Targeting the Next Generation of Toys 'R' Us Kids

Dec. 18, 2007— -- If you think it's crazy to take your kids to a toy store, try going with Jerry Storch. He moves at warp speed through a Toys "R" Us superstore in Elizabeth, N.J., pointing out the "hottest" toys of the season, declaring one toy "hot" and another "on fire."

Storch may sound like the chief toy tester, but he's actually a chief executive on a mission. A mission, he says, to save an American retailing icon. Storch took over as the CEO of Toys "R" Us in February 2006.

"You can't even watch a movie. I was watching a movie the other day with Bruce Willis, the latest 'Die Hard,' and he flashes his badge and the fellow asks him, 'Where'd you get that, Toys "R" Us?'"

Storch says the Toys "R" Us brand "is everywhere," and the company needs to capitalize on that sense of familiarity.

"Parents have a huge soft spot in their hearts for Toys "R" Us," he said. "It's up to us to fulfill that promise of that brand icon."

A catchy jingle, a jolly giraffe named Geoffrey and discount prices made Toys "R" Us America's toy store for a generation. But like other competitors, it became a victim of the super discounter Wal-Mart, now the largest toy seller in the country.

'We're Always Children'

Parents started complaining about dirty stores, messy aisles and a lack of customer service.

"We did it to ourselves," Storch acknowledged. "It's very easy to develop a victim culture in a company just like any organization, and when I came here what I heard was, 'It is impossible to succeed because the discounters were too strong.'"

Storch showed up at Toys "R" Us after it had become clear he wasn't going to get the top job at Target. At Toys "R" Us, he found a company in trouble, but rather than shut it down, he wanted to fix it, to rebuild the brand.

Toys "R" Us operates a lab at company headquarters that is set up like a store -- part of what Storch calls "the science of retailing."

"A big part of retailing is to make it easier for the customer to find what they want and to stimulate add-on purchases when something belongs together," he explained.

Storch has made little changes (mopping twice as often a day) and big changes like rejoining Babies "R" Us and Toys "R" Us stores. They look as if they're side by and have two separate doors, but inside it's one superstore.

"Look, you go right from babies, this is the baby world, everything you could ever want," Storch explained, giving "Nightline" a tour. "And then you come right into the toys for a baby. These are infant toys, right, and as you go to the next aisle older, older, older … you've got the entire toy story. All the way from zero to [a] video game player who's age 30 -- you know, we're always children."

Surviving the Recalls

Is this just a gimmick? Not according to retail watchers, who are taking notice. In a slowing economy, Toys "R" Us is growing, despite the turmoil of a toy business in which retailers have been forced to pull millions of recalled toys from shelves.

"We've told the toy makers that it's absolutely intolerable for them to manufacture toy products that do not meet our specifications," Storch said. "We've terminated two vendors already this year. We've had some very tough conversations with the others -- you can believe that. And we've stiffened our standards even more."

"If it's someone we have confidence in and we know they can do something about it, then we'll stick with them and help make sure they make better product," he said.

"We know that we won't be in business very long if we don't reassure parents that these toys are safe," he said. "So we've been outspoken about this. We've been aggressive about this, and the parents recognize that."

In an unusual twist, this businessman is asking for more government regulation. But it may not be the strangest thing he did this year. That would be his decision to go big on pink.

Think Pink

"It's a hot color and, of course, it works well for girls," Storch explained. "In retail you follow a trend curve, so you try to identify something as it's coming in, so this is something that's been developing over time and this year we just decided to put our foot on the pedal and go for it big time."

Storch went to toy makers, asking for pink products to be sold exclusively at Toys "R" Us, from a pink Monopoly game to pink baseballs.

Bob Giampietro is another Target alum who has the unusual title of senior vice president for trend and innovation at Toys "R" Us. These guys believe, as in the fashion business, they need to create or build a trend to capture market share.

"I cannot take credit for finding pink," Giampietro said. "Toy trends and science -- that's also called alchemy! And that's where the art and science come in. There's obviously stats that drive this, but there's also feeling and, most prevalently, emotion because guests respond to this in a very emotional way."

Giampietro is passionate about his job, and about his new favorite color.

"I love it!" he said.

Their bets this year, along with pink: Cookie Monster, Hannah Montana and Guitar Hero. Is it working? Stay tuned to see where Santa did his shopping.