Dollar Stores Likely to Benefit Big From Toys ‘R’ Us Closures

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Dollar stores could “benefit” from Toys “R” Us closures, according to a new research survey by Coresight Research, formerly Fung Global Retail & Technology.

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With the New Jersey chain shutting down, Amazon, Walmart and Target are the big retail giants who will be duking it out for the $7 billion in annual toy sales that are up for grabs, as per the Coresight data. But, the survey concludes, “dollar stores…could also benefit from Toys ‘R’ Us closures.”

Looking at where shoppers have browsed and bought children’s toys and games in the past 12 months, excluding Toys “R” Us (which placed fourth in the rankings), Coresight found that Amazon led the pack (63.8 percent browsed and 53.7 percent bought) followed by Walmart (54.7 percent browsed and 45.5 percent bought) and then Target (50.4 percent browsed and 38.6 bought). Dollar stores came in fourth (25.3 browsed and 21.4 bought).

“On a percentage basis, they may see the biggest boost to their sales [of all toy sellers],” said Timothy King, the managing partner of CPEX Real Estate.

Toys “R” Us announced this month that it is closing its 800-plus U.S. Toys “R” Us and Babies “R” Us stores, six months after filing for bankruptcy protection. When surveying Toys “R” Us shoppers to find out where else they browsed for toys and games in the past year, Coresight, which provides future-focused analysis to organizations at the intersection of retail, technology and fashion, found Walmart and Amazon tied at 65.4 percent and Target was close behind at 63.6 percent. Dollar stores ranked fourth at 29.8 percent.

“For most consumers, low price and convenience are paramount features,” King said. “Dollar stores offer both low prices and ease of shopping. Smaller stores in more locations make them easy to get to and easy to shop at. A trip to Costco is time consuming and tiring—at least for me. Targets are large stores as well. A dollar store is like the 7-Eleven of retail—convenient locations and easy in and out.”

Retail consultant Kate Newlin said of dollar stores: They are “okay and cheap. They have a good enough selection and the prices are low. I believe some great portion of the stock is close-out and remainders, but for some kid you don’t know’s fifth birthday a bright and shiny something is the price of admission to the party.”

One retail broker, Eastern Consolidated‘s Robin Abrams said that while her mother loves to buy her great-grandchildren toys at the local dollar store, and dollar stores “will get a share of the business,” she can’t “imagine [it] will have a huge impact unless they greatly broaden their product offering to embrace some higher price points.”