Retailers like Toys ''R'' Us needs differentiated products to compete on more than just price, which may increase sales to offset higher rent costs says retail analyst Mary Epner.
Aren't threats will close its flagship Times Square location today but said it has plans to relocate and midtown Manhattan. What does this store closures say about the changing retailing and escape. Let the that's what Mary at their principal at Mary Haffner retail analysis Mary thank you so much for joining has. We appreciate you might bite will use apprised about the start closing well kept. Being a big hit myself yes I'm a little disappointed in a little bit surprised but when one considers some of the major factors the real estate prices. Minimum wage going up it's not all that surprising and then the third actor would be the type of product they offered and it's not. Clearly differentiated from other toy manufacturers or acts retailers. When it comes to be located high traffic areas incurring those additional. Rental expenses. How do you retailers offset the cost they charge higher prices at those locations or do their other locations subsidize that additional cost it can be a little bit of both but in this. Particular instance it's really challenging because the toy business is very promotional and then you add on that fact that they'd been Amazon eyes so to speak. It makes it even more challenging so they have to match prices and it makes it difficult for them to get ahead if they're competing on like product. If they had unique product that you couldn't get anywhere else except for. Toys 'R' Us that could be a different story but that is not the case and what does the promise of a Wal-Mart and target when it comes to selling toys how is that impacting its enormous enormous impact because they look for the customer. To get into the to the store and sometimes they'll make that choice a loss leaders. Which means that they don't have did make a profit on it they just. Use these toys to get the customers into the store hoping that it will buy other things while they're in the shopping trip so it makes it more difficult for a brand like toys are rats. It just specializes. Namely in toy. To get that customer again. And we saw it same thing happened with at AO Schwarz absolute column I've recently we have towards earth do you expect to see this happen to other retailers such hybrid areas going forward I think if they don't have differentiated product. Then yes I expect to see if you're just competing on price. Then that means you need to sell more in order to make up for that higher rent. And higher minimum wages so for example since the end of 2008. The Times Square rant is bye to an at times for retail space. And we all know that salaries have not risen to at halftime so you do the math it doesn't necessarily work out. If that customer is going in there for Star Wars merchandise as well as the target or Wal-Mart or. More importantly an amateur. Quit the changes we're seeing with explosive growth and e-commerce what can retailers such as towards the rest dude to me island. I think they can do a couple of things number one. To find different imprints in real estate based on where they're. Geographic location is so it doesn't mean that they have to have a 100000 square foot store anymore they can have a smaller imprint. They can you collaborations. With other. Brands like an apple and making add up or up Harold. Manufacturers that they can offer unique product. They can also do store in store concepts let's say with the Macy's. We're self bridges in London or galleries Lafayette something like that scene just have to look at it differently. Or you could even do pop up stores based on really busy times of the year in different. Geo political. Locations. The leader right there and pay so much thank you so much. Married Abner principal at very opener retail analysis I'm sure he accurately that it's right there.