Toys “R” Us Pivots From Teddy Bears to Surveillance

The once loved toy giant could have simply died a quiet death. Instead it has been co-opted and transformed into a private equity surveillance project.
toys "r" us
Image: Getty Images

The last few years haven’t been kind to popular toy retailer Toys “R” Us. After accumulating more than $5 billion in debt and struggling to compete with online competitors like Amazon, the company filed for bankruptcy protection in 2017, then shuttered more than 800 retail locations last year. More than 30,000 employees lost their jobs, initially with no severance. Last month the company re-emerged as a faint echo of its former self, backed by new private equity partners intent on making customer surveillance a cornerstone of their new business model. Initially the reborn venture looked fairly ordinary. The first of the company’s new, smaller flagship stores opened in late November at the Garden State Plaza mall in Paramus, New Jersey. A second store opened last week in Houston. But a closer look reveals a retail operation that’s nothing like store you once knew. The company’s new, much smaller stores don’t actually fully stock toys; they’re just glorified showrooms where customers peruse preferred brands before buying them online at the Toys “R” Us website—the logistics of which are actually managed by Target. Instead, new Toys “R” Us owner TruKids has developed the showrooms with a far less playful purpose: rampant consumer surveillance. Via a partnership with a startup dubbed b8ta and another firm by the name of RetailNext, the new stores have embedded ceiling sensors, cameras, and other tech tasked with monitoring your every playful moment in the store. RetailNext, which claims to have some 500 retail and mall partners, is part of a growing effort to bring online surveillance to the brick and mortar world. Often aided by phone location data, such firms track and monetize consumer behavior, monitoring everything from the path you walk through a mall, to the amount of time you spend looking at any one particular product.


“This data allows Toys ‘R’ Us to measure and manage the performance of the store, including product placement and staffing,” TruKids recently told Wired. “All traffic data is anonymous and the cameras do not register kids.” All told, RetailNext claims it analyzes the shopping habits of 800 million consumers in more than 80 countries worldwide. The firm’s privacy policy states it doesn’t “knowingly” collect data on kids under 13 in adherence with the Children’s Online Privacy Protection Act (COPPA), the only meaningful internet-era privacy law the US currently has. But there’s a long list of studies that have repeatedly showcased that anonymized data isn’t actually anonymous. And there’s just as many scandals showing that companies routinely violate COPPA, with penalties that are routinely a far cry from the money made off of kids. Some retail giants are exploring AI-driven surveillance and facial recognition technologies capable of determining shoppers’ age, gender, or even mood. But when brands are asked whether they use these emerging technologies in their retail locations, they’ll often dodge the question—much like their online counterparts have for years.

RetailNext’s website promises to bring “e-commerce style shopper analytics to brick-and-mortar retailers.” To do so, the company’s Aurora cameras help clients with everything from “understanding shoppers’ paths” to tracking “their individual actions and behavior.” Some (but not all) of the companies’ cameras attempt to blur faces to help prevent identification. The company insists its technology is programmed to avoid recording any humans less than four feet tall in a bid to comply with COPPA, even though CDC data suggests many young boys can easily exceed such height limitations. To hear industry tell it, this surveillance provides important insights into how well a store and its employees perform, opening the door to real world targeted ads. And while industry routinely insists consumer privacy is a top priority, the last decade has repeatedly shown such promises to be decidedly hollow, and government regulators routinely incapable of penalizing companies that mislead consumers or break the law.

Toys “R” Us and mascots like Geoffrey the Giraffe could have just died a quiet death, secure in the annals of retail history. Instead the brand has been lobotomized and re-animated into something decidedly different—a private equity-backed playground where everything from your location to your LEGO play is collected, stored, and monetized, whether you like it or not.