As it gears up for another holiday season, Toys “R” Us may have to fight Walmart on two fronts.
Top executives at the giant toy chain are concerned they may face competition from the world’s biggest retailer as they look to secure prime locations for “pop-up” stores that open only during the holiday season, sources said.
That’s because — under the public radar — Walmart last year had studied a potential rollout of toy-themed pop-up stores, according to sources close to the situation.
“Walmart didn’t go through with it, and now they’re focused on the Express initiative,” said one industry insider, referring to the smaller store format Walmart is now preparing for an major expansion into urban areas, including the Big Apple.
Nevertheless, “there’s still the perceived threat that the machinery is now in place and Walmart might try to hit them this year,” the source said. One reason for skepticism: Toys “R” Us’ pop-up stores were a disappointment this past Christmas, according to people close to the situation. The company opened more than 600, versus just 90 a year earlier.
“That was clearly too many,” said one source, noting that a number were in poor locations, and most were saddled with older inventory that “just wasn’t all that exciting” for parents and their children.
But insiders speculate that Toys “R” Us profits were hit as the retailer was forced to bid against Walmart for some leases.
“I don’t know if Walmart actually won any of those leases,” a source said. “If they did, it was a rounding error on their books.”