Could WHSmith secure Toys R Us’ success through concessions?

After disappearing from UK high streets and retail parks in 2018, Toys R Us has made plans to relaunch this summer across several locations, as well as in the form of concessions in WHSmith branches. 

The children’s toys retailer exited after falling out of favour due to strong competition from supermarkets and specialised online retailers. 

In the run-up to closing all of its remaining UK stores, the retailer’s last reported annual profit was in 2013 and reported a net loss of $164m (£132m) in the quarter ended 29 April 2017. 

In the prior year, it also lost $126m (£101m) in the same period and had been paying $400m (£323m) per year towards its debt, which prevented it from improving its in-store experiences to compete with the likes of Amazon and Walmart. 

The company announced its intention to liquidate and close at least 26 stores in the UK as part of a company voluntary arrangement (CVA), after amassing £15m in unpaid taxes. 

Although it had to retreat out of the UK, Toys R Us was recovering funds with a much smaller portfolio in the UK. Last year, it secured concessions within 451 Macy’s stores.

According to Macy’s, at first it didn’t intend to introduce Toys R Us across its entire chain, but decided to open concessions in July 2022. CEO Jeff Gennette said that toys were “a huge opportunity” for the company to produce $1bn (£0.8m) in annual sales. 

The introduction of Toys R Us concessions seemed to have paid off for Macy’s, as it reported that 87% of Toys R Us customers “cross-shopped” categories at its stores – particularly in children’s clothing – which is often located close to the toy department. 

Concessions have proven effective at revitalising floundering businesses in the UK, as shown with Paperchase concessions within Next. However, this isn’t just for struggling brands, as Argos and Habitat also have concessions within Sainsbury’s, Costa within Tesco, and Mothercare within Boots, among others. 

Toys R Us is only the latest concession for WHSmith, too, as the global retailer for news, books and convenience also expanded Holland and Barrett concessions within its travel stores. 

While not a new concept, concessions have become an easy way for established retailers to diversify their offering on the high street. This is because it can be easily incorporated into their existing business model, while blending online and in-person shopping experiences, increasing footfall, and offering low risk with a high return. 

To showcase how useful a tool concessions can be, Sheran Ramzan, CCO of Quiz, said: “Stores and concessions in the UK continue to play an important part in our strategy to expand Quiz by driving sales, building awareness and showcasing the brand. Our stores not only showcase the brand and the product, but as a true omnichannel business model, the customer can shop in a way that suits them whether that’s online, in-store or via concessions.”