‘R’ Us president Monika Merz readily admits the chain was tardy in remodelling, but points out that few of its mass market competitors feature meaningful customer service programs.

‘A lot of stores think they give customer service [but] I don’t think the Canadian marketplace is well known for customer service,’ she says.

‘What we’ve done with this program that’s really different is we have put a big investment of money behind it in terms of training people.’

Merz says the chain has eschewed advertising the new store formats until everything is in place and all the bugs are worked out.

This is the right approach, says retail analyst Richard Talbot, president of Unionville Ont.-based Talbot Consultants International. Talbot says that Eatons went mass media before its relaunch last year, but the newly minted stores failed to deliver on expectations, leaving consumers disappointed.

Talbot says TRU is spot-on in another regard. By offering expanded lines to include both younger and older kids beyond TRU’s traditional demographic base, the retailer is giving affluent baby boomer grandparents a shopping destination. ‘The aging baby boomers becoming grandparents are far more likely to cross shop into the toy department. So really what you’re doing is providing a second reason to come in,’ he says. ‘What you’re trying to provide is a one-stop shop for kids.’

The one-stop-shop concept is where Wal-Mart and Zellers have been killing TRU. But by targeting a more affluent demographic, TRU is eyeing a different corner of the market.

Retail consultant Wendy Evans says TRU’s lines of exclusives will have an impact as well. Since all the players offer about the same in licensed merchandise, the TRU exclusives provide a significant point of differentiation from Wal-Mart and Zellers.

‘This just provides more fun,’ she says. ‘It’s a reason to want to go to Toys ‘R’ Us.’