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How Target will try to crush Amazon and Walmart in toys this holiday season

Brian Sozzi

The holiday season is approaching, and with it the holiday toy wars.

And Target (TGT) CEO Brian Cornell isn’t playing around when it comes to trying to nab a huge piece of the toy business this holiday shopping season.

“We have double-downed on toys and will be playing to win during the holidays,” Cornell tells Yahoo Finance. That’s for sure. Target said this week it will add nearly 245,000 square feet of new space for toys across more than 500 stores before Nov. 2. The company also plans to stock more than 2,500 new and exclusive toys, twice as much as last year.

Target will hold in-store events for kids, too, in an effort to get more toys out the door. 

Why it matters: The bold move by Target makes perfect sense for at least two reasons. A Target spokesperson tells Yahoo Finance that same-store sales for its toy business have increased for an impressive 17 straight quarters. So clearly consumers have an appetite for buying toys from a discount retailer known for its cheap-chic apparel and home goods.  

Further, this holiday season will see sizable chunks of the toy business up for grabs amid two large, fallen retailers. Holiday 2018 marks the first one in 50 years absent a now-bankrupt Toys ‘R’ Us, which notched about $11.5 billion in sales in 2016. Sears will be in the process of liquidating 142 of its namesake and Kmart locations by year-end as part of its recent bankruptcy. Once the inventory at these stores is sold out, that is it.

The death of these once-formidable retailers opens the door for Target, Walmart and Amazon to ring up way more in toy sales this holiday season vs. 2017. 

The bottom line: A strengthening U.S. economy has spurred toy sales growth of 7% to $7.9 billion in the first half of the year compared with the first half of 2017, according to NPD Group. That’s despite the disappearance of Toys ‘R’ Us, making the growth even more noteworthy. So Target’s aggressive push into toys this holiday season – and likely into 2019 – is a logical one. The retailer already has roughly 17% market share in toys according to IBISWorld, so why not try to gain ground on Walmart (30% market share) and Amazon (16% market share). 

Big picture, Target’s rivals need to be on high alert. Plush toy sections during the holidays appear to be a byproduct of Target’s plan revealed in 2017 to remodel 1,000 stores by 2020. Total investment in these remodels: a lofty $8 billion. If most of the store remodels resemble anything like the one being overhauled in this writer’s hometown of Bay Shore, N.Y. (more modern exterior, massive new cosmetics section, well-lit dressing rooms, wood floors in the electronics section), competitors best up their game – and fast.

Brian Sozzi is an editor-at-large at Yahoo Finance. Follow him on Twitter @BrianSozzi

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