Retailers keep going back to basics during the recession, sometimes in surprising ways. First, they brought back layaway, then the Christmas Club. And now a toy store is offering trade-ins.
Toys R Us announced Wednesday that it will take back used baby products between Aug. 28 and Sept. 20 in exchange for 20 percent off new ones. Like the federal government's "cash for clunkers" program, the "Great Trade-In," as the toy chain is calling it, will enable consumers to replace old, potentially dangerous items with safe, new ones at Toys R Us and Babies R Us stores.
There are a few catches, though: The trade-in doesn't apply to any of those made-in-China toys, the ones with the lead paint and tiny plastic parts that broke off. Those were supposed to have been recalled already.
This trade-in covers cribs, car seats, bassinets, strollers, car seats, play yards and high chairs. The discounts apply to items made only by participating manufacturers, including many brands popular with the stroller set such as Evenflo, Chicco and Graco. Shoppers can go to the company's safety web page for the fine print.
In its announcement, Toys R Us cited consumer advocates' figures that only 30 percent of products involved in recalls are actually returned. But management must have also had an eye on the weak sales expected this holiday season.
Just like everyone else in retail, Toys R Us has been hit by the weak economy. It posted a loss of $35 million in the last quarter it reported, $1 million less than the same time last year, but same-store sales were down 5.4 percent. So while conventional wisdom says parents keep spending on their kids during lean times, the recession says otherwise.
If the comments registered in this site to the news of the Christmas Club comeback are any indication, shoppers will respond to this promotion. This recession has brought back an old-fashioned streak among consumers, and simple concepts like trade-in are popular.
Meanwhile, Toys R Us, which is privately held, has been expanding and revamping stores. It bought FAO Schwarz in May and in February bought online toy store eToys.com.
Toys R Us, was taken private in 2005 in a $6.6 billion sale to investment groups Kohlberg Kravis Roberts & Co. and Bain Capital Inc., and real estate developer, Vornado Realty Trust. After last week's announcement that KKR would offer part of its stake in Dollar General, some Wall Street observers said if the market for initial public offerings keeps perking up this year, Toys R Us could be a good candidate for an IPO, too.
What are stocks? Learn how to start investing.View Course »