aNb Media News, November 1, 2011

TRU Acquires Majority Stake in Existing Asian Stores from Li & Fung; Also Opens Store in Poland

Toys “R” Us, Inc., and Li & Fung Retailing announced they have entered into a joint venture agreement for the Toys “R” Us (TRU) business in Southeast Asia and Greater China. With this agreement, the existing TRU licensed operations throughout Asia, which currently consist of more than 100 stores and offices across nine markets, will become 70 percent majority owned and controlled by Toys “R” Us, Inc., and 30 percent owned by Li & Fung Retailing. The terms of the joint venture also allow TRU to acquire the remaining share of the business in the future. Financial terms of the deal were not disclosed.

Effective immediately, the joint venture will include 90 existing Toys “R” Us stores in Brunei, China, Hong Kong, Malaysia, Singapore, Taiwan, and Thailand. These stores will be considered wholly owned operations of Toys “R” Us, Inc., increasing the number of the company’s wholly owned international locations by 17 percent. The remaining 14 stores in the Philippines and Macau continue to be operated under a license agreement.

“Li & Fung has been a terrific partner in establishing and growing the Toys “R” Us brand in Asia, and we are pleased to continue our work with them as we enter this exciting next phase of our business development there,” said Jerry Storch, chairman and CEO, Toys “R” Us, Inc., in a statement this morning. “We believe there is significant growth opportunity for our company in this region, and we look forward to an aggressive expansion of our business in both existing and new Asian markets, including Northern China. International growth remains a key part of our long-term business strategy,” he said.

The joint venture will include ownership and oversight of office operations in seven markets, as well as the regional headquarters in Hong Kong. More than 350 employees who had previously been part of the licensed operation will now become Toys “R” Us, Inc., employees. An existing network of eight distribution centers in Asia will be used to stock Toys “R” Us stores.

The chairman of the Li & Fung Group, Dr. Victor K. Fung said in a statement, “Over the past 25 years we have opened over 100 Toys “R” Us stores across Asia. This successful business has benefited from high brand awareness and the recruitment of nearly three million members in our Star Card loyalty program in the markets we operate. We are pleased to return to the joint venture arrangement with Toys “R” Us, Inc., in anticipation of a new phase of business growth. The new agreement will enable us to expand into new geographies such as Northern China, which will help us leverage even further growth in the region.”

Toys “R” Us, Inc. opened its first international locations in 1984 with wholly owned stores in Canada and a licensed store in Singapore and has continued to grow its operations around the world. The TRU business in Asia grew in 1986 when Li & Fung Retailing opened the first TRU store in Hong Kong in Ocean Terminal in a joint venture with Toys “R” Us, Inc. This joint venture was converted to a licensing business in 1999.

With this agreement, TRU now operates more than 600 wholly owned locations in the U.K., Japan, France, Germany, Spain, China, and Canada, among others. In addition, the company currently has more than 140 licensed Toys “R” Us stores through agreements with retail partners around the globe, according to the company.

In a separate announcement made last week, TRU announced that it has established business operations in Poland and plans to open its first store in the country at the end of November. The first Toys “R” Us store in Poland will open in the country’s capital city of Warsaw just in time for the holiday shopping season, with several additional locations slated to open in major cities throughout the country in 2012.

TRU opened a corporate headquarters for its Poland operation in Warsaw in August, employing approximately 25 people who function in merchandising, marketing, human resources, store operations, and finance roles. The new store in Warsaw will be located in the Blue City Shopping Center and will create approximately 30 additional local jobs. To stock the new store, the company will utilize its existing European distribution channels. The store is expected to stock items from major manufacturers such as Mattel, Hasbro, and LEGO among others. TRU is also looking to build relationships with Polish manufacturers.

TRU says that the store measures 25,000 square feet in size, and will feature a small Babies “R” Us section within the same location. This is consistent with the company’s integrated store strategy across the globe.

With plans to open several additional TRU stores in major cities throughout the country in 2012, Toys “R” Us, Inc., intends to expand its operations in Poland.

NRF Announces Holiday Retail Sales Projections

Halloween is over. Let the Holiday shopping begin. According to the National Retail Federation’s (NRF) 2011 Holiday Consumer Intentions and Actions Survey, conducted by BIGresearch, holiday shoppers say they plan to spend an average of $704.18 on holiday gifts and seasonal merchandise. This is down slightly from last year’s $718.98. However, NRF is still forecasting overall holiday retail sales to grow 2.8 percent during the months of November and December to $465.6 billion.

Additionally, nearly six in 10 holiday shoppers (59.9 percent) say they plan to take advantage of retailers’ sales and discounts to make additional non-gift purchases for themselves and their families during the holiday season. The average person will spend approximately $130.43 during the holiday season to take advantage of sales and discounts on apparel, electronics, home goods, and other items for themselves or a family member, up from $112.20 last year.

The largest portion of a consumer’s holiday budget will go toward gifts for family members, with the average person expected to spend $403.26 on kids, parents, and other family members. Friends, co-workers, and even the family pet can expect something nice this year as well. Shoppers will spend an average of $68.23 on friends, $21.06 on co-workers, and $23.39 on other gifts. Consumers will also spend on decorations ($46.73), greeting cards ($26.52), candy and food ($96.75), and flowers ($18.23.)

Respondents said they plan to shop around with a variety of retailers. Department stores, with unique private-label offerings, will see an increase in traffic over last year (56.9 percent vs. 54.5 percent last year), as will clothing or accessory stores (35.2 percent vs. 33.6 percent in 2010), drug stores (21.1 percent vs. 18.9 percent last year), and grocery stores and supermarkets (48.8 percent vs. 46.7 percent last year), and most will head to discount stores (66.1 percent vs. 65.1 percent). Crafts and fabric stores will also benefit (17.5 percent vs. 16.1 percent in 2010).

For the fifth year in a row—and at the highest level in the survey’s history, says NRF—57.7 percent of shoppers say they’d like to receive a gift card this holiday season. Other items on consumers’ wish lists include clothing or clothing accessories (50 percent), consumer electronics or computer-related accessories (35.4 percent), jewelry (22.8 percent), and personal care items (19.3 percent).

Nearly half of respondents (46.7 percent) will buy online, up from 43.9 percent last year. Additionally, the average holiday shopper plans to do 36 percent of their shopping online—whether they’re comparing prices, researching products, or actually making a purchase. Online shoppers plan to spend more as well. The average holiday online shopper will spend about 22 percent more than the average adult. Adults aged 25–34, many of whom have small children and crave convenience, will complete 43.7 percent of their holiday shopping online, the most of any age group, says The NRF.

Each year, nearly 40 percent of consumers begin their holiday shopping before Halloween, and this year is no different with 38.9 percent shoppers starting or had planned to start before Halloween. Another 40 percent will begin shopping in November, 17 percent will hit the stores the first two weeks in December and 4.1 percent will procrastinate until the final two weeks of December.

For the first time this year, NRF and BIGresearch polled consumers about their intentions to use smartphones and tablets to research and purchase holiday items.

According to the survey, half (52.6 percent) of those who own a smartphone said they will use their device to research products, redeem coupons, use apps to assist in their purchase, and purchase holiday gifts and items. Specifically, nearly one-third (31 percent) say they will research products and/or compare prices, 14.1 percent will purchase products, 17.3 percent will redeem coupons, and 15.6 percent will use apps to research or purchase items. One-quarter (25.1 percent) of smartphone owners say they will use their phone to look up a retailer’s information such as store hours and location.

Tablet owners are even more likely to use their device to aid in their holiday shopping—70.5 percent of tablet owners will research and shop using their device. According to the survey, half (50.8 percent) of those with tablets will research products and/or compare prices, and more than one-third (34.8 percent) will actually make a purchase with their device. Tablet owners will also redeem coupons, look up retailer information, and use apps to research items or purchase products.

When it comes to mobile shopping, young adults present the biggest opportunity for retailers. According to the survey, Americans ages 18–24 are the most likely to use their smartphones (72.2 percent) and tablets (86.4 percent) to shop for holiday items this year.

Men are also considerably more likely than women to use their smartphone and tablet device to shop for gifts.

Toysmith Distributing RandomLine’s Squiggle

Toysmith, a specialty toy and gift company, announced that it has finalized a distribution agreement with RandomLine, Inc. Effective immediately, Toysmith is now the exclusive distributor of the RandomLine, Inc., brand of products.

RandomLine, Inc. was created in 2002 by John Kiely, a dad who loves to play. His goal is to offer products that encourage children to be creative and use their imagination. “No Noise. No Batteries. Simply Imagination” is RandomLine’s motto.

RandomLine’s primary brand is Squiggle, a doodling activity that can be done anywhere. Products include an assortment of Games, Just for Fun On-the-Go Activity pads, Educational Activity Pads, Themed Doodle Pads, and Wipe-off Drawing Pads.

Toysmith began shipping RandomLine products last month.