Toys R Us to launch rapid expansion in China in the next 3 years
In the context of China's consumption transformation and upgrading and implementation of the “Two-child” policy, world-renown toy retailer Toys R Us (TRU) Asia has made plans to further develop the China market. Within the coming 3 years, TRU will expand rapidly by opening 50 new stores each year, which will make China its largest market in Asia in 2021.
Nicholas Green- Managing Director of Toys R Us China
According to Mr. Nicholas Green, Managing Director of TRU China, “China is the fastest growing market for Toys R Us. We do see a lot of growth opportunities in China in the future. I believe that by 2021, Toys R Us will double the number of its store in China reaching 400. In our view, China will become the largest market for TRU.” The newly opened stores, like other TRU chain stores with an average area of 800 square meters, will be mainly located in first-tier and second-tier cities. “The reason is actually very simple. The business of Toys R Us is very successful in China, so we hope to bring our brand to more cities in China” Nicholas added.
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"China is the world's second largest toy market and the world's largest toy exporter. The global toy market has been slowly declining over the past few years, but China market still sees steady growth," said Wang Zhiyuan, director of retail research at Mintel China. According to the predictions by Euromonitor International, the China toy market may reach $62.29 billion by 2022. The retail value of China's toy and gaming market has grown at a double-digit annual rate in the past few years, doubling from $20.06 billion in 2013 to $40.9 billion in 2017.
Nicholas said that as the China juvenile market continues to expand, Chinese consumers are particularly interested in educational toys, such as toys that teach language, writing, and mathematics. Traditional toys with educational content are always effective in catching the attention of Chinese parents because they are highly concerned about their children’s academic performance. According to Euromonitor's report, in addition to building blocks and preschool toys, modern STEAM (science, technology, engineering, art and math) toys are becoming increasingly popular as they allow children to learn through play and obtain modern scientific knowledge. Based on market demand, education-related products sold by TRU account for about 25% of their entire sales volume in China, which is much higher than other markets.
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Unlike many retail companies that have experienced fierce competition in e-commerce, Toys R Us's physical stores are stable and strong, with brick and mortar store sales accounting for the majority of their overall sales. As early as 2012, TRU launched its online sales business on China’s e-commerce giant Tmall and its official website. At present, TRU is seeking diverse cooperation with digital platforms such as WeChat and JD.com.
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Experts indicated that China toy market will see fierce competition among domestic and foreign brands. Domestic companies not only possess price advantage but also have a wealth of media resources and it’s easier for them to carry out extensive distribution. “Many Chinese manufacturers are producing very attractive toys. We buy those toys because they are very good. We’re sure they will sell well in China,”Nicholas said. According to Mr. Wang Zhiyuan, director of retail research at Mintel China, the China toy market still has large room for growth in adult and juvenile groups, and the toy market for young people has not yet been fully explored.
Toys R Us entered the Chinese mainland market in 2006 and currently has opened more than 180 stores in China. In 2017, after the Toys R Us chain in New Jersey filed for bankruptcy, Toys R Us Asia began to operate as a fully independent legal entity in China, Japan and Southeast Asia. At present, Hong Kong Fung Retail is the largest shareholder of Toys R Us Asia.