By Lizzy Newsome, founder of Kappa Toys

The recent demise of Toys R Us has been emotional for many of us in the toy industry. The retailer had a lot going for in initially: a recognized brand, relatively few brick and mortar competitors and lots of exclusives with famous toy manufacturers. Shed a tear for one of the cutest jingles of all time: "I don't wanna grow up ..."!

In the end, nothing could save the toy retailer from the overwhelming debt placed upon it by private equity. Plummeting sales and the inability to connect with a new breed of customers didn't help either. As the ashes of the failed retail giant begin to smolder, many copycats are emerging to take its place in addition to a troubled attempt at resuscitation by a toy manufacturer.

Yet, as is so typical for the executive levels of the toy industry, the uniting theme of these competitors is the "discount" focus. Old school retail attempts to lure customers with pricing, sacrificing the supporting customer service and in-store experience that could be the one distinguishing factor from the online retail behemoth that shall not be named. What many retail chains have yet to realize is that the "frills" they so often eliminate as a cost-saving measure are one of the only distinguishing factors that remain between them and online stores. Physical stores can promote their brand by not only delivering the desired product right away but also by having a wonderful environment to shop in, knowledgeable staff and a social goodwill that Amazon can only hope to one day attain. Yet, while the establishment toy retail focuses on trying the same formula over and over again, web-based retail is taking a serious look at brick and mortar. Amazon, often pointed to as a major obstacle for traditional toy retail, now has more than 12 retail locations, with plans to open more.

The reason? Brand value is hard to protect virtually. If customers are going to be loyal to a brand, there has to be a lifestyle story beyond saving a couple of dollars. Amazon understands this, and its foray into physical retail is not coming cheap. This is further supported by the recent purchase of Whole Foods, a retailer with lots of goodwill but not much else. Despite plateauing sales at the end, Whole Foods had a 30-plus year legacy of enchanting and overserving the burgeoning organic lifestyle customer base, at a time when there were few healthy retail options. Purchasing this high-end grocery chain immediately gave Amazon lots of access to a specific category of food retail that requires an in-store experience to enchant the right customers.

The emotional connection to purchasing goods, especially something as fun as toys, has a much larger impact in the physical retail world than more mundane purchases. Finding the perfect doll or dinosaur is a personal experience beyond buying more skim milk. With a toy, there is always the potential for a relationship -- and a story about how you first met! In their best incarnations, stores create a place to experience a product, socialize with fellow shoppers and create a memory attached to the point of purchase. If the store is pretty and the emotion is strong, many customers share their experiences online through social media platforms -- adding to the brand story in a very valuable way. Find the emotion in your product category and learn how to exploit it. Whether it is the nostalgia for a past experience or a relationship with a friend, the strongest brands create an emotional response with their brand advocates.

My time in independent toy retail, continued now with my toy startup, has allowed me to witness these customer "conversions" first hand. Toys specifically have so much emotion tied to them. Classic toys are the physical embodiment of nostalgia. Everyone has a story about to tell about their favorite childhood plaything. New toys often come with a story from a new movie, an online indie game or a special interaction with a kid in your life. Both create a chance to connect with someone -- to celebrate the memory.

Purchasing the toy is just the start of the story. The real value is in the memory now attached to the brand, both the toy brand and the toy retailer.  

Toys are my personal obsession and constant career. Founding Kappa Toys is a culmination of my industry knowledge and desire to innovate.

Published on: May 16, 2018
The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.