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From this angle: What Toys ‘R Us’ recent closures signal

BY Seth Mendelson

Toys ‘R Us did something that had to be done. The beleaguered chain, now in bankruptcy protection and pretty much directionless, announced on Tuesday that it was shuttering about 180 stores across the country.

That should have caught no one by surprise and expect more closely in coming months and years as it tries to survive against more adept competitors, both digital and traditional.

But the real news here is that Toys ‘R Us officials have finally figured out that their decision nearly 30 years ago to create Babies ‘R Us was a short-term gain that resulted in a long-term loss. In the company’s glory days—also when everything from diapers to toys were sold under one roof—the company was able to get consumers into the store for their lower-margin baby needs and upsell them on higher-margin toys and games.

Creating two separate companies took away that advantage. Now, leadership is putting the two divisions back together—where possible—again, hoping to re-create the synergies between babies, older children and their moms.

A step in the right direction, but it may just be a decade or two too late. Time will tell if Toys ‘R Us will survive.

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Hannaford highlights own brands in new loyalty program

BY Michael Johnsen

Ahold Delhaize’s Hannaford banner announced Monday the company-wide launch of My Hannaford Rewards, a reinvention of grocery store loyalty programs that rewards customers for buying own-brand items while leaving already low prices untouched.

Shoppers who choose to participate earn a 2% reward on every own-brand item purchased, including fresh meat, seafood and deli items, as well as thousands of packaged products across the store. About 5,200 fresh and center-store items qualify for rewards in an averaged-sized Hannaford store.

Shoppers also will receive personalized coupon offers for the national and regional-brand products they buy.

“My Hannaford Rewards is a new way to thank customers, with a 2% reward on own-brand items and coupon offers that are meaningful to them as individuals,” said Mike Vail, brand president for the Scarborough, Maine-based grocer. “The things that people love about Hannaford – including great fresh food, low everyday prices and excellent service – are our foundation. My Hannaford Rewards builds on that to provide customers with additional benefits for the shopping they do each week.”

The program is different from traditional supermarket loyalty programs because in-store prices remain the same for all customers whether they enroll in My Hannaford Rewards or not. By contrast, club models or two-tiered loyalty programs require customers to subscribe to access a better level of store pricing.

My Hannaford Rewards, which began as a test with associates last year and later as an 11-store pilot in Vermont, is now available in all 181 Hannaford stores in five states in the Northeast.

 

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Rite Aid pulls in $1.3B with latest store transfer to WBA

BY Michael Johnsen

Rite Aid Monday evening reported the successful transfer of 625 stores and related assets to Walgreens Boots Alliance, and has received cash proceeds of $1.3 billion, which it is using to repay all of its $970 million of outstanding secured loans while maintaining a strong liquidity position.

“Our teams continue to make tremendous progress in transferring stores to WBA and I want to thank them for their ongoing commitment and dedication,” John Standley, chairman and CEO Rite Aid, said. “We are on track to complete the transfer of stores in the spring of this year. Going forward, we remain focused on the continued smooth execution of that process and capitalizing on our most significant business-building opportunities as we work together to deliver a great experience to our customers and patients, and drive value for our shareholders.”

Under the Asset Purchase Agreement, Walgreens will purchase a total of 1,932 stores, three distribution centers and related inventory from Rite Aid for an all-cash purchase price of $4.4 billion on a cash-free, debt-free basis.

The majority of the closing conditions have been satisfied, and the subsequent transfers of Rite Aid stores and related assets remain subject to minimal customary closing conditions applicable only to the stores being transferred at such subsequent closing, as specified in the Asset Purchase Agreement.

 

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