[Brielle Buckler]

In this unit, we learned about how important it is for organizations to pay attention to the marketing environment for their line(s) of product(s) and/or service(s). We watched a video about Toys R Us, which went into liquidation in 2018 closing virtually all their stores throughout the world partly as a result of not focusing on the marketing environment.

This company essentially failed to adapt to a significantly changing marketing environment. They maintained their large-scale supermarket retailing model for over 50 years without considering trends in retail design, retailing itself, changing consumer needs, technology and online factors.

Based on what you read in this chapter and what you learned from the video and any additional research, list as many factors and changes that contributed to the decline in Toys R Us commercial success as you can think of. Categorize those factors into the main marketing environment components (social factors, demographic factors, economic factors, political and legal factors, and competitive factors) and rank the factors in terms of which ones were the most significant in the downfall of Toys R Us in your opinion.

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In order to receive full credit for this assignment, you must first post your own response to the question(s) above by Friday, September 15 at 11:59pm ET. You then must comment meaningfully on at least two classmates’ posts by Sunday, September 17 at 11:59pm ET.

This assignment is worth a total of ten (10) points — 6 possible points for your original post, and up to 2 points for each of the two responses to your classmates’ posts. Please reference our Discussion Rubric for more information, and to this guide from MSSU to learn more about what it means to respond meaningfully to a classmates’ post.

• This topic was modified 1 year, 7 months ago by Brielle Buckler. Reason: Republish

[Yohance Williams]

As a kid growing up in the Caribbean, I knew about Toys R Us being a huge retailer of all types of board games and action figures etc. While not having international locations (apart from Canada) the brand was internationally known. It was a major shock to me when it decided to permanently close its doors. In exploring the rise and fall of Toys R Us we focus on five factors that I believe all played a crucial role in creating the perfect storm that led to the Toy giants’ demise.

The Social Factor
Despite being the toy retail industry giant, they failed to realize the change in the need of the consumers. Not only in the product but in the place. There was an emergence of technology in the toy and gaming world which created a shift in children (which was its target audience) wanting to play with action figures and board games to desiring video or digital type of gaming systems, which Toys R us did not recognize and stay abreast of.
There was an evolution in the product but also the place which played a key role in the company’s downfall. The rise of dotcom/ecommerce and its convenience for customers to obtain the newly desired products online through companies such as etoys.com and eventually amazon needed to be identified sooner by toys r us to stay competitive.

The Competitive Factor
As discussed in the above social factor. ecommerce, at the time, proved to be a disruptive force for Toys R Us in the toy retail industry. New competitors such as eToys took advantage of what customers wanted at the time. Outside of the holiday season as the world evolved people had less time or desire to go into big stores looking for toys and preferred the online experience. These newer competitors used this information to establish themselves and gain a competitive advantage over the more traditional approach provided by Toys R Us.
Apart from online competitors Toys R us had to contend with “The Big Box Store” companies such as Walmart. Its ability to supply customers with toys as well as other household products allow them to capture a much larger audience. The lack of quick recognition, response and adaptation to the dotcom and big box store era, from a competitive standpoint, also led to the company’s fall.

The Economic Factor
In examining the economic factor, we focus on price. Toys R Us’ decision to keep all its doors open amidst stiff competition from discount stores proved to be costly. According to the report by CNBC companies such as Walmart, due to their business model had the luxury of undercutting Toys R Us with pricing of toys and in turn using it as a marketing tool to drive consumer traffic to its stores. In response, instead of a reallocation of resources to its top performing locations, Toys R Us chose to keep its prices high and doors open across all locations in the hope that its big brand name would retain its customers’ loyalty. This resulted in the company being sold.

The Political and Legal Factor
Another key factor in the downfall of Toys R us was the partnership with Amazon. A major oversight occurred, given the exclusivity that Toys R Us was seeking, in signing a contract without writing in language that would prohibit Amazon’s ability to partner with third party competitors. In my option, Amazon, understanding its legal obligations to Toys R Us, per its contract to sell its toys, held ethical responsibility. Amazon did what any other business would do in its position and seek to expand its customers base and increase its profits through third party sellers.
Toys R Us saw its legal was continue when it was forced to consider filing for bankruptcy. According to the report by CNBC the leak of this information caused supply chain issues with vendors refusing to ship with fear of nonpayment. In terms of retail, if you have no product, you have no income which inevitably pushed Toys R Us to bankruptcy.

The Demographic Factor
While I believe Toys R Us’ demographic hadn’t changed, the interest within its target audience did. As discussed in the social aspect as that major shift by children in the desire for a different type of toys (video and computer games) grew the consumption of more traditional style (as provided by Toys R Us) dwindled rendering its business model obsolete.

Final Word
In summary I think that Toys R Us’ delay in its adaptation to the evolving times was costly. After reviewing the various factors involved it appears they failed to truly analyze its strengths and weaknesses along with opportunities and threats. A more timely approach to this analysis could have helped with the company being more proactive as opposed to reactive in its decision making. This proved to be detrimental to its longevity and ultimately the company’s success.

[Bridget]

I agree with a lot of what you are saying, especially the part where you said other big box stores cut their prices to compete with Toys R Us was a marketing tool. I feel this allowed them to gain an advantage over Toys R Us because they kept their inventory and prices the same. When other companies were branching out into E-commerce and electronic toys instead.

[Sindi]

Hello, Yohance, I agree with you on the fact that Toys R Us did not fully understand their strengths and weaknesses. While the company was in a tight spot, there was only so much they could do. Signing with Amazon may have seemed like a good idea in hindsight, but they completely ignored the type of competition they would be getting into. Other big retailers would also be on Amazon, but they would selling a variety of products, not just toys, which made it harder for Toys R Us to compete in the e-commerce market.

[Jazmin Valdovinos]

As a kid growing up, Toy’s R Us was my favorite store of all times… but of course! All I could think about at my young age was toys. I did not understand the importance of maintaining a company evolving and adapting to changes, as it is what took Toy’s R Us to bankruptcy. After hearing the unfortunate news about the complications that my favorite store was facing, I resonate their circumstances and their fall came to be predictable. Here are a few factors that led Toy’s R Us to their end-

1. Social Factor

When it comes to find an ideal present, we all thing about the cost, quality, and easy access, which is something that Toy’s R Us did not take on count. The company failed on satisfying consumers budget and needs. Instead of focusing on the many factors that were leading them to demise, they remained competing with its competitors’ prices.

2. Demographic Factor

As the market started changing, the company slowly started losing consumers interest on their products for not evolving. While other stores started taking over through online retails and technology evolution, Toy’s R Us stayed behind failing on making online presence which is what gave other companies advantage on the market. But not only that, the company maintained their products traditional as kids started to get more attracted to technology.

3. Economy Factors

Toys R Us declared bankruptcy and their debts got to be too much, due to the huge decrease in sales. It had billions of dollars in debt and could no longer invest the money required to keep up with competition.

[Nechama]

Toys R Us was a company well known throughout the world for years. It was quite surprising to me when I heard they had filed for bankruptcy and were shutting down. Here are some of the factors I believe contributed to why that ultimately happened.

1. Competitive Factors: Toys R Us would have had a good brand to work with had they adapted to the changing times. Due to their deal with Amazon, Toys R Us spent too much time wrapped up in legal battles, leaving them behind in the E-commerce world. By the time they got out of their agreement they had missed their shot at creating a strong online presence alongside others. They also used price as their main competing factor leaving them weak against competing retailers, because prices can be easily undercut. In addition, they did not have a good customer relationship to build on eventually leaving them with no competitive edge to help regain some control in the market.

 

2. Social Factors: Instead of adapting to the new wants and needs in the market, Toys R Us continued to compete on price alone. They failed to consider the added convenience families may find in ordering their toys online, as found with amazon, or the ease of picking something up while out shopping for other needs, like in target or Walmart. They also ignored the growing interest children had in online gaming and didn’t cater to it.

 

3. Political and Legal Factors: Instead of developing their own online presence, Toys R Us chose to partner with Amazon to become their sole seller of toys and baby products. Amazon began allowing other retailers to sell products through their site leaving Toys R Us at a loss and allowing them to be slowly edged out of dominating the market. Toys R Us was able to sue and win, allowing them to end their agreement. At that point, they were too behind in innovation, and the added debt didn’t allow them to catch up to other retailers.

 

4. Economic Factors: One of the economic factors used to evaluate things is supply and demand. Toys R Us existed as a big company with many stores and amidst changing times continued on that way. Instead of calculating where the demands of consumers were and meeting them with what was needed, they continued oversupplying unnecessary products. They should have reevaluated what consumers wanted and proceeded from there. I believe it also contributed to their mounting debts.

 

5. Demographic Factors: They relied on their name/brand dominating the toy market and continued to do so instead of focusing on targeted advertisements to the correct clientele. They also shut down their flagship store in times square, along with its many attractions, which would have helped keep children’s interest in specifically getting their toys from Toys R Us.

[Yohance Williams]

Hey Nechama,

I was keen on seeing how my fellow classmates’ responses would differ from mine. Overall, I think you presented a very compelling argument for the downfall of Toys R Us.

Your competitive factor, in particular, I strongly agree with your point that competitors were able to undercut Toys R Us pricing at a crucial stage which left the company weak and at a major competitive disadvantage.

For the demographic factor you stated that “they also shut down their flagship store in times square which would have helped keep children’s interest…” while valid, I do have a slight difference in opinion in that I believe the children’s interest had already changed coupled with the company’s legal woes left Toys R Us with little option which forced the closure of the flagship store.

Yohan

[Bridget]

Your response is great, I like how you said that Amazon was able to dominate E-commerce because they had the presence, I wonder what could have happened if Toys R Us set up their own online marketplace and utilized “dot.com.” Under economic factors, I also agree that they should have re-evaluated what they were selling based on their consumers.

[Bridget]

(Did not mean to reply twice) I cannot delete this and it will not let me submit it empty, sorry!

• This reply was modified 1 year, 7 months ago by Bridget.

[Krishna Mathur]

Hey, Nechama. I strongly agree with your Social Factors. Toys R Us kept on competing using price variations, when they should have stopped and re-strategized as soon as they noticed that Discount superstores such as Walmart and Target were already selling similar and many times same products on discounted prices at their stores, proving this value proposition of Toys R Us a failure. They lacked both; proper Targeting as well as segmentation.

[Leslie]

Hello Nechama! i really liked how you stated that Toys-R-Us would have been a good brand to work with if they had adapted to the changing times. I feel like they were so stuck on one particular thing, that they weren’t realizing all the other changes that were going on around them

[Taylor (Taye)]

When I was growing up, I unfortunately didn’t get the opportunity to go to Toys-R-Us as a child due to living in a small town in Ohio. We had one about 30–40-minute drive away from us, but I wasn’t so devastated that it was going bankrupt due to Amazon on the rise. Also, because we had Wal-Mart which sold mostly the same items for a cheaper price. My experience partial explains the bankruptcy of Toys-R-Us.

The Social Factor:

Due to the rise in technology kids have new and exciting options when playing at home. When watching things on YouTube, kids are seeing toys that can easily be bought online via the internet/amazon without the hassle of physically going to the store. Video games can even be available instantly when buying them online using the console, further encouraging a preference for the digital over the physical.

The Competitive Factor:

When competing on price, the online competitors have an advantage because they don’t have to maintain the cost of brick-and-mortar stores. When it comes to consumer preference, a brand known for better customer experience has the advantage. This left Toys-R-Us at a competitive disadvantage relative to newer upstarts such as Amazon, as well as traditional alternatives like FAO Schwartz.

Demographic Factor:

Although Toys-R-Us did not change its target demographic, that group preferences did change. I believe due to the convenience of purchasing from a parent standpoint, buying online or from a store that priced checked made other options more appetizing. The company didn’t even focus on appealing to the younger demographic available in big cities, as it chose to shutter its Time Square location.

Economic Factor:

Unfortunately for Toys-R-Us, its regionally diversified brick-and-mortar strategy requires dividing all investments in inventory, operations, employees and marketing between many outlets in different geographies. A local brick-and-mortar store can focus on investing in that one market, while investments made by Amazon and other eCommerce companies typically improve supply chains globally and benefit all customers regardless of their location. Thus, while Toys-R-Us investments only benefited a fraction of its customer base, both online retailers and local competitors made investments designed to benefit all customers.

Legal And Political Factor:

As the prestige of budget, big-box retailers declined, so did the fortune of Toys-R-Us. Once, Americans would have welcomed Toys-R-Us as a job creator, source of entertainment, and emblem of progress and efficiency. In the 20th century globalized world of e-commerce, however, Americans shunned big box retailers as backwards businesses dependent on foreign imports and as destroyers of local economies. Relative to “Big Box Retailers,” even large online retailers were favored with preferential political and legal treatment, for example by exempting online retailers from local sales tax for much of their history. All the while, these online platforms were outcompeting and bankrupting Toys-R-Us.

• This reply was modified 1 year, 7 months ago by Taylor (Taye).

[Krishna Mathur]

Hi, Taylor. I really liked how you mentioned that Toys R Us used the “Brick-and-Mortar” strategy in your Economic Factors and how using the strategy won’t have an effect on the customers on a large scale, while its competitors started competing globally through the internet way more aggressively.

[Yohance Williams]

Hey Taylor,

I thought you presented some excellent points in your response to Toys R Us’ downfall. I appreciate your view on the Economic factor when you stated that Toys R Us’ investments only benefited a fraction of its customer base while its competitors were able to benefit from a larger market via the use of dotcom.

I also agree with your demographic point that convenience played a major role in the consumer decision making process. Personally, as a consumer, I am willing to pay extra for convenience, this is why I use services such as amazon fresh and Instacart as opposed to physically going to a grocery store.

Thanks,
Yohan

[jewel.conyers55@stu.bmcc.cuny.edu]

Hi Taylor,

I agree with you especially with the social factor of Toy R Us. Kids began to evolve and adapt to the tech wold. Kids were definitely more interested in the internet and gaming online compared to playing with toys. I also agree with the demographic factors as well. I also wrote and felt that parents would rather buy toys online for a cheaper price or at places such at Walmart or Target because it’s more convenient. It’s killing two birds with one stone if a parent is already outside at a department store and it happens to have the same or similar toys for a cheaper price. Or with the convenience of online shopping it’s easy to just add it to a shopping cart and have it delivered to you.

[Bridget]

In 2021, Toys R Us closed down its last store out of 800 that were liquated as a result of immense amounts of debt. The cause of this stemmed from many factors including, social, demographic, legal, political, and competitive reasons.

 

Social: When Toys R Us first opened their consumer base was completely different than what it became. At the time, just selling toys such as teddy bears, race cars, and Polly Pockets was more than enough to keep the company afloat. This changed when their consumer base ( young children and parents) switched their interest to electronic devices instead. Toys R Us struggling to stay current with their marketplace decided to sign a contract with Amazon. Little did they know this would be the start of their downfall, which is why I feel this factor is most important. A business has to pay attention to detail, if they fail they could lose everything.

 

Legal: As mentioned before their decision to partner with Amazon in 2000 played a part in their downfall. Amazon took complete control of the products on their marketplace and did so while also selling lower-priced third-party competitor toys. When Toy’s R Us saw a decrease in sales and was threatened by these competitor products they wanted out. To do so they had to break a contract and contact a legal team to help. They were successful in breaking the contract but, they gained a large debt because of it. Three investors invested in Toys R Us, they were Bain, Vornado, and KKR who paid 6.6 billion in 2005 for the store. They wanted to revive the company. This however did not work out as planned.

 

Competitor: With Toys R Us now facing massive debt, they were looking for sales. This was also unsuccessful due to their new competitors, places like Target and Walmart branched out into selling children’s toys, but at a lower cost. The loyalty of Toys R Us’s customer base was not enough. Their competitors also branched out into E-commerce, something that Toys R Us failed to do, once again not recognizing the pattern changes of their customers.

 

Demographic: Toys R Us as mentioned before failed to survey their demographic properly, with the years going by people evolve. Children were not interested in products that had come out years prior. If they put research into what products they should sell, maybe the turnout could have been different.

 

Political: After facing the realization they needed help as a company, Toys R Us turned to financial help (restructuring advisors). They were told to declare prepackaged bankruptcy, after the holidays. News outlets caught wind of this and spread this news. Vendors were scared of not getting paid and a lot left the company. The holiday season, as a result, was not enough to keep it afloat and Toys R Us was forced to liquidate.

 

• This reply was modified 1 year, 7 months ago by Bridget.

[Krishna Mathur]

As a kid, I remember watching, “Home Alone 2: Lost in New York” and seeing the lead character, “Kevin” go to the Toys R Us superstore in his rented stretched Limousine during Christmas time. It was all beyond magical. But seeing the entity collapse and file for bankruptcy broke my heart. Here are a few factors behind why it collapsed-

1.Technological Factors- The emergence of the “Dot.com” era was something the entity wasn’t ready for. And in order to hurry up and survive in the industry, it they made an expensive deal with Amazon, giving them the exclusive rights to sell Toys R Us’ products on its website, while in no time Amazon also started selling the products of the entity’s competitors as well.

2. Competitive Factors-Discount supermarkets such as Target, Kmart and Walmart started selling the similar products as Toys R Us but on a cheaper price, which effected the profits of the entity very negatively. They even tried to sell baby products (through Babies R Us), but could not compete against Buy Buy Baby of Bed Bath and Beyond and diapers.com.

3.Legal and Political Factors- Toys R Us took Amazon to court in order to get out of the deal, but the legal tussles ended up pushing them financially even further down the hole. It even had a chance to go public in the market, but they ended up reciting as a private entity and missed the window.

4. Change in Preference- With the change in time and shifts in generations, the company could not compete against the changing needs of the market. For instance, instead of regular toy trucks, kids preferred owning Xboxes and PlayStations, in competition of which, Toys R Us didn’t have much to offer.

 

 

• This reply was modified 1 year, 7 months ago by Krishna Mathur.

[Katrina Lizarondo]

Hi, Krishna

I like how you referenced Home Alone into the discussion post. Toys R Us was indeed magical, I remember getting lost every time I’d go into the store it always felt like Christmas going in. I agree with what you said on how discount stores affected Toys R Us’ profits. It affected them greatly due to competitors selling toys for a much cheaper prices which attracted more customers to the discount stores.

[Leslie]

Hello Krishna! i really liked how you mentioned watching “Home Alone” as a child and seeing the Toys-R-Us store on TV. I feel like a lot of us can relate seeing the toy store on TV and being very eager to go. So  seeing it get shut down must’ve been disappointing for a lot of us

[Leslie]

Toys-R-us had always been a place I would’ve liked to go growing up but never had the chance to. It is a big inconvenience to them that their stores took a big loss and had to shut down their locations but overall I am not surprised.

The Competitive Factor:

It is no surprise that Toys-R-Us’s stores slowly started shutting down throughout the years due to its competition. Slowly, parents started getting electronics for their kids and sure enough, they wouldn’t have to rely on toys when they have recourses such as Youtube and game apps they can download on their devices to keep them entertained. On top of that, as they talked about in the video, stores such as Walmart, Target, and K-Mart have been a big competitor against Toys-R-Us. Being that there are more locations of these stores, it has been more convenient to buyers and is usually their first choice causing Toys-R-Us’s clientele to decrease.

The Social Factor:

During their downfall, instead of paying attention to the rest of the factors, they only payed attention to one issue instead of paying attention to their, customers, store locations and basic ethical standards they failed to meet. Instead they payed attention to the short-term like the price of their products and compared them to others.

Political and Legal Factor:

During their time trying to save their company from their downfall, Toys-R-Us came in contact with a lot of legal issues such as their bankruptcy. The company paid about $600 million for goods but failed to keep up with the changes. They ended up being in an immense amount of debt in which they struggled to pay off and ultimately ended up in their bankruptcy forcing them to close their stores down.

[Nechama]

Hi Leslie,

I too put the competitive aspect as the largest factor that led to their undoing. They should have placed a greater emphasis on the changing times and focused on the growing interest in online gaming. You made a good point in referencing YouTube specifically. While I’m not sure they would have been able to compete against that aspect, it affected the growing competition in the entertainment industry that no longer solely relied on toys.

[Zaheer Ali]

Hi, Leslie i agree that the significant impact of competition on Toys R Us and the rise of electronics and digital entertainment has indeed changed children’s preferences. Additionally, the convenience and competitive pricing offered by big-box retailers like Walmart and Target posed a serious challenge to Toys R Us. It’s clear that the competitive factor played a crucial role in their decline.

[pasquale]

As a kid i use to go to toys r us to get toys and it was sad seeing it go down.

competitor factor: As soon as you were able to order toys online, People could buy them with a click of a button and not have to go outside and travle To acquire them. As showed in the video Target,walmart and other places put these toys for discount which lead to people buying it from there to save money.

Social factor: when buying toys often it adds up, Kids normally get bored of a toy after a week which leads to buying more and more. With having Things such as youtube and game apps, parents could just put on a video for them and so on. Toys r us could not  keep up.

Legal factor: Toys r us signed a deal with amazon to have their toys on their website to compete with others, but when amazon started selling third party items, toys r us took amazon to court but failed and that set them back finically.

demographic: They kept their priorities the same, failing to keep up and change as their niche changed, Also losing their biggest stores and not renewing them.

Overall toys r us failed to keep up with modern day Company’s and  i feel like that’s what caused it to shut down for good.

[Sindi]

Hello Pasquale, I do agree that legally being in a dispute with Amazon definitely set Toys R Us back quite a bit. Do you think the company could’ve avoided bankruptcy and shutting down their stores entirely if they never signed with Amazon, or somehow got out of the legal dispute quicker?

[Zaheer Ali]

Hi, i Agree that they failed to adopt innovative strategies that might have allowed them to remain competitive in the evolving retail business. And also the legal challenges also have set them back.

[Sindi]

Toys R Us was a huge part of my childhood, and my mom would always take me to multiple different stores to buy toys for me and my sister. When the stores were getting shut down, I was very disappointed; my childhood memories were gradually fading away. But, there is still hope, because recently Toys R Us reopened a couple of stores, one of them being in NYC.

Anyways, lets discuss the factors that led to the company’s failure:

Social Factors:

Toys R Us was unable to adjust to children’s increased interest in digital games and other developments in the toy market. They clung to their conventional toy-focused business model rather than forming alliances with video gaming businesses. The emergence of large-scale online retailers that provide convenience and cost savings was a big contributor to their demise. Toys R Us outsourced this obligation to Amazon rather than creating a successful online strategy, which ultimately impacted their competitiveness and financial health. In addition, their connections with toy suppliers and manufacturers suffered as a result of CNBC’s disclosure of Toys R Us’ impending bankruptcy.

Demographic Factors:

Toys R Us failed to take into account the changing preferences of its customers, and this failure led to a number of issues that ultimately played a role in their demise. They remained focused on their core business rather than actively looking for ways to expand their product line or investigate adjacent markets. Toys R Us catered to children with their toy choices, but neglected to meet the demands of parents and guardians—the people in charge of the actual purchases—in doing so. Due to this error, a large chunk of their consumer base was lost.

Competitive Factor:

Customers now have the convenience of shopping for groceries, apparel, household goods, and toys all in one place thanks to the emergence of huge retail behemoths like Walmart, Target, and Kmart. Toys R Us did not, however, consider other options to increase their product selection and neutralize this competitive threat, which ultimately had an influence on their capacity to draw and keep customers at their physical mega-toy shop locations. Toys R Us chose to work with Amazon in order to take a unique tack when it came to their online presence. As justification for their collaboration, they claimed inventory and fulfillment restrictions. Toys R Us may have avoided the bad effects of their partnership with Amazon if they had instead focused on building their own internet business rather than expanding their physical store network. They could have done this by putting a heavier focus on online order fulfillment and customer care.

Economic Factors:

The previously mentioned social and competitive issues largely contributed to Toys R Us’s financial downfall, which was made worse by its unwillingness to effectively address these internal problems and external threats. As mentioned before, the company was heavily burdened financially as a result of the substantial legal costs involved with the lengthy legal dispute with Amazon. In addition, Toys R Us lost the chance to use price matching, a pricing approach that is frequently used by other retailers to counter the competitive pressure provided by big-box stores. Instead, they kept concentrating on growing their presence without properly accounting for the long-term costs of sustaining many locations, even when they were not making a lot of money. Toys R Us continued operations in a number of underperforming locations rather than quickly closing them, including the famous Times Square site, which stayed open until 2015.

Political/Legal Factors:

Toys R Us had to deal with serious political and legal issues, which had a substantial effect on their business. Millions of dollars were spent on the costly lawsuits against Amazon, which limited the business’s capacity to build a unique online identity and successfully compete in the e-commerce industry. Also, their relationship with toy vendors suffered as a result of their bankruptcy filing. The company’s challenges were made worse by the frequent leadership changes, which made it more difficult for them to stay focused on particular objectives, plans, and methods.

• This reply was modified 1 year, 7 months ago by Sindi. Reason: accidentally wrote something twice

[Nechama]

Hi Sindi,

I found your comments interesting and enjoyed reading it. I agree with you saying that the social factors played a large part in the downfall of Toys R Us. They ultimately chose not to reevaluate the market and current needs of consumers choosing to disregard it and passing on creating their own individual online presence.

In addition, you raised some good points in regard to the economic factors that led to them shutting down. Choosing to keep the doors open on stores that weren’t generating enough revenue, added to their collecting debts.

[Jasmine Amaker]

Hey Ema,
I do agree that if Toys R Us had focused more on their online business instead of only in house sales, that they would have been around longer.I also wish they would have declined the partnership with Amazon, seeing as how that hurt them tremendously.

• This reply was modified 1 year, 7 months ago by Jasmine Amaker.

[Katrina Lizarondo]

Toys R Us began trading in the New York Stock exchange in 1978 as a public company and became the go-to toy store, which led its competitors going out of business. Growing up in the Philippines; we didn’t have discount chains such as Walmart, Target, and Kmart, so every Sunday my brother and I would ask our parents to go to the mall for Toys R Us. Toys R Us was like heaven for us, I remember always getting lost at the doll section as a child.

Competitive Factor:

While Toys R Us put its competitors’ out of business, they didn’t see the dot-com era and rise of the big box store coming. Discount chains like Walmart, Target and Kmart started selling toys to bring in shoppers to their stores. Withe the toys’ prices from discount chains being cheaper than buying from Toys R Us, this affected the company’s stocks greatly.

Demographic Factor:

Toys R Us intended demographic was for children, and the company then launched Babies R Us to further its demographic for babies’ needs. Due to the company’s retail price, they lost consumers since discount chains sell similar products that are way cheaper and affordable. Children then switched from wanting toys to wanting computers, video games, and tablets which led to a decline in the toy industry.

Economic Factor:

Discount chains and partnership with Amazon resulted to Toys R Us’ struggle to get the company to where it was. The company was set back greatly from debts made from the company losing buyers due to competitors. When Toys R Us was purchased in 2005, the goal was to revive the company, but debt payments made it impossible to further any investments. The company was eventually forced to file for bankruptcy.

Political and Legal Factor:

During the rise of dot-com era, Toys R Us gave Amazon signed on to a partnership with Amazon in 2000, which gave the company exclusive rights to sell Toys R Us products on its website. Toys R Us eventually took Amazon to court after Amazon started selling third-party items in direct competition with Toys R Us. The company paid an expensive partnership with Amazon, in which they didn’t get the exclusivity that they paid for. Once taken to court to get out of the contract, it ended up sending them back financially and left them behind on their e-commerce efforts.

[Jasmine Amaker]

Growing up in the 90’s, Toys R Us was a very essential part of our childhood. I remember many trips to Toys R US for being rewarded for doing the right thing. I remember one year before Christmas we went there; my sister and I picked out a shopping cart of things. I don’t remember us purchasing anything that day now that I think of it. But we did get all those new toys plus bikes for Christmas. I remember in 2015 I took my brother and nieces to Toy R US in Times Square. We got the giant candy bars and rode the Ferris wheel for a final time. I really miss that kind of experience; I would love to have been able to take my son there.

Social Factor:
Toys R US failed to notice the need of the consumer. At a time where ecommerce was being introduced, they should have teamed up with them to boost their sales. Also, families experience changes in income, so selling things at regular price may not be best for some families. That’s when they are forced to shop with Toys R Us’ competitors such as Target, Kmart, and Walmart.

Economic Factor:
Toy R Us failed to focus on where most of their money was coming from. They continued as though they were not facing hardships. Whereas if they faced these issues and closed a few stores, altered pricing, and maybe cut down own employees they may have been able to last around.

Political Legal Factor
The legal factor that contributed to Toys R Us closure was when they signed a contract with Amazon. That contract put them in hole. It allowed amazon to sell their products for a lower price, as well as amazon selling their competitors toys.

[jewel.conyers55@stu.bmcc.cuny.edu]

Hi Jasmine,

We have similar experiences with Toys R US. After reading your response I wonder too if they only closed a few stores, would they have been able to save the entire company. Especially being billions of dollars in debt and continuing to put themselves in debt. I also think it didn’t help that they signed a deal for ” debtor in possession financing”. It was supposed to keep them afloat and help redirect them going bankrupt. However they did not have an actual turn around plan or be able to act in accordance with the financial covenants. I also agree that Toys R Us did not adapt or evolve with its consumers. Knowing they had some competitors and weren’t doing great financially, it might have made some difference for the company if they at least closed down some stores and also lowered their prices. I also feel they shouldn’t have signed the contract with  Amazon either.  This definitely put them in a hole being that they were selling their products for a lower price and selling other vendors products as well.

[ema]

hey jasmine, I definitely agree that toys r us downfall can be attested to them not thinking about the commerce side of business as much. So I think and agree that they should have put more work into their website because I remember going online sometimes just to browse and realizing that it’s not that easy to maneuver through the website as it was to go to lets say amazon or eBay. Even though amazon was a big factor in their downfall they could and should have taken tips from them to grow themselves.

 

[ema]

Toys r Us meant a lot to my brother and I growing up because it was a good hour bike ride to where the store was located which made it worth it in our opinion. But I could recognized the decline of the company by even just visiting the stare every now and then when I was little. It started out as this booming place with nice aisles and organized and stocked shelves with a baby r us right next door, to as I was getting older to a run down place that just so happened to have toys and not even the good toys for when you needed to buy them for Christmas or a birthday party. But at least now there is the couple of toys r us that have re opened and my brother has been able to take his son their to experience it.

the competitor factor

they were simply not able to keep up or accept that people were growing towards more technology. With the growth of YouTube and people gaming and showing themselves online playing these games kids are no longer interested with the old normal everyday toy they would rather have something that give them that extra feedback like a video game on a console or tablet . (this could also be a factor for the demographic because they were not willing to grow with the new age kids)

the financial factor

they were too late to realized the deal they had cut with amazon would just lead there competitors into a better position and by the time they realized it they were to late. The legal finances to somewhat recover from that deal only was digging themselves into a deeper hole. But to be honest I could have seen this happening in any other way because then they would just have been bombarded with the now super stores like target and Walmart that sell basically anything you can think of in-store and online so it was only a matter of time.

overall

toys r us has made somewhat of a comeback but solely capitalizing on the fact that they are now ‘nostalgic’. Connecting it back to my brother taking my nephew there. He has only taken him there once because most of the toys we buy for him is either target or tjmaxx because they are just more accessible for all your one stop shopping. Rather going out of your way to plan a day out with your kids just to get a singular toy or Christmas presents. At the end of the day I do think those hand full of stores will stay open just on the fact of people wanting to experience it. But this same faith was repeated by another brand mentioned in the video which was bed bath and beyond. Similar example to real life in staten island where there was a big bed bath and beyond there is now a super target in its place and the parking lot is always packed.

 

[Sherlyn]

Hi Ema! When talking about Toys R Us competitor factor, one of there main reasons of downfall was the lack of keeping up with the new generation. During the time of the 2000s I remember many new technology were coming out. Such as Xbox’s, gameboys, and much more. I was privileged enough to have my own Nintendo DS and I remember there was a time I stopped asking for toys and I wanted an Nintendo DS. This goes to show Toys R Us should has seen the shift in children’s wants and should have acted accordingly.

[Jazmin Valdovinos]

Ii Ema,

I can relate with your brother, I was a big fan of Toys R Us as growing up, and I’m still waiting for their come back. I fully agree with you to your point of view to factors, specially with your financial factor. I agree that people tries to save time by being able to shop everything that’s needed, including me, that’s why I rather go to bigger stores where I know that I will find everything that I need . It is true that other stores like Target and Walmart, become more accessible for in-store and online.

[Sherlyn]

Growing up as a first generation Mexican American and immigrant parents. My parents were always cautions on how they spent their money especially when having two other daughters. I have few memories going to “Toys R Us” and the few times we went my parents always pointed out the price saying it was too expensive but never the less they’d always end up buying us something. “Toys R Us” during the time I was growing up was known as a dream place to us kids. When hearing the devastating news that “Toys R Us” went bankrupt and were closing down all their stores was heart breaking! As if I was a little kid again being amazed of all the toys they had on the shelves and all the toys I dreamed of having .

Social Factors

“Toys R Us” downfall started when they failed to please their customers needs. During the downfall of “Toys R Us”, the usage of technology started to expand. Instead of kids asking for toys and trucks they were asking for tablets, Xbox’s, and Nintendo DS. “Toys R Us” failed to keep up with the change of the new generation and advanced technology. Which caused dotcom/e-commerce to rise. Which made it easier for customers to buy products without having to waste money on gas or on public transportation.

The Competitive Factor

Many companies started to use the internet as a source of income money since the e-commerce was rising. Such as eBay and Amazon. As I stated in the earlier paragraph people started to see how easy it is to buy their necessities online with a click of a button. Without having to get off their couches/beds. Which initially led to their downfall.

The Economic Factor

“Toys R Us” main economic issue was their resell value. Other companies such as Walmart, Marshalls, or even local toy stores had cheaper resell prices on toys. Which made customers run to other affordable locations to buy their loved ones toys. Another big mistake “Toys R Us” made was not lowering their prices down even though they knew the competition they had held upon them. Such as sales to their customers.

 

The Political and Legal Factor
The final straw for “Toys R Us” was the collaboration they had with Amazon. “Toys R Us” made an agreement with Amazon once they started rising to sell their merchandise. What “Toys R Us” didn’t know was that Amazon was partnering up with other toy brands. Which led “Toys R Us” no choice but to file for bankruptcy. “Toys R Us” bankruptcy news made headlines and was  a global hit for many days, and a new ending era to what many children called “Toys for us”.

 

 

[Katrina Lizarondo]

Hi, Sherlyn

I agree that Toys R Us’ partnership with amazon was one of the major causes that led to their bankruptcy. Going into the agreement, Toys R Us believed that Amazon would not sell third party toy companies during their partnership, but they were proved wrong. The company started heading downhill which led them to find it hard to further investments and pay off the debts made.

[Jasmine Amaker]

Hey Sherlyn, you are absolutely correct when you say one of Toys R US biggest mistakes was their pricing. As a retailer we all know consumers love a sale or bargain.

[Jazmin Valdovinos]

As a kid growing up, Toy’s R Us was my favorite store of all times… but of course! All I could think about at my young age was toys. I did not understand the importance of maintaining a company evolving and adapting to changes, as it is what took Toy’s R Us to bankruptcy. After hearing the unfortunate news about the complications that my favorite store was facing, I resonate their circumstances and their fall came to be predictable. Here are a few factors that led Toy’s R Us to their end.

1.Social Factor

When it comes to find an ideal present, we all thing about the cost, quality, and easy access, which is something that Toy’s R Us did not take on count. The company failed on satisfying consumers budget and needs. Instead of focusing on the many factors that were leading them to demise, they remained competing with its competitors’ prices.

2.Demographic Factor

As the market started changing, the company slowly started losing consumers interest on their products for not evolving. While other stores started taking over through online retails and technology evolution, Toy’s R Us stayed behind failing on making online presence which is what gave other companies advantage on the market. But not only that, the company maintained their products traditional as kids started to get more attracted to technology.

3.Economy Factors

Toys R Us declared bankruptcy and their debts got to be too much, due to the huge decrease in sales. It had billions of dollars in debt and could no longer invest the money required to keep up with competition.

[Taylor (Taye)]

Its interesting that you really cared about Toys-R-Us growing up. For me I didn’t consider it that important so I didn’t care very much when it got bankrupt. I cared about the toys that I got from there but I didn’t really care about the store itself. Did you care more about the store or just the brands of toys you found there. I wonder how that ties into the demographic factor, do you think you are typical of your age group?

[Sherlyn]

Hi Jazmin! I completely agree with you on “Toy R Us” failing to meet there customers needs and budget. Especially when it came to toys most people can say they can find it somewhere else for more cheaper. Which initially made “Toys R Us” customers to go to another reasonable toy store.

[Gio Blanco]

Yes, Toys R Us was also my favorite store of all time. I believe that Toys R Us still kept being traditional because they thought people were going to be faithful. It’s important to give the people what they want, like affordable products and digital wants. The debts took away the money they could use for other things like competitive advantage for sure.

[jewel.conyers55@stu.bmcc.cuny.edu]

Growing up I was fortunate enough to visit Toys R US pretty frequently. One of my favorite memories as a child is my 8th birthday. I went to Time Square and went to the huge flagship store and was able to ride the Ferris Wheel and buy some candy in the “Candyland” section as I would call it, and of course pick a toy out. Toy R US was a magical place for me. It brings me back to many of my childhood memories. From picking out my first bike and learning how to ride it in the parking lot to begging my mom to just look at the toy sections and promising not to ask for anything. Something about just being in the actual store felt great to me. In 2018 hearing that Toys R US will be shutting down and filing for bankruptcy was truly a shock for me. Here are some major factors I believed played a role in Toys R US shutting down.

The Social Factor and Competitive factors:
I believe as kids got older and technology became more advanced, kids were more interested in lots of online gaming, video games, and honestly anything that had to do with being online. Youtube and other streaming services also were becoming more popularized. Kids were not as excited or asking their parents to go to an actual store to buy toys or board games. Everything is now in the palm of their hands because of the internet. This made everything easier to buy online, especially with the rise of Amazon. This worked well for its competition E toys too. Walmart among other regular department stores also began selling toys.This was a positive change for them to include selling toys in their department. The reason being was because they made sure to sell the toys for a lower price so many consumers began to buy from Walmart and Amazon over Toy R US. It seems that Toy R Us did not take the steps needed to innovate or adapt to the evolution of technology and against their competition.

Political Factor and Demographic factors:
Toy R us decided to partner with Amazon which would be the beginning of their downfall. In 2000 Toy R US made a deal with Amazon to allow their toys to be sold on Amazon’s website. However, they were unaware that Amazon would still allow other vendors to sell toys on their site. This was a win for Amazon at first because this allowed Amazon to profit off multiple vendors. Even though the company Toys R US sues Amazon and won the case, it was still not enough. Toys R us never built their own e-commerce identity/platform so they were still behind compared to other companies. Later on in 2017, Toys R Us was in too much debt so they ended up filing for bankruptcy. Children also outgrew Toys R US. The demographics began to evolve, children weren’t interested in consuming the next new toy, barbie, action figure or board game. They were interested in digital things such as gaming systems, laptops and the internet. Because children were evolving, the age range that Toys R Us was used to marketing began to shrink. This made it difficult to continue having the same rate of customers. It was also difficult because it circles back to the competition that they have. If only younger children are interested in toys and parents are the ones making the purchase, the parents benefit from ordering toys online especially if it is cheaper and it saves them a trip to the actual toy store.

[ema]

Hey Jewel, I completely forgot how big of a part the Times Square location was because anytime any family member came to visit that was the spot to take them. and all your points were well thought out.

[Zakaria Serroukh]

Yes I agree children now don’t want toys they want video games.

[Jazmin Valdovinos]

Hi Jewel,

I can relate with you! I was also able to visit Toy’s R Us frequently or at least every time my parents wanted to award me for my good action, so I have very good memories of the store. I am sure that the news of Toy’s R Us Bankruptcy impacted a lot of people, but it is true that within time, kids started to gain more interest in technology rather than toys. I genuinely hope that Toys R Us arise.

[Taylor (Taye)]

I agree that the partnership with Amazon was probably a critical mistake. It made sure Toys-R-Us couldn’t change to a hybrid strategy that also took advantage of e-commerce. The demographic factor I think compounded that, since it basically took away the ability to compete for the younger demographic. Another option is maybe they could have at least had unique toys, so they would at least be selling their own items through Amazon as part of the partnership. But it was actually just those brands that got that benefit from Toys-R-Us’ deal.

[Zaheer Ali]

I strongly believe the decline in Toys “R” is on their marketing and not adapting to the change of the market I also believe that the deal with Amazon was a terrible deal Toys “R” Us is a big company and they could’ve afford to make their own website and sell their own toys instead of getting a terrible deal from Amazon and Amazon ended up selling third-party toys.The rise of e-commerce giants like Target. Kmart and Walmart offered consumers a wider selection and often lower prices, drawing them away from Toys “R” Us. Also with the rise of the tablets and video games lots of kids was drifting away from the physical toy experience, the inability to compete effectively with online giants like Amazon, coupled with the emergence of discount stores in the toy market, posed a significant challenge to Toys R Us’s business model.

[Zakaria Serroukh]

I agree the online market took over.

[Zakaria Serroukh]

<span style=”font-weight: 400;”>Growing up in NYC I remember the Toys R Us by Times Square, there was a famous Farris wheel in the store. sadly i couldn’t afford their toys so I spent my time there window shopping. The most popular item was the Lego sets. However, now you can order them online having an impact on their business. Also now you have children wanting electronics, not action figures. Due to their lack of income they went bankrupt, and now Amazon and other companies benefit off their old customers. </span>

 

[Anayssa]

I never really got the experience of going in Toys R US growing up, since I was young my gifts would usually be brought home to me, although I do remember always skimming through magazines to look at the latest toys and their store would be one of the first places to be shown to shop at for children so it was very shocking when I found out they were closing down. There were many factors that contributed to the downfall of Toys R US such as the ones listed.

Economic Factors: The economic recession in the late 2000s and early 2010s made a significant impact on Toys R Us. The decrease in consumer spending during this time affected the company’s sales as well as their profitability. Toys R Us also faced high levels of debt and interest payments which limited their ability to invest in certain things like updating stores, online compatibility, improving, and just being more competitive overall.

Technological Factors: The rise of online shopping and e-commerce such as Amazon created a major challenge for Toys R Us. Online shopping became convenient considering it offered a wider selection and competitive prices.  Other advancements in technology such as  smartphones and tablets was a drastic change for children. These devices were particularly more appealing to kids rather than their traditional toys.

Social Factors: Consumers became very adamant on experiences rather than material items and this also affected Toys R Us. More families started to prioritize activities and trips with their children. Toys R us’s target market started ti become smaller as there was a decline in birthrates. With there being fewer children in the world the demand for toys reduced overall.

Competitive Factors: Big-box retailers such s Walmart and Target posed as a threat to Toys R Us with their wide range of toys and competitive prices. These retailers had scale and diverse product offering which gave them an advantage. Toys R Us failed to differentiate themselves from other retailers and had no unique selling point from their competitors. Toys R Us did not give their target market a good reason to buy their toys over their competitors.

In my opinion, the most significant factors in the downfall of Toys R Us were the economic recession, the rise of e-commerce, and the rapid advancements in technology. These factors had a profound impact on consumer behavior, preferences, and the overall retail landscape.

[Gio Blanco]

I didn’t think really think about the recession. That makes sense! Consumer spending decreased a lot, and I believe Toys R Us still had pricy toys.

It’s so interesting that phones and tablets became more attractive to kids than traditional toys. I see it in my nephews and nieces too! I believe Toys R Us should’ve added digital games as well since consumer wants were changing towards that. Video games are a big thing to kids these days, and that’ll attract customers to their store.

[Gio Blanco]

I had the luxury of going to Toys R Us every month as a kid. I live in NYC so going to the Toys R Us in Manhattan was not a problem. I remember being to excited to ride the ferris wheel and to see the giant moving dinosaur they had. Going to the stones and crystals part of Toys R Us was my favorite! When I heard that all of the Toys R Us were closing down, I was shocked. Now that I’m reading the reason behind it, it’s all making sense to me.

Social Factor

Let’s start off with this. I really believe this is the biggest factor to Toys R Us going out of business. Kids these days are now wanting to play with digital games. There’s an increase in wanting tablets, Playstation, and products like those. Toys R Us didn’t really adapt to this and still continued selling tradition toys and games. This caused Toys R Us to lose these customers.

Another factor was the rise of online shopping. Websites like etoys.com made shopping easier. Online shopping is convenient to people, so less people were going out to buy toys in Toys R Us.

Competitive factor

Like I said before, people wanted to stay indoors more since buying products online was more convenient for them. They liked the online shopping experience. Companies saw this as an opportunity to launch online business like etoys.com and Amazon. This gave them more of an advantage.

There are also “The Big Box” companies like Walmart and Target. Not only do they sell toys, but they sell other products such as kitchen tools, towels, food, etc. This brings more customers to these stores since they had more things to offer.

Price is also another competitive advantage “The Big Box” companies had that Toys R Us didn’t. They were selling toys that were cheaper compared to Toys R Us’. Most people pay attention to price and love deals. This means less people were shopping from Toys R Us since there were other cheaper toys they can buy from other stores.

Legal

There was a contract Toys R Us made with Amazon. Since Toys R Us saw the trend in online shopping, they wanted to partner with Amazon. However later on, Amazon starting selling toys from other third party sellers. Toys R Us went to court to break away from the contract. Toys R Us spent a lot of time fighting legal battles. A better approach is making their own website.

Toys R Us was also considering filing for bankruptcy. This made sellers worried that Toys R Us wouldn’t be able to pay for the products they are selling to them. They stopped selling their products to Toys R Us which was about 40% of Toys R Us’ products. Toys R Us had less products, which means less profits.

Economic

Toys R Us still kept all of their stores open instead of moving them to high performing locations. I believe this made Toys R Us spend more money just for these locations to be open still.

Again, the price is important! “The Big Box” stores were selling toys way cheaper than Toy R Us’ toys. This attracted customers to leave Toys R Us.

Demography

I put this last because Toys R Us’ demography didn’t really change, which is kids and parents. It’s just the kids’ interest changed to wanting digital games, and the parents’ interest wanted cheaper toys and an online shopping experience which made Toys R Us lose them.

Conclusion

Reviewing all of these factors, it’s safe to say that Toys R Us didn’t really adapt to the changing needs. They didn’t really look into their strengths, weakness, opportunities, and threats. They stood traditional and pricy when kids were interested in digital games and other stores were selling toys for cheaper prices. This caused Toys R Us to become out of business.

[Author]

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