Does Macy's Own Toys "R" Us? New Partnership Is in the Works

An iconic toy store with a long history, Toys “R” Us hasn’t had an easy run over the past several years. It was founded in 1948 as a children’s furniture store and gradually evolved to also sell toys, clothing, and baby products.

The company faced a host of problems, including the failure to build its online business because it deferred that portion of the company to Amazon for a period of time. In 2017, the struggles came to a head when the company filed for bankruptcy. Tru Kids Inc. bought Toys "R" Us, but closed its final two physical U.S. locations early in 2021.

Now Macy’s is bringing the toy retailer under its wing to bring in more business for itself and improve the prospects for Toys “R” Us. Since big-box retailers Walmart and Target aren’t likely going anywhere, and Amazon is also a formidable rival, Macy’s could likely use a boost.

Macy’s is partnering with WHP Global, which took a controlling interest in Tru Kids Incorporated, the Toys “R” Us parent company, earlier in the year.

The plan is for Macy's to roll out its new program of Toys “R” Us stores that will be located within over 400 Macy’s department stores starting in 2022. A large selection of Toys “R” Us products are already available online on the website powered by Macy’s.

The chief merchandising officer at Macy’s, Nata Dvir, said that Toys “R” Us has international brand recognition as a toy retailer that will help Macy’s to “significantly expand our footprint in that category,” according to Forbes. Dvir also noted that Macy’s toy business grew “exponentially” over the past year.

The CEO of Macy’s, Jeff Gennette, said in a conference call this week that the move to partner with Toys “R” Us is all about reaching the “millennial mom.” The strategy is that young parents going into Macy’s to buy toys might also visit other higher-end departments and shop, according to CNBC.

Macy’s new endeavor partnering with Toys “R” Us isn't the first time another store has attempted to revive the struggling toyseller. In 2019, Target announced its partnership with Tru Kids Brands, the parent of Toys “R” Us. However, the agreement was short-lived. Target dropped its ties with the toy seller less than a year later.

Upon leaving Target, Toys “R” Us shifted to offer online toy sales via Amazon in a reminder of the early 2000s. The company made a 10-year deal with Amazon to run its e-commerce business.

Despite the many failures of the Toys “R” Us company to adapt and pivot over the past several decades, the deal with Macy’s could be a “win-win” for both companies, according to Forbes.

Toys "R" Us should benefit from Macy's strong customer loyalty and brand power. Macy's can benefit from Toys “R” Us providing a wide array of products in what Forbes calls a difficult category for department stores.