Toys `R' US Finds Success In Japan

Just over five months ago, Toys "R" Us became the first U.S. mass merchandiser to open a store in Japan. Today, there are four giant Toys "R" Us stores in Japanese suburbs, with more than 20 in the works.

Defying predictions from naysayers, Japanese consumers have flocked to Toys "R" Us, setting records in new-store sales for the company and introducing their children to sought-after U.S. toys.

U.S. toy makers have a powerful new outlet for their wares and have seen their Japanese sales jump.

All this would seem a triumphant blow for free trade and a clear trail blazed for adventurous U.S. retailers. But Toys "R" Us may have the Japanese stage to itself for quite awhile longer.

"We got a handful of very preliminary inquiries" from other big stores, said Larry Bouts, president of the international division at Paramus, N.J.-based Toys "R" Us. "But when people start thinking about how difficult Japan can be, they maybe start thinking they should go to Canada or Europe first."

Not one retailer has followed up with more detailed questions about the hurdles Toys "R" Us overcame, Bouts said.

A handful of top-end, sophisticated merchants, including Tiffany's, Barney's and Paul Stuart, have opened Japanese stores and boutiques in the past few years. But most of the mass marketers looking overseas are starting in the United Kingdom, said Walter Levy, a Manhattan retail consultant.

Toys "R" Us began expanding overseas in 1984 and now has 131 stores in 10 countries. It grew using many of the techniques that earned it a 20 percent to 25 percent share of the U.S. toy market, according to a case study of the company by Barry Berman and Joel Evans, Hofstra University business professors.

They found that Toys "R" Us expands in one area at a time, building a distribution center that ultimately will handle all the stores in that market.

In Japan, Bouts said, the company has built an immense, 150,000-square-foot warehouse in Kawasaki, at the south end of Tokyo Bay, that can serve dozens of stores.

Infant-care items are heavily discounted here and overseas, a strategy to turn first-time parents buying formula, diapers and baby equipment into steady customers as their children grow through various toy-buying stages. The foreign outlets resemble the U.S. stores and carry a similarly huge selection.