Toys R Us is banking on futuristic tech to save its business after bankruptcy

Toys R Us

In the midst of its bankruptcy, Toys R Us is beefing up its online presence and revamping stores with a focus on interactive areas and augmented reality, Toys R Us CEO Dave Brandon told USA Today.

The retailer plans on developing AR experiences that will be interactive in stores through an app.

"It's going to transform the experience of coming into a Toys R Us bricks and mortar store and turn it into something that's quite different and a lot more fun,'' Brandon told USA Today.

He added: "We believe that's going to drive a lot more traffic into our stores which will ultimately put us in a position where we can be more successful at growing our sales and our company.’’

With the app, shoppers can animate Toys R Us' Geoffrey the Giraffe mascot, navigate the store, shoot virtual baskets, take care of a virtual baby, or scan a code to watch a toy animate on their phone screen. The app is also gamified, with the objective being to collect "stars" to unlock more experiences.

The AR experience is now live in 23 stores in the US and will expand nationwide on October 21.

The company is also planning to add playroom areas to 42 stores later in the fall. The room will act as a place for kids to play with toys and gadgets — with the help of a demonstrator — before purchase, much like the area in Toys R Us' popup Times Square holiday store.

While a large reason behind the specialty toy chain's decision to file for bankruptcy in September was the $5 billion in debt it owes as a result of a leveraged buyout in 2005, the chain's problems run deeper than that.

Toys R Us has "fundamental, structural challenges," KeyBanc wrote in a note to investors following the company's bankruptcy filing.

Those challenges predate the 2005 leveraged buyout, and the huge debt load has weakened Toys R Us' ability to adapt to a changing retail climate. It was slow to adapt online to compete with Amazon and slow to differentiate itself in the face of increasing competition from big-box stores like Walmart, which is now the biggest seller of toys in the US.

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