Toys R Us, Babies R Us demise gives some LI retailers a boost

September 7, 2018

By Tory N. Parrish | Newsday

When Toys R Us and Babies R Us closed this summer, they created opportunities for kid-focused retailers on Long Island to take advantage of the chain’s large market share locally.

Some toy stores, baby boutiques, children’s furniture retailers and kids’ clothing stores report their business is up, even in the face of a challenging retail environment that includes a declining birth rate that is cutting into spending for kids, as well as Amazon’s growing online retail dominance.

Funky Monkey Toys & Books in Greenvale, Bambi Baby in Melville and Behr’s Superstore, a kids’ furniture store in Farmingdale, are among the retailers that say they are seeing gains.

“Everything seems to be working, between Toys R Us going out and [our adding] a new, refreshed merchandise assortment,” said Stanley Greenman, owner of Funky Monkey.

“We’ve increased our staff to give better customer service,” he said. “We want to make sure that we get as much business as possible from Toys R Us’ demise.”

After filing for Chapter 11 bankruptcy in September 2017, Wayne, New Jersey-based Toys R Us Inc. closed all of its 800 stores, which include Babies R Us locations, this summer. Besides toys, Toys R Us sold bikes and games, while Babies R Us sold nursery furniture, car seats, strollers, clothes, bottles, disposable diapers and other items for infants and toddlers.

At Bambi Baby, a New Jersey-based baby goods store that opened a Melville location two years ago, sales from January through August are up 40 percent compared to last year, CEO Enelio Ortega said.

The boost started even before Toys R Us closed. The chain’s bankruptcy filing a year ago created uncertainty among customers, he said. Expectant mothers did not feel comfortable making baby registries at Babies R Us. Bambi Baby, with merchandise including cribs, strollers, car seats and bedding, picked up some of the slack.

“Come January, we started to see the overflow,” Ortega said. And when the last bid to save some Toys R Us stores fell through in May, “we saw a major spike.”

Behr’s, located in a One Ten Home Furnishings store off Route 110, is also benefiting, said owner Art Eisenberg. The retailer has seen a 15 percent sales increase over the last year. “I expect it to stay steady,” he said.

There is less competition overall, because the number of independent kids’ furniture stores is dwindling, Eisenberg said.

“There has been such a decline, that so many baby stores have gone out of business,” he said.

Eisenberg said his brick-and-mortar business also has benefited because children’s furniture does not lend itself to online shopping as much as other goods.

“People do not want to buy kids’ and babies’ furniture online because they want to see that it’s quality and they want to see that their kids are safe,” he said.

Bigger boost on LI

Child-focused retailers on Long Island are in an unusual position because of the exits of Toys R Us and Babies R Us, said Marshal Cohen, retail analyst at the NPD Group, a Port Washington-based market research firm.

With its 12 Babies R Us and Toys R Us stores on Long Island — some were combination stores — Toys R Us Inc. had a nearly 20 percent market share for toy sales on Long Island, compared to 12 percent nationwide, he said.

“They had more stores per square mile than most other regions. We had more than our fair share,” said Cohen.

Large chains, such as Target and Walmart, which are expanding their baby sections, will see a bigger dollar boost in the fourth quarter of this year and next year, said Burt Flickinger III, who founded the Manhattan-based consulting firm Strategic Resource Group and has studied Long Island retail.

But Long Island’s independent stores will see bigger percentage increases — 15 percent to 20 percent for toy stores and at least 10 percent for baby boutiques and other stores — while their peers across the nation will see about half of that increase, Flickinger said.

Still, “the Toys R Us vacuum in brick-and-mortar will never be completely filled on Long Island or anywhere in America because Toys R Us was the last of the category-dominant toy and baby retailers,” he said.

Nationwide, an unprecedented number of U.S. store closings of all types was announced last year — 7,087 — and 4,579 closings have been announced so far this year, according to Coresight Research Inc., a Manhattan-based retail analysis provider. The reasons for the so-called “retail apocalypse” of brick-and-mortar stores include the growing dominance of Amazon and other online retailers.

Toys R Us also cited the factor of millennials having fewer children, but the company’s bigger issue was that it was mired in debt — $5 billion — following a $6.6 billion leveraged buyout in 2005, experts said.

The U.S. general fertility rate — births to females ages 15 to 44 — hit a record low of 60 per 1,000 mothers last year, beating the previous historical low of 62 in 2016, according to the U.S. Centers for Disease Control and Prevention in Atlanta. Long Island’s general fertility rate has been trending even lower than that: The local rate was 57.7 births per 1,000 women in 2016, the most recent data available.

Between 2000 and 2016, the number of annual births on Long Island fell nearly 20 percent to 29,888, according to a study the Long Island Association released in April.

The wide availability of birth control, the increase in the number of women in the workforce, and economic instability because of student loans and other debt are factors in the declining birthrate, the study said.

“From a purely empirical standpoint, a primary factor driving lower birthrates regionally is the economic condition of millennials in light of the costs of child-rearing and housing,” said Long Island Association spokesman Matthew Cohen.

‘Rather have a dog’

Victoria Caputo, 25, a hairdresser from Ronkonkoma, says living on Long Island is expensive enough without adding the cost of child rearing.

“It’s a lot of work. I’d rather have a dog over a child,” she said.

Caputo and many of her peers are delaying having children or planning not to have them at all.

The trend has been enough to send U.S. sales of disposable diapers down 3.9 percent from January to July, after an 8.1 percent decline in 2017, according to Nielsen, a market research firm.

Also, sales of children’s furniture fell 6 percent to $876.3 million over the 12-month period that ended in July, NPD said. Children’s bedding also fell 6 percent, to $321.6 million.

While the overall birthrate is declining, the percentage of births to women 35 and older is on the rise on Long Island.

From 2000 to 2016, the percentage of births to women ages 35 to 39 increased from 20.1 to 22.3, and those to women ages 40 to 44 increased from 3.9 percent to 4.9 percent, according to the Long Island Association study.

Some retailers are finding a sweet spot in appealing to older mothers and those with more disposable income.

Personalized customer service is a valuable amenity for them, said Bambi Baby CEO Ortega. “You have a lot more educated of a consumer having children, with a lot more purchasing power than before.”

At Lester’s, a clothing chain founded in Brooklyn in 1948 with five locations in the metro area, including one in Greenvale, sales of baby clothes, layettes and shoes for toddlers have risen about 5 percent over the last year, owner Perry Schorr said.

“You can’t argue with the statistics that the birthrate might be declining a little, but from our experience, in spite of that, we are seeing some growth in those categories in what might otherwise be a pretty challenging retail environment,” he said.

Some of the boost can be attributed to 30-somethings with kids moving into the Greenvale area as baby boomers leave, he said.

Because Lester’s sells “better brands,” similar to a Bloomingdale’s merchandise, its typical clothing shopper was not a Toys R Us or Babies R Us consumer, Schorr said, so that chain’s demise had little impact.

But he said online competition has hurt.

“I call it like an invisible competitor really. You don’t know how much it’s affecting, but it’s definitely had a negative impact for sure,” he said.

Lester’s does not sell online, nor does Pashley Children’s Boutique, which has operated in Cold Spring Harbor since 1990. Likewise, Pashley isn’t seeing a boost from the Babies R Us exit.

The boutique’s sales are down about 10 percent over the last two years, said founder Pat Ramsay, who attributes the decline to online competition and a drop in the number of children on Long Island.

The upscale boutique, which carries baby and children’s clothes, jewelry and games, is more careful about its buying, she said.

“We have to try to make the right decisions, things that you won’t see everywhere,” she said.

It also offers a high level of personalized customer service, such as not selling duplicate Communion dresses for the same Mass, Ramsay said.

While retailers hope to attract shoppers to their brick-and-mortar locations with exceptional service, one former Toys R Us customer said she will now shift to more online shopping.

Manhasset resident Melissa Ferazzoli, 42, was doing back-to-school shopping for her 7-year-old daughter, one of her three girls, at Lester’s in Greenvale recently. The store was buzzing with parents and kids picking out clothes, shoes and accessories.

Toys R Us was one of the stores Ferazzoli used to frequent for toy shopping, but now she will be shifting more of her spending to Target and Amazon, she said. It’s something she laments.

“I like the tradition of going [in a store] and buying toys and wrapping them,” she said.