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The Phoenix Brand: Toys “R” Us

Guess what? The iconic world of Geoffrey the Giraffe, Toys “R” Us, is back. 

Toys “R” Us is a Phoenix Brand. 

A Phoenix Brand is a brand that has been burned to death yet attains new life and rises the next day. The mythology around the Phoenix is that it is a symbol of renewal. 

If any brand in the last ten years deserves the Phoenix Brand label it is Toys “R” Us. Toys “R” Us’ rising from the flames with renewed life supports the principle that brands can live forever if properly managed. And, now that Toys “R” Us is in the capable hands of a brand-focused firm, your toy shopping just became easier and more delightful.

It is an extraordinary turn-about. Five years ago, the Toys “R” Us brand was in a conflagration.

In 2017, an extraordinary debt load of $5 billion pushed the storied brand into Chapter 11. Reports are that 33,000 people lost their jobs. The 2017 bankruptcy filing set off a months-long effort to restructure the company in bankruptcy court. But, sadly Toys “R” Us liquidated. 

To make matters worse, creditors brought a lawsuit against Toys “R” Us executives claiming that the executives misled their suppliers about Toys “R” Us’ dire financial condition while the company tried to stay afloat in bankruptcy. Then, executives left these suppliers with more than $600 million of invoices. Furthermore, the creditors allege that millions of dollars of bonuses were dished out to 117 Toys “R” Us executives and managers just prior to the company’s 2017 bankruptcy. The suppliers allege that this was a breach of the former executives’ fiduciary duty. Former Chief Executive Officer David Brandon received the largest bonus totaling $2.8 million. The trial of the former executives is slated to begin now in 2022 after several years of legal wrangling.

The bankruptcy judge’s opinion supported Toys “R” Us creditors because sufficient questions surrounding the payment of executive retention bonuses and advisory fees to the company’s equity sponsors – including Bain Capital, KKR & Co. and Vornado Realty Trust – do appear to require the legal proceedings to continue.  The bankruptcy judge said:

“The evidence submitted by the trust, if proven, is sufficient to establish a prima facie case that the defendants violated their duties of loyalty and good faith in addition to their duty of care,” Judge Phillips wrote in his opinion, referring to the retention bonuses paid to 117 Toys “R” Us executives before the bankruptcy filing.

“Payment of the advisory fees was not endorsed by court order, as the payments were made prior to the bankruptcy filings. The evidence offered by the trust supports a finding that the defendants were not constrained by their contractual obligations to the sponsors and had other options available.”

From the ashes of this ugly situation, the Toys “R” Us brand is currently in revitalization mode. And, in a very clever manner.

The brand’s owner, WHP Global, partnered with Macy’s, another iconic retail brand, allowing Toys “R” Us to place Toys “R” Us shops inside all of Macy’s stores. Press reports indicate that by mid-October 2022, Toys “R” Us will open shops in all of Macy’s stores. When Toys “R” Us closed its stores, Walmart, Target and Amazon saw and leveraged the opportunities. Now, Macy’s sees an opportunity to sell toys increasing traffic and loyalty while Toys “R” Us sees the opportunity to rebuild its brand back to enduring profitable growth.

What both Macy’s and Toys “R” Us are implementing is a Combination Branding strategy; more specifically, a component brand approach to Combination Branding. With the component approach to Combination Branding, both brands maintain their own source of their promises. Combination Branding using a component brand approach is “a brand within a brand” not a brand with a brand. The latter would be a co-brand approach where the two brands share the identification of the source of the promise.

For Macy’s, having an iconic, beloved toy shop brand inside its stores provides the ability to compete for holiday shoppers and year-round shoppers in a retail environment currently led by Amazon for online purchases and by Target and Walmart for brick-and-mortar purchases. Toys “R” Us offers Macy’s (as the host brand) and Macy’s customers an additional benefit of a glorious, enchanting world of quality toys and toy shopping. 

For Toys “R’ Us, the partnership provides instant brick-and-mortar facilities, a reliable stream of shoppers and the ability to reinforce its brand with old and new customers. The benefits of Toys “R” Us do not replace Macy’s benefits; Toys “R” Us just enhances Macy’s with a new benefit. Toys “R’ Us does not delegate its brand management to Macy’s and Macy’s does not delegate its brand management to Toys “R” Us.

The chief merchandising officer of Macy’s told investors, “Macy’s cannot wait to bring the Toys “R” Us experience to life in our stores. We hope Toys “R” Us kids of all ages discover the joy of exploration and play within our shops and families create special memories together. The customer response to our partnership with Toys “R” Us has been incredible and our toy business has seen tremendous growth.”

Since Macy’s has been selling Toys “R” Us toys online and with the cascading in-store Toys “R” Us shops, Macy’s CEO, Jeff Gennette, said during its second-quarter conference call that first-quarter toy sales were 15 times higher than the comparable period prior to the Toys “R” Us partnership.

As for Toys “R” Us, the CEO and chairman of WHP Global, told CNBC, “We’re in the brand business and Toys “R” Us is the single most credible, trusted and beloved toy brand in the world. We’re coming off a year where toys are just on fire. And, for Toys “R” Us, the US is really a blank canvas.”

If all goes according to plan, this partnership should be a boon to both Macy’s and Toys “R” Us. Press reporting indicates that brands such as Hasbro are already stocking up inventory to avoid any supply chain issues this holiday season. Hasbro’s CFO confirmed that Hasbro is “well positioned” this year when it comes to inventory. Very good news for Macy’s and Toys “R” Us.

A component brand approach is gaining strength with retailers due to the pandemic. It does not always work out, however. J.C. Penney had a partnership with beauty brand Sephora. But, that relationship is ending to be replaced by J.C. Penney Beauty, an offering with more “mass” brands.

What is clear is that Toys “R” Us is alive and well and focused on rebuilding itself after years of fire and brimstone. Its partnership with Macy’s has a lot of brand potential. And, finally, the Toys “R” Us brand is being properly managed. Toys “R” Us is a story about a brand that is renewing itself. Toys “R” Us is today’s Phoenix Brand.

Larry Light: Brand Insights on Pandemic Impacts & More

Take These Actions Now Or Lose Your New Customers Post-Pandemic

Packaged goods food companies are performing beyond expectations. Will this sales lift last into the future? For enduring profitable growth, brands must not only build their quantity of sales but the quality of their sales. Here are four actions to help the fortunate sales lift endure post-pandemic.

Personalization Will Change Your Car Dealership Experience Forever

Hyper-personalizing the car purchase experience will be a path to auto dealer success. Personalization is about making the customer feel special. Hyper-personalization is focusing on an audience of one for each and every customer, each and every day.

Harley-Davidson: Adore Your Core

A turnaround strategy is different from a growth strategy. When a brand is in trouble, the priority is to stop the hemorrhaging of the customer base. CEO, Jochen Zeitz is making a radical strategic shift to put Harley-Davidson back on the road to enduring profitable growth.

Coronavirus Spurs Brand Innovation

As a result of the Covid crisis, there are a lot of innovative ideas being tested in the restaurant industry to keep businesses alive. For example, many restaurant brands now provide meal boxes that offer more than just meals – they are cooking lessons.

Guitar, Pet, Bicycle: Our Need For Therapeutic Experiences

Home-based therapy experiences that help us feel better are the new normal. Loving a pet overcomes loneliness, which has been exacerbated by being stuck at home, away from friends and sometimes away from family. Financial Times calls this feeling “lockdown loneliness.”

Environmental Decency Makes Money

Sustainable leadership and business practices influence customers’ brand decisions. In today’s environment, data show that environmental decency “significantly impacts” brand preference and purchase.

Old Is New, Denied Distinctiveness & More: The Latest from Larry Light’s Forbes.com Column

Larry Light sheds light on interesting marketing and branding news in his Forbes column on a weekly basis. Below is a roundup of some of his latest insights. Read them now!

https://www.forbes.com/sites/larrylight/2020/08/31/old-is-new-erewhon-the-whole-earth-catalog-loop-and-blueland/#1a13769571e9″ target=”_blank”>Old Is New: Erewhon, The Whole Earth Catalog, Loop And Blueland

In 1966, a year before the Summer of Love and two years before the original Woodstock, two gurus of the macrobiotic lifestyle, followers of the great George Ohsawa, opened a health food store called Erewhon. Erewhon is meant the title to be understood as the word “nowhere” backward even though the letters “h” and “w” are transposed. It came from the Samuel Butler book about a utopia. One of the fictional Erewhon’s tenets was that everyone was responsible for their own health and wellbeing.

Read more.

Land Rover And The Case Of Defender’s Denied Distinctiveness

In January of 2016, after 67 years, Jaguar Land Rover (JLR), owned by Indian company Tata, ended production of the iconic and beloved Land Rover Defender four-wheel drive vehicle. The first Defender, aka Land Rover Series, began sales in 1949 post-war Britain. The intended use was for agricultural purposes. The design was similar to the WWII Willy’s Jeep (manufactured by Willys-Overland Motors). Over the course of its 67-year history, Land Rover Series and Defender vehicles reportedly sold just over two million vehicles. As a point of interest, at its 1949 debut, the Land Rover Series was the first four-wheel drive, mass-produced civilian car with doors.

Read more.

Home Depot, Alexa And The Paradox Of Do-It-Yourself

In a world of meal-kits, parking assist vehicles, wearable heart monitors, voice-recognition devices, connected homes, networked transportation services, farmers’ markets, delivery of practically everything, Bluetooth, and Task Rabbit employees who assemble your IKEA purchases, what does “do-it-yourself” mean?

Read more.

Nextdoor, Brands And The Need For Neighborhood

Neighborhood is more than a geographic descriptor. Neighborhood is a mindset… an amalgam of attitudes and behaviors. Whether it is Mr. Rogers’ Neighborhood, or the Cheers bar neighborhood is a powerful force. Financial Times once described a New York City, Upper Westside neighborhood toy store that had lasted beyond the demise of KB toys, FAO Schwartz, and Toys R’ Us. The store lasted because their neighbors owned the store and their neighbors worked in the store.

Read more.

SpaceX, The Pursuit Of Quality And The Law Of The Diagonal

Elon Musk’s SpaceX company was founded in 2002 to revolutionize space transportation, with the ultimate goal of “making humanity multi-planetary.” SpaceX designs, manufactures, and launches the world’s most advanced rockets and spacecraft.

Read more.

Larry Light Dials In On Domino’s Success in 2020

In Larry’s latest piece in Forbes, Domino’s Six ‘Can-Do’ Actions Lead To Increased Sales, he lays out the 6 critical actions to Domino’s 2020 success.

Read his latest thoughts now, here.

Larry Light’s Forbes.com Column Roundup

Larry Light’s latest pieces in Forbes have collectively been read by over 54,780 readers. They cover an array of marketing topics including the impacts of Covid-19, Ease of Choice, and more.

See his latest headlines below.

Macy’s And The 100th Anniversary Of The 19th Amendment

At this 100-year anniversary for women’s right to vote, we should be respecting brands that stood up for women, especially working women Macy’s is one of those brands.

Six Rules To Plan Now For The Post-Coronavirus World

When the economy starts up post-coronavirus, many brands will need to be reenergized. How to plan now for post-coronavirus revitalization?

What’s Next For The Whole Foods Market Brand?

Amazon is focused on building Whole Foods Market into a trusted source for organic, healthful, eco-conscious, ethically-sourced offerings with a reputation for quality, leadership, and trust. The singular desire is to build loyalty to Whole Foods Market rather than sharing it with the “365” brand.

In This Complicated Uncertain World Ease Of Choice Wins

Right now, why add more uncertainty to our lives by selecting an unknown or new brand? This is not a time for new brands. It is a good time to build on the strength of brand familiarity and trust.

After The Quarantines, We May All Sell And Buy Used Cars The Carvana Way

Carvana is turning the used car business on its head and in doing so has the potential to utterly change the way car dealers do business. As with Uber, Tesla, Airbnb, Amazon that forced established brands to change, Carvana is causing a sea change in one of the most ubiquitous industries in the US.

To Innovate and Generate Market-Winning Brands, Change The Culture

In his latest piece in Forbes, Arcature CEO Larry Light explains why brands must adopt Internal Marketing to create and reinforce a cultural commitment to the new direction. 

Read his latest piece now for some valuable insight and practical tips: The Do’s And Don’ts Of Mindset Change

You can follow Larry Light on Twitter here: @CEOLarryLight


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Photo Credit: pjs2005 from Hampshire, UK

Advertising, Brand Impact And More In Larry Light’s Forbes Column

In Larry Light’s recent Forbes pieces, he takes on the marketing mindset that ignores the true brand impact of advertising as well as the laziness of today’s ad creation.

Marketers Ignore True Brand Impact At Their Peril

Marketers are confusing “clicks and listens” to buying. Marketers seek reliable data on how many people have viewed or heard particular advertising messages. The “view/hear mindset” is captivating for marketers. Clicks feed egos. [Read This Piece]

Lazy Advertising Thinking Is A Deadly Sin

Enterprises that own multiple brands have the opportunity to reach different customers with the same needs and the same customers with different needs over all the stages of their lives. Each of the brands in a brand portfolio has a relevant, differentiated promised experience that receives added trust and authority from the corporate parent. [Read This Piece]

See Larry’s Forbes Column here and follow him on Twitter here.

Larry Light in Forbes: “Instagram And WhatsApp Will Not Be Able To Fix Facebook’s Image”

Facebook can’t rely on Instagram and WhatsApp to fix it’s image problem. Read why in Larry Light’s latest piece in Forbes. Click here.

Larry Light asks “Is This Your Grandfather’s Harley-Davidson?” in Forbes.com

Has Harley-Davidson met its Oldsmobile moment? The venerable motorcycle brand faces the deleterious consequences of demography. On the one hand, Harley continues to be reliant on the defining mood, spirit and discretionary spending of Baby Boomers (think Marlon Brando’s outlaw motorcycle 1953 film, The Wild Ones, Jack Nicholson and Dennis Hopper in the 1969 film Easy Rider, and the hauntingly sad Rolling Stones Altamont concert). Today, many Baby Boomers are aging out of the motorcycle lifestyle.

Is This Your Grandfather’s Harley-Davidson? Forbes.com

Read the rest of Larry Light’s piece now! Click here.

The Mass Middle of the Market is Muddling its Way Into the Future

The village of Tupper Lake, NY, in the Adirondack Park has a population hovering just under 6000. In the short summer season tourists and second-home owners boost that number. Recently, there has been a seasonal gentrification with the opening of two craft breweries, but it is basically a struggling place to live. Tupper Lake is a small town 130 miles southeast of Montreal, Quebec, and 89 miles south of Cornwall, Ontario. In Tupper Lake, there is a Dollar General, a Save-A-Lot, a Family Dollar, and a Day Wholesale.

Read the rest of Larry Light’s latest LinkedIn piece here.