• Reuters, Thursday, November 11, 2010 10:40 AM

Phil Wahba takes a look at the large 3,000-square-foot "store-in-store" toy boutiques that Barnes and Noble is testing at five stores in New York, New Jersey and Connecticut and finds they are organized in five sections according to the goal of the toys -- such as building, learning and playing areas.

But B&N is not trying to re-create Toys R Us. "Everything in here has an educational element to it," Marnie Lawrence, the chain's director of educational toys and games, tells Wahba as she gives him a tour of a boutique. "We think we should be the largest seller of educational toys and games in the U.S.," says CEO William Lynch.

Morningstar analyst Pete Wahlstrom believes toys and games could eventually account for about 10% of the chain's overall sales, though he does not believe it is a panacea for its challenges as readers migrate to digital formats.

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