Li & Fung

In stark contrast with former US parent, Toys ‘R’ Us Asia to open 60 new stores in 2019, seek further expansion

  • Most of planned new stores to open in China, the company’s biggest growth market
  • Toys ‘R’ Us Asia is also seeking opportunities in Indonesia, Vietnam and Cambodia
PUBLISHED : Thursday, 03 January, 2019, 7:01pm
UPDATED : Wednesday, 16 January, 2019, 12:22pm

Toys ‘R’ Us Asia, backed by Hong Kong tycoon Victor Fung Kwok-king’s Fung Retailing Group, aims to open up to three stores in Hong Kong and dozens more in mainland China, bucking an economic downturn blamed largely on the US-China trade war.

The recession-proof nature of the demand for toys, the right store locations and a fresh offering of not only toys but fun and educational experiences for the whole family are key to the success of the Asia business, Jo Hall, Toys ‘R’ Us Asia’s chief commercial officer for Greater China and Southeast Asia, said in an interview during its second annual toy fair in Hong Kong, where it has 13 stores.

Toys ‘R’ Us Asia aims to expand in the region after divorce from American parent

“We are cautiously optimistic,” she said. “We continue to invest in refurbishing existing and opening new stores, and our investment budget in Hong Kong [for stores, information technology and online commerce] this year is the same as last year.”

Hall declined to give figures for the privately-owned company, when asked if the trade war and economic slowdown had hit sales. Toys ‘R’ Us Asia operates more than 550 stores across the region, and has 182 stores in mainland China.

It completed its separation from indebted former US parent firm Toys ‘R’ Us Inc in November. It plans to open 60 new stores in the region in 2019, most of them in China, its biggest growth market, besides Japan, Malaysia and Singapore, said Hall. The company, which operates in 10 Asian markets, is also seeking opportunities in Indonesia, Vietnam and Cambodia.

Hall said bricks-and-mortar toy stores remained highly relevant in Asia, as a “hands-on experience” was important for children to understand how toys work, and for parents to appreciate their developmental benefits.

We are cautiously optimistic
Jo Hall, chief commercial officer for Greater China and Southeast Asia, Toys ‘R’ Us Asia

She said that while e-commerce was “convenient”, social media had replaced traditional advertising channels such as the television, which has become almost “irrelevant”. Andre Javes, the company’s president and chief executive, said in November its overall sales through e-commerce channels amounted to between 5 per cent and 10 per cent of total sales, depending on the market.

“Our model is to encourage the whole family to have an in-store entertainment and leisure experience,” said Hall.

A greater propensity among Asian parents to spend on children’s toys with educational value has also helped the company. “Asian mums love to invest in learning products for their children, as part of the development of their imagination, curiosity and [interest in] science,” said Hall.

Toys ‘R’ Us Asia’s 11-day toy fair coincides with the Hong Kong Toys & Games Fair, which opens on Monday.

Toys ‘R’ Us files for liquidation, shutdown of 740 US stores amid competition and crushing debt

Toys ‘R’ Us Asia was originally set up 32 years ago as a joint venture between Fung Retailing and Toys ‘R’ Us Inc, which filed for bankruptcy in 2017.

After a debt-for-equity restructuring deal, Fung Retailing became its largest shareholder, its stake rising from 15 per cent to 21 per cent. The rest is owned by creditors of Toys ‘R’ Us Inc, which was forced to sell or close 740 stores in the United States last year.