�� Toys ‘R’ Us ANZ CEO Dr Louis Mittoni says. “Separate to technology needs, and particularly as we emerge from disruptions shaped by the pandemic, we believe unique retail experiences will form a very important part of how children and families seek out and engage with highly beloved brands such as Toys ‘R’ Us.” The iconic retailer went big on e-commerce in 2021, following a merger into a larger business that listed on the Australian Stock Exchange with possibly the cutest ASX listing code: TOY. Mittoni reports support from shareholders allowed the business to capitalise and restructure its operations across Toys ‘R’ Us, Babies ‘R’ Us and Hobby Warehouse, including signing a lease to design and build a 20,000sqm e-commerce centre and headquarters, which will incorporate the first Toys ‘R’ Us and Babies ‘R’ Us experience centres. The business restructure was driven by the brand’s desire to focus on direct-to-consumer sales and involved selling assets such as its B2B confectionary distribution business and the intellectual property of Chill Factor. Mittoni originally thought the process would take at least a year, so he’s chuffed most of the reorganisation was completed in just six months. “In August, Toys ‘R’ Us commissioned its first state-of-the-art autonomous mobile robot fulfilment warehouse – an incredible milestone,” he says. “Shortly thereafter, we proudly launched Babies ‘R’ Us as a separate e-commerce website. The most significant initiative for the year, and potentially one of our greatest for years to come, was to secure exclusive licensing rights to operate Toys ‘R’ Us and Babies ‘R’ Us in the UK, the largest toy market in Europe and fourth largest in the world, with a total addressable market of £3.3 billion in 2020.” Global supply chain challenges Disruptions to the global supply chain at the start of the pandemic, in 2020, triggered a mass cancellation of orders and forecasts by retailers and suppliers, Mittoni observes. He says because the business hasn’t fully trusted supply since June 2020, the chief operating officer and inventory planning team have worked with partners to place orders and forecasts for the 2021 holiday peak season as early as October in some categories. “In the toy e-commerce industry, we experienced increased demand,” he says. “It inverted the switch on the supply-demand equation, creating huge deficits in everything from puzzles, board games and crayons, through to bicycles and trampolines. Oh, and toilet paper.” Robots for Christmas Businesses with huge logistics centres are increasingly bringing in robots to do the heavy lifting of inventory between warehouse and pick areas. Toys ‘R’ Us is no exception. Commissioning the first Toys ‘R’ Us automated logistics hub before the holiday peak period was one of the most important, and certainly most challenging, achievements for 2021, Mittoni notes. The logistics team had to adopt new engineering and robotic approaches rapidly, while moving inventory from four separate warehouses into two centres. “This achievement proved critical to support the business during the peak trading season just weeks later,” Mittoni says. “And it has freed up team members to concentrate on improving other processes. With just a few well-trained operators, we can already accommodate a much greater variety of toys and toy orders than we used to achieve with a team four to five times larger.”  Big plans for 2022 Toys ‘R’ Us will open a new experiential store in Victoria in 2022, which Mittoni explains is being developed with some of the world’s leading retail designers to stimulate emotional connectivity through interactive experiences. Meanwhile, the business is also focused on re-establishing the brand as the market leader in the toy sector and a top-two choice for consumers in the baby sector. Babies ‘R’ Us will draw on consumer feedback about which categories are important to them, Mittoni says: “We are patient, but still passionate, and well capitalised. This allows all our team shoppers and suppliers to grow with us over the medium-term horizon.” Mittoni says the business is well-placed to capitalise on the big toy retail trends for 2022 and beyond, including: E-commerce expansion to offer ‘almost endless aisles’ across the whole marketPhysical retail experience centres that will become ‘must visit’ attractions Extension of ‘phygital’ (customer experiences that span the physical and digital worlds) to offer “all the range, price and practically of online, with the emotional connection of a great in-store customer experience”. “Our edge is our passion for the sector and focus on the shopper, supported by innovative technology,” Mittoni says about the return of Toys ‘R’ Us to the UK. “The previous Toys ‘R’ Us businesses in Australia and the UK achieved revenues of almost $900 million across nearly 150 stores. The UK holds enormous opportunity for Toys ‘R’ Us in 2022 and beyond, and there are millions, if not tens of millions, of former loyal shoppers and fans that hold a deep affection for the brand. The UK has one of the most advanced e-commerce markets globally and the retail environment is also fiercely competitive. Consequently, the technology and systems we employ, plus the experiences we provide to our shoppers, will be vital to our success.” This article was originally published in the 2022 Australian Retail Outlook, powered by KPMG