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Target is winning the great American toy war

Brian Sozzi

Through a series of strategic moves over the past two years, Target (TGT) has morphed from being just a top place for cheap chic apparel to also being the toy capital of America.

“Target has won the toy war in my mind,” said Toy Insider editorial director Jackie Breyer on Yahoo Finance’s The First Trade. Indeed it sure looks that way headed into this year’s crucial holiday shopping season.

Target said this week it will power the website of the re-launched Toys R Us website. Shoppers head to the new Toys R Us website hit the buy button, and they are linked to the same product page at Target. The revenue sharing arrangement was not disclosed.

Breyer isn’t convinced the tie-up between the two retailers will move the sales needle for Target right now, but thinks it’s still a nice win from a headline perspective.

But for Target, the partnership is another feather in its cap when it comes to gaining more market share in the competitive toy space.

Earlier this month, Target cut the ribbon on the first 25 Disney shops inside its stores. Each location has a highly edited assortment of about 450 items. Forty more Disney stops are expected to open at Target by October 2020.

The Disney shops take aim at the hundreds found at J.C. Penney (JCP) stores. But with the mid-tier department store having one foot in the retail grave, Target looks to be laying the groundwork today for picking up Disney toy business when J.C. Penney does die.

“I do think it will drive a lot of toy traffic to Target,” Breyer said about Target’s latest spate of initiatives.

Target’s aggression in toys shouldn’t be a shocker to anyone that follows the retailer.

James Deakyne, left, looks at items in his cart as his 7-year-old daughter, Madison, sits on a toy horse during a trip to get toys for her birthday at a Target store in Edison, N.J. (AP Photo/Julio Cortez)

Following the closure of all Toys R Us stores in the spring due to its bankruptcy, Target made a major investment in the toy category. The company added about 245,000 square feet of space devoted to selling toys at about 500 stores before Black Friday. Not only did Target boost space for toys, it also completely refreshed the look of store aisles to make them more inviting to shop. It added more inventory, too.

The efforts paid dividends in the form of market share gains and a better than expected holiday sales performance.

The stage is set at Target for that to happen this fourth quarter as well, thanks to toys.

Brian Sozzi is an editor-at-large and co-anchor of The First Trade at Yahoo Finance. Follow him on Twitter @BrianSozzi

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