Toys R Us Takes Aim at Holidays with Hot Toy Reservation Program

Toys R Us
Toys R Us

The deals will be plentiful this holiday season at Toys R Us, as will the mix of exclusive toys that shoppers won't find at competitors, such as the much-ballyhooed Tabeo tablet.

But the big news this year, according to CEO Jerry Storch, is the company's first-ever Hot Toy Reservation program. The free service will enable customers to reserve the season's hottest toys, sparing parents the mad dash to snatch up that "it" gift before the shelves are bare. That's "revolutionary," Storch told DailyFinance.

Having the toys kids want in stock is the holy grail of retail during the Christmas shopping season, which can generate up to 40% of stores' annual sales. "It's the No. 1 thing a parent wants," Storch said.

No More Frenzied Search For the Hot Toy?

Like many retailers these days, the 875-store toy chain is looking for new ways to distinguish itself from larger competitors like Walmart (WMT), Target (TGT) and Amazon (AMZN), which are growing increasingly fierce in the battle to offer the lowest prices. With the reservation program, Toys R Us is selling not just toys, but peace of mind, company officials said.

Toys R Us is also grappling with the rise of showrooming, which finds shoppers browsing for potential purchases in brick-and-mortar stores, only to buy later from online retailers for less.

The free toy reservation service will be offered through Oct. 31, and applies to the 50 items featured on the retailer's upcoming "Holiday Hot Toy List," which highlights what it's sees as the must-have products of the season.

Shoppers must reserve toys in-store at customer service desks -- a move to prevent "pros" from gaiming the system online -- and make a 20% down payment. When their order arrives in store, they receive an email notice, and have until Dec. 16 to pick it up.

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"This may be attractive to some customers and give Toys R Us a point of differentiation that they badly need, other than just price," said Mark Cohen, a professor of marketing at Columbia University's business school, and former CEO of Bradlees and Sears Canada.

But the devil is in the details, and Toys R Us better make sure they can pull the promotion off. If shoppers reserve products that end up being unavailable, "that will be deadly," Cohen told DailyFinance. "People will kill them if they don't execute well."

But the retailer believes its year-round focus on the toy business puts it in a unique position to gauge consumer demand for specific items, said Jennifer Albano, a company spokeswoman, at the event.

What's more, it enjoys tight relationships with its vendors, meaning it can nimbly adjust to increased demand for a given toy. Still, there's a possibility that the reservations will be "closed" on particular items at a certain point, she said.

Let's Make a Deal

When asked if the chain will be trotting out the big bargains this year, Storch said, "We're always very aggressive" on price, and this year will be no different.

Another enticement for cash-strapped shoppers: Toys R Us is offering free layaway through October 31, dropping the $5 fee it charged in 2011. It will also be doling out free shipping offers.

Exclusive merchandise from big national brands and its own private-label line continues to be a major push at the chain, Storch said. This year, the retailer is not only featuring only-at-Toys R Us items but exclusive lines, such as the new LEGO Technic collection.

Here's a look at five Toys R Us exclusives the retailer is pushing for the holidays.