Inside the Toys ‘R’ Us rebirth: Why we decided to launch as a purely online retailer

Louis Mittoni launched Hobby Warehouse as a digital platform in 2011 and is the new chief executive officer of Toys ‘R’ Us ANZ. 

When the journey began to digitally re-birth the Toys ‘R’ Us brand, we based it upon the values, beliefs, stories and algorithms learned over eight years of building Hobby Warehouse into the largest online hobby retailer in Australia and New Zealand.

Hobby Warehouse is a digital native and specialist hobby retailer with a very loyal and engaged shopper base. The shopper communications platform follows a digital formula that is focused on telling true stories about real Australian shoppers and their hobbies, shared in a high-quality video format.

This formula has allowed Hobby Warehouse to grow at up to 60% year-on-year.

We overlayered that experience with the belief the Toys ‘R’ Us brand appeals to everyone, including adults. It is a specialist toy retailer with a rich heritage that dates to the late-1950s.

The experiences that children and adults have built together with Toys ‘R’ Us is very strong. In fact, many of us, and importantly grandparents, still identify with being a Toys R Us kid. Within Australia, 36% of focused toy buyers are grandparents, with 30% being mums and 10% being dads, which supports Toys R Us as a trusted brand.

Toys ‘R’ Us ANZ chief executive officer Louis Mittoni with Toys ‘R’ Us ANZ chairman Kevin Moore. Source: Supplied.

The decision to launch as a pure online retailer was based on logic rather than emotion.

Global research estimates about half (47.9%) of toy and hobby products will be purchased online by 2023, rising from 31.4% of retail sales in 2019.

In fact, some toy brand owners have shared their belief it will be as high as 60% for their toys, so an obsessive focus on digital retailing at the exclusion of physical retail was our starting point.

It’s important to note that, as a dedicated toy retailer, we consider our key competitors to be other pure toy or baby product retailers, whether physical or online.

While we have immense respect for existing physical and online retailers who sell toys or baby products alongside other items, only Toys ‘R’ Us, Babies ‘R’ Us and Hobby Warehouse will operate as an integrated baby, toy and hobby business.

Supporting the Toys ‘R’ Us brand is Louis’ own core personal belief that “play is possibly the single most important thing that we engage in as children”. Play, not competition, enables children to experience joy, learn, problem solve, develop imagination, collaborate, express themselves, and empathise, developing so many facets that really are integral to development and wellbeing.

We also believe one of our missions is to encourage children to engage with as many different forms of play as possible. Drawing, role play, digital play and online, riding bikes, getting out and exploring, and maybe even a bit of rough and tumble play, or taking sensible risks.

When we met with Toys ‘R’ Us Kids global chief executive officer Richard Barry and his team of senior executives, licensing specialists and marketers from the US, values, beliefs stories and algorithms were at the heart of our market re-entry discussions. Hobby Warehouses’ successful digital formula, based on telling true stories in high-quality video, resonated as a key platform to reconnect Toys ‘R’ Us’ 70-year heritage with Australian and New Zealand shoppers of all ages. 

Supporting the shopper-facing parts of the business, we have continued to constantly innovate with cost-effective warehouse automation and improved logistics abilities to meet delivery demands in peak periods. Louis’ background in AI and machine learning allowed us to design logistics systems that are self-learning.

Once our system meets a toy or other product for the first time, it then learns about that product, its weight and dimensions, and remembers what packaging to choose when that toy is encountered in a future order. 

The system can also automatically alter the freight service for shoppers if it knows that a better option exists that will get the product to the shopper’s location more quickly or cost-effectively.

This value-based, digital storytelling platform, harnessing real-time shopper data and machine learning within our logistics chain, and a very wide and deep range of brands and products at competitive prices combined with fast delivery, has seen Hobby Warehouse achieve a 99.99% positive feedback score from shoppers.

It’s this successful combination of the human and the technological that will be evident in the digital re-birth of Toys ‘R’ Us.

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