Toys ‘R’ Us sets sights on Australian relaunch after being resurrected from bankruptcy

Almost a year after collapsing, Toys ‘R’ Us is preparing to make a comeback in Australia under new owners.

The well-known toy retailer was saved from the retail graveyard in the US late last month by Tru Kids Brands, a new entity created by former executives of the business who have acquired its intellectual property.

They’re wasting no time, planning a fast-paced expansion of the business in North America, Europe and Asia, with Australia firming up as an early priority.

A spokesperson for the new venture has confirmed executives recently flew Down Under to discuss a potential re-opening of the Toys ‘R’ Us and Babies ‘R’ Us businesses with “prospective partners”.

President and chief executive of Tru Kids, Richard Barry, would not reveal the details of ongoing negotiations, but provided an indication as to his retail strategy.

“While I can’t say today who our partner will be or what the exact roll out strategy is, we do know that we will have an omni-channel approach that is tech immersive and experiential,” Barry said in a statement.

Toys ‘R’ Us and Babies ‘R’ Us shut up shop in Australia last year after failing to find an Australian-based buyer willing to run the business.

It came amid a global sell-off of Toys ‘R’ Us operations as the original US-based company behind the retailer was liquidated.

Rumours began swirling a viable suitor for the business was in the wings last October after a planned auction of intellectual property was cancelled.

The new owners did not disclose how much they paid for the IP or address a severance controversy from the old venture, which saw thousands of workers split a $20 million payout last November, just months after executives jumped ship with multimillion-dollar golden parachutes.

Toys ‘R’ Us has remained a popular and well-known brand across the world, even amid its collapse, but had suffered from years of consecutive losses amid the rise of competitors such as Amazon.

The Australian venture had not fared much better, falling over owing more than $90 million to creditors, despite former boss Dianne Guerreiro planning a significant expansion through Home Consortium’s former Masters sites.

There were 44 stores in the network when the brand was shuttered, sites other retailers have since moved into.

Nevertheless, Barry, formerly the global chief merchandising officer for Toys ‘R’ Us, is optimistic a new vision for the business, built on modern retail principles such as experiential retailing and online sales, will prevent the new venture from repeating history.

“We have a once-in-a-lifetime opportunity to write the next chapter of Toys ‘R’ Us by launching a newly imagined omni-channel retail experience for our beloved brands,” he said in a release circulated earlier this week.

Tru Kids is planning 70 Toys ‘R’ Us and Babies ‘R’ Us stores in Asia before the end of the year, although it hasn’t been revealed how many locations are planned in Australia.

Under the previous structure of the Toys ‘R’ Us business, the Australian arm was separate from broader Asian operations, which are half-owned by Fung Retailing.

A relaunch of Toys ‘R’ Us and Babies ‘R’ Us in Australia raises several questions though, namely whether the business could even be successful in the current retail landscape Down Under.

A significant hole was opened in the market when the business did shut down, but it has since largely been filled by other players.

ASX-listed Baby Bunting, for instance, has been aggressively expanding in the wake of the demise of Babies ‘R’ Us, capitalizing on the collapse of several other competitors to cement its position as a market leader.

Queensland University of Technology associate professor Gary Mortimer believes the business could be successful in Australia, but would need to look to a new model.

“The Toys ‘R’ Us brand still has a lot of sentimental value,” Mortimer tells SmartCompany.

“They’ll probably look at a partnership agreement or a strategic alliance that will embed their big-box format into smaller stores in shopping centres.”

Mortimer points out the recent collapses of Roger David, Ed Harry and others could provide an opportunity for a much leaner and smaller format concept to grab up available centre space.

Otherwise, a potential partnership with existing department stores such as Myer or even David Jones could also be an option.

“Potentially taking an experiential marketing approach and combining that with omni-channel features may work to their benefit,” Mortimer says.

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