Dive Brief:

• The owner of the Toys R Us brand has joined up with retail concept b8ta to open new stores in the U.S. under the toy retailer's banner, according to brand executives and information emailed to Retail Dive.
• On Thursday, Tru Kids Brands, which owns the intellectual property of the toy retailer that liquidated last year, and b8ta announced a 50-50 joint venture and plans to open two stores this holiday season. The stores — around 6,500-square-feet in size according to executives — are set for The Galleria in Houston and the Westfield Garden State Plaza mall in Paramus, New Jersey.
• The smaller format stores will use b8ta's model of charging product vendors for space in the stores. The locations will serve as venues for displaying and playing with products as well as event-hosting. The companies said they planned to open more locations in "prime, high-traffic retail markets" in 2020 but did not specify how many.

Dive Insight:

On a much smaller scale, the new Toys R Us offers toymakers what they perhaps miss most in the market after the retailer collapsed in bankruptcy last year: a year-round showroom for toys and a place to test new products. 

Teaming up with b8ta offers a way to modernize those aspects of Toys R Us. The startup trumpets its "retail-as-a-service" platform model for product brands. While b8ta historically has focused on electronics, CEO Vibhu Norby told Retail Dive in an interview that delving into toys makes sense as a category "very adjacent" to electronics. 

The stores themselves will be designed as a kind of playground. "The store itself is more than just a traditional toy store with boxes on shelves," Norby said. "We've got an event space, we've got a full theater we're building into it for showing movies or premieres, or shows or games." The stores will also have a virtual reality room, a treehouse in the middle of the store where kids can play, and dedicated brand shops. 

All told, Norby estimates the store space is 70% dedicated to retailing and 30% dedicated to events and activities. "We think this is kind of the playbook for any type of retail store," he said. 

Before going under, Toys R Us had touted its role as the last dedicated toy retailer in the country and the largest toy showroom available to kids and parents. It took steps to capitalize on that, creating dedicated play areas in test stores in the months between filing for Chapter 11 and announcing it would shut down after an abysmal holiday season. 

While retailers and analysts praise the store experience and talk of its primacy for traditional retailers, most retailers aren't charging for that experience, meaning they're still vulnerable to showrooming and e-commerce competition. 

That was a problem for the old Toys R Us, but the new one skirts the issue entirely by relying on b8ta's revenue model. Sales go back to vendors, who pay fees to the venture to put their products in stores, both for sales and for marketing purposes. 

Tru Kids CEO Richard Barry, who previously was chief merchant at the old Toys R Us, told Retail Dive that the stores will "of course have the big guys," meaning the largest toy brands. "But just as importantly, they will have some of the smaller guys, and some things that perhaps you've never seen before."

Barry said the team expects the stores will eventually become larger than the initial locations opening this year, up to approximately 10,000 feet. The executives were coy about exactly how many stores they planned to build in the coming years, but Norby said he wouldn't rule out more than 200 stores at some point. He also noted, though, that "it's hard to find good real estate today."