Toys 'R' Us Asia to open more stores in region, including S’pore, after separation from US owner

SINGAPORE — Despite the shutdown of Toys "R" Us stores in the United States, its Asia chain is looking to expand the iconic brand’s presence here and in the region. This is after the toy retailer announced its separation from its American parent company last Friday (Nov 16).

Toys “R” Us Asia said on Monday that it will be ramping up investments in its IT systems and e-commerce platforms, as well as its brick-and-mortar stores around Asia. In Singapore, it will be reopening two stores next month at Great World City and City Square malls — which were closed for renovations — and the company is “in discussions” to turn a pop-up shop at Westgate mall into a permanent store.

Seven out of its eight existing stores here have also undergone renovations over the past two-and-a-half years, said Mr Raymond Burt, country director of Toys "R" Us in South-east Asia, during a press conference.

Toys “R” Us Asia is exploring opening more stores in “specific shopping centres” in Singapore, but Mr Burt declined to go into details. Its Asian business now comprises more than 500 stores, including franchises in Macau and the Philippines.

The firm’s announcement of its expansion plans comes days after Toys “R” Us Asia revealed its new ownership structure, which “completely separates” it from its previous parent company, Toys “R” Us Inc. Its business in Asia used to be a joint venture between Fung Retailing, the retail arm of Hong Kong-based Fung Group, and Toys “R” Us Inc.

In September last year, Toys “R” Us Inc filed for bankruptcy protection in the US.

The holders of the parent company — collectively known as the Taj noteholders — later bought 79 per cent interest in Toys “R” Us Asia from Toys “R” Us Inc, while Fung Retailing increased its shareholding from 15 per cent to 21 per cent. The Taj noteholders include several investment funds and financial institutions which are mostly based in the US.

The new shareholders have also agreed to retain the existing management team of Toys “R” Us Asia, which is paying for the licence to the Toys “R” Us brand name for at least 20 years.

Mr Andre Javes, chief executive officer of the toy retailer’s Asia operations, said in a phone interview that the closure of Toys “R” Us Inc’s US operations last year had led to “contamination effects”, with vendors and customers confused over the status of its businesses in Asia.

The new shareholding structure means that its present shareholders will only be focused on the development and growth of Toys “R” Us Asia, added Mr Javes.

STILL TOYS “R” US KIDS

While retailers in Singapore are struggling to cope with rising rents and competition from e-commerce, Toys “R” Us Asia has seen revenue from its regional businesses growing in “double digits” over the last three to four years, said Mr Javes.

“We're a company that has been growing consistently over the last 10 years. Certainly, our growth has been exponential in the last five,” he said.

Growth came from both its e-commerce and brick-and-mortar stores, although the growth in sales from e-commerce has been “outgrowing on a year-on-year basis”, he added.

While Mr Javes declined to reveal exact figures for the company, Accounting and Corporate Regulatory Authority records showed that Toys “R” Us (Singapore) made an after-tax profit of S$8.05 million for the year up to Dec 31, 2017. This was an increase of 32.8 per cent from the year before that.

There were three main reasons why the US market did not perform as well as in Asia, said Mr Javes. Toys “R” Us stores in the US tended to be standalone outlets, there was a heavy reliance on the year-end festive season to boost overall sales figures, and the size of its stores with a large choice of toys were “paralysing” customers.

This is unlike in Asia, where Toys “R” Us stores are almost exclusively located in shopping malls with better footfall, since families spend recreation time there during the weekends. With stores in Asia averaging around 10,000sqf compared with 45,000sqf in the US, staff members have to be more selective on what sort of toys to sell.

The sales pattern in Asia is also more diversified due to a greater number of events on the calendar such as Chinese New Year, Children’s Day, as well as the Golden Week national holidays in China and Japan.

In expanding its footprint in the region, the retalier will look into using data to make better decisions, and engaging with customers in its stores, as well as through its loyalty programmes and digital networks.

Mr Burt, who heads operations in Singapore, said that Toys “R” Us will “continue to work towards securing exclusive ranges and toys”, and invest in stores by putting in “interactive zones and larger-than-life displays” to engage customers. The firm will also organise events and product launches “to create special memories for families”, he added.