Pop-up toy stores for the holiday season

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For this holiday season, Toys “R” Us will be opening 600 pop-up stores across the U.S. and Canada. In fact, by the time they have opened up all their pop-up stores they will be operating more pop-up stores in the U.S. than regular stores. For those that don’t know, a pop-up store is a temporary store location, usually located at malls in vacant store spaces. These stores are generally smaller than traditional stand alone stores and for Toys “R” Us, they often bear the name Toys “R” Us Express. Their main purpose is to be open for the holiday season and then close in January.

It is an interesting strategy that they actually started last year. However, some of their pop-up store locations in the U.S. and Canada did so well last year that they remained open for good. They hope to increase market share and overall sales by attracting the mall going crowd. Last year they tested this strategy out with about 90 stores and obviously they felt it went well. I guess they calculated that the increased sales out weigh the costs of opening up these stores and then shutting them down within 2-3 months. This should help the employment picture here although, that alone will not be very meaningful.

Some people think that adding 600 of these stores is a bit over kill. After all, it isn’t like people did not have enough toy supply in the past few years that there is such a strong demand for an additional 600 locations. I don’t know how successful this strategy will be. It seems to me that adding about half the number they plan to open would be a little more prudent. Opening up 300 new pop-up stores would still have a lot if impact on sales, but would likely not cannibalize sales from other locations and would mitigate some of the risk if the sales end up not being as strong as expected. I don’t know what the average cost is for opening up and closing one of these pop-up stores but I imagine it isn’t very low.