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The Great Experiment that Failed

Toys “R” Us created the ultimate experiential store … then it closed

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Toys “R” Us did all the right things.

The smart word for retailers, in this era of digital communications, social media and Internet-dominated shopping, is “create an unforgettable in-store experience.” So that’s exactly what Toys “R” Us did on Times Square.

The once-powerful category killer – its dwindling chain of big-box stores, now mostly irrelevant – created a theme park-like experience in Manhattan’s biggest theme park neighborhood, with an indoor Ferris wheel and a robotic dinosaur.

The store was everything experts recommend: fun, interactive, innovative – a “must see” and then a “must see again.” When it was completed in late 2001, it was hailed “The World’s Greatest Store.” For once, the hyperbole was almost acceptable.

The store soared about 80 feet, filled to the top with rides, animated figures and eye-catching action models.

Whatever was hot in the kids’ market, from Harry Potter to Barbie to Superman and Batman to Jurassic Park to last month’s new Star Wars movie, had room to stretch out and settle in. For 14 years, a 42-inch-tall E.T. pointed home at a 1600-pound light-flashing spacecraft.

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Lights flashed and digital media, like a scrolling billboard system and a 20-foot “Geoffreytron” LED screen, felt entirely up-to-date and at home in the state-of-the-art digital media show that Times Square has become.

Like Peter Pan himself, it never got old. Ten-year-olds who dragged their parents to the first Christmas opening were dragging their youngsters to the last one.

In other words, the company did exactly the right thing, nothing cheap or cheesy, the perfect venue for the perfect market segment.

So what happened? In late December, as the holiday shopping season was coming to an end, Toys “R” Us closed its doors. The retailer explained that its lease was up and the substantial rent, reportedly upwards of $50 million a year, had been cutting deeply into the company’s profits.

But there was another problem. It had to do with the brand Toys “R” Us was trying to build through its fantastic store. When Nike fascinated the industry with its NikeTowns in the 1990s, it acknowledged it was selling the Nike brand. Even if people went to the mall to buy their Nike merchandise, the store was accomplishing its objectives.

Similarly, Disney didn’t need the merchandise revenue from its best stores, as innovative as they were, to support its theme park business or its other projects.

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But with Toys “R” Us, the stores were the only revenue-producers the brand had. So people coming into Times Square could enjoy the spectacle and maybe get some gift ideas. But if they left the store and ordered online, Toys “R” Us was left with just an expensive theme park that it didn’t even charge admission for.

In this case, “great branding” equaled “so what?” And, frankly, that’s sad!

As a journalist, writer, editor and commentator, Steve Kaufman has been watching the store design industry for 20 years. He has seen the business cycle through retailtainment, minimalism, category killers, big boxes, pop-ups, custom stores, global roll-outs, international sourcing, interactive kiosks, the emergence of China, the various definitions of “branding” and Amazon.com. He has reported on the rise of brand concept shops, the demise of brand concept shops and the resurgence of brand concept shops. He has been an eyewitness to the reality that nothing stays the same, except the retailer-shopper relationship.

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