[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, all components of this assignment are due by 11:59pm ET on Friday, February 18, 2022. You should first contribute a thoughtful post of your own before viewing/commenting on the posts of others. You must respond meaningfully to at least two classmates to receive full credit for this assignment.

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 2 years, 5 months ago by Brielle Buckler. Reason: Updated Date / Rubric Link

[Joana Berger]

Even though Toys R Us had strong brand recognition for those who grew up going there as kids, they failed to be successful in the modern market. Here are the reasons I think so, from most impactful factors to least impactful factors.

• Competitive Factors- With the accelerating speed of Amazon’s success, along with new and upcoming businesses that put cheaper prices and customer convenience first, Toys R Us had no way of being able to stay in the market without putting up a fight, which they didn’t (weren’t able to) do. Those who went as kids were growing up, and new parents were able to buy toys along with necessities at other big retail stores.
• Political & Legal Factors- Honestly, partnering up with Amazon was a big mistake on their part. They saw the rise of the dot com era and tried to hop on it, but ultimately got the short end of the stick with their contract with Amazon. Toys R Us failed to realize that their contract with Amazon did not give them exclusive rights as a toy seller on their website. By the time they tried to end their agreement, things were getting too messy to focus on another online solution. (Mentioned in CNBC’s The Rise And Fall Of Toys R Us Youtube video)
• Social Factors- Failure to stay socially connected with their customers definitely put Toys R Us behind the competition. Shopping was changing, and Toys R Us was not changing with it.
• Demographic Factors- Toys R Us never had a hard time realizing their core demographic, kids. I don’t think a child would prefer to buy a toy from Walmart over Toys R Us, but the convenience and pricing of Walmart for the parents was much more appealing. If they had the resources, I think trying to advertise to the parents would have been their next big step to success. Other than that, I don’t think Toys R Us really had any issues concerning demographics.
• Economic Factors- Toys R Us was not able to keep up with the price of their competition, but not due to the economy. Maybe if Toys R Us decided to close a couple of their stores, focusing on their most successful ones while they were suffering, they may have made it. I don’t think the chances were very likely though.

[Edward Quinn]

Hi Joanna!  I really agree with you about ranking the decision to partner up with Amazon as being a major misstep for Toys R Us in failing to understand and predict the marketing environment!  Before watching this last video for our class I never knew that Toys R Us and Amazon has entered into this partnership, and it really makes me see the importance of having a good lawyer and business team think about how a partnership with another business could turn sour!  In this case, very sour, haha!  It does seem strange they would not have included very clear language that Amazon would not sell any other toys on it’s platform other than from Toys R Us, especially at that date, when Toys R Us was still very well respected among consumers and Amazon was trying to break into everyone’s consciousness as the “go to” online destination!

[Ferliana Cuadrado]

Hi Joana.

I agree with you. Toys R Us trying to make a deal with Amazon was a terrible idea. If they weren’t so desperate they would see how this would have negatively affected their company greatly.

[Amanda Hines]

Hi Joana, I agree that Toys R Us should have closed stores and focused on the top key locations – Times Square for example should have become a museum in my opinion. The history, the feelings that took over adults and people of all ages. How many thriving small pop up experience monetizing on just the way they make people feel and a good photo opp. They truly should have leaned into their brand image and story.

[Desire Acevedo]

Hi Joana, I agree with you about the Demographic factor I don’t think either that a kid would prefer to buy a toy from Walmart but in reality is way more easy for their parents to go to those stores because of the amenities that they offer in one place.

[Klaudia Przybyla]

Hi Joanna! I’d love to comment on your Political & Legal Factors point. Toys R Us got an expensive deal with amazon for 10 years. Unfortunately, Amazon didn’t give them exclusive rights and they started selling 3rd part toys. In my opinion, a company, as big as Toys R Us should’ve created their own online store and started selling toys there.

[Joana Berger]

Hi Klaudia! I totally agree with you, Toys R Us was big enough of a company to be successful with their own online business. Sometimes taking risks, such as partnering with Amazon (which could be very successful), is worth it, but their contract was really terrible.

[Edward Quinn]

Toys R Us experienced incredible commercial success after growing past it’s second brick and mortar location, branching out from children’s furniture to toys and growing rapidly for some 50 years — but the brand now serves as an example of failing to notice — and most importantly, predict — the changing trends in the marketing environment which forced it to liquidate over 800 stores and file for bankruptcy protection!

Ranked in order from most to least impactful, I think the main marketing environment components that contributed to the once strong brand’s demise are:

1. Competitive & social factors of the rise of online convenience shopping!  This has changed the entire retail industry, not just children’s toys — for instance, many brick and mortar businesses, especially smaller businesses known as “Main Street” are fighting to stay alive amid the rise of one-click convenience shopping created by Amazon, Pets.com, Zappos, to name but a few major retailers that are predominantly e-commerce based.  The additional social factors of children wanting digital goods, “consumed” on electronic devices, also severely curtailed the market for tangible play-things that lined the shelves of children’s toy stores.  These two components constituted a “sea change” in my opinion, and created the largest headwinds for Toys R Us to grow, let alone stay alive in the competitive business environment.
2. Economic factors next played the largest role in the marketing environment — the rise of “discount” stores like Walmart, which also began selling online (see above), further hampered the growth of Toys R Us, and collective efforts to drive prices down further (especially amid reports of tough budgetary cuts Toys R Us was experiencing) further drove the brand under water.
3. Next, the political and legal setbacks of pairing with Amazon to begin selling online really spelled disaster for Toys R Us, despite years of history and very strong brand recognition in the US marketplace.  Just as the company needed to pivot and grow into an online juggernaught to respond to competitive and social changes in the marketing environment, the company leadership and lawyers embarked on an ill-fated decision to essentially trust that Amazon would serve as an honorable partner in their growth.  By failing to see Amazon’s true ambition beyond online book sales, they allowed Amazon to create the convenience and cost benefits for consumers, creating major competitive advantage when they began selling 3rd party toys.  I’m no business lawyer or corporate board member, but this does seem like a very real outcome that should have been addressed in the contract between the two companies given the large dollar partnerships and strategic need for Toys R Us to grow into an online purveyor of children’s toys.
4. Lastly, I think demographics played a role in Toys R Us demise, as families are now having less children per household and Toys R Us also failed to create “digital” goods of interest to an increasinly tech connected (and addicted!) “customer” base.

[Horatiu Pui]

Hey Edward,

I agree with your thoughts. The e-commerce revolution affected every industry. And of course, the smarter and the most strategic planner survived. Unfortunately, Toys R Us was one of the most badly affected, but as I mentioned in my post, and you paid attention to it, they received more than  $50 M. Obviously, it’s not a big amount for such a huge company but if their managers were working hard on planning, innovating, and organizing they could survive a bit longer. Also, it is interesting reading your economic factors. Collective efforts on selling discounted products was one of the main negative impacts on the firm. </span>

 

[Horatiu Pui]

During its operation, Toys R Us, became the most known and successful international toy retailer with thousands of stores almost everywhere on the planet. However, in 2017 the huge company that at one time was considered the “category killer”, filed bankruptcy and closed its stores because of several factors:

• Social factors
  One of the main factors that led the company to bankruptcy is the social factor.
  I think that blaming Amazon for selling toys for third parties is just a small % of sending the organization to shut down. First, the company was slow in supplying certain products to Amazon, which showed lack of planning. On the other hand, the more reasonable issues that led to failure in the category of social factors were that customer satisfaction was not anymore the main point of the firm. Also, the owner and managers suffered from myopia. They thought that they still were the center of the toy industry, because employees started hiding facts from top managers in order to protect themselves, and their positions. When employees begin lying in an organization means that things are not going in the right direction.
• Competitive factors
  Toys R Us mentioned in its bankruptcy filing that other giant toy retailers suffocated them with such low prices that those competitors did not even make profit on products. I think that this is just an excuse. The firm was not able to adapt itself to the new circumstances as the technology advanced and it was also not able to innovate. Of course, in the business world, as in almost every field, the smarter wins. While competitors such Walmart, Target, and Amazon were working on flexible price strategies, and sales, Toys R Us was focusing on advertising so much that they failed to notice that digital sales was overtaking the sale methods.
• Demographic factors
  The organization mentioned in its bankruptcy report that one of the reasons affecting the shut down was essentially the birth rate decline. Based on reading part of the bankruptcy filing, I feel that the organization tried to blame everybody and not take its responsibilities by admitting that they were not able to survive due to lack of innovating, organizing, planning strategically, and perceiving the outside world. Generations are changing as technology innovates, so, a company such Toys R Us should have known how to keep up with innovating sales forms.
• Political & Legal factors
  Based on research, Amazon was the worst nightmare possible for Toys R Us. However, at the time of suiting Amazon, because of its illegal action of introducing new parties, thus violating their agreement, Toys R Us received $51 M. I think that the organization, Toys R Us, instead of signing 10 years with Amazon should have advanced its own e-commerce platform. Nevertheless, I also think that Amazon’s plan was to destroy the company and lead it to failure because it did not want such a competitor.
• Economic factors
  Since the organization was involved in huge debt they focused on keeping their prices high in order to make profit and try to still be on the market. However, organizations, such as Walmart, Amazon, Target and so on, have undercut the prices by selling the same or at least very similar products for a significantly lower price. The competitive company’s goal was more to expand than create outstanding profit.

[Edward Quinn]

Hi Horatiu!

I think that’s a great point about moving ahead with their own e-commerce platform once they realized Amazon was not playing fair.  I also like you comment about Toys R Us being “myopic” — what if they had anticipated the changing marketing environment and launched a delivery service, or partnered with the digital software companies to capitalize on the brand as being a distribution partner for video games and/or consoles, like a Best Buy or Walmart?  It’s also also very interesting that Toy R Us prevailed in the lawsuit and was awarded $51 million dollars — not a small chunk of change!  But even with a large verdict, the time that went by was extremely costly for Toys R Us and by the time they won the lawsuit, the damage was already done as sales were plummeting.  Do you know if Amazon had to pay for Toys R Us lawyers?  I think there is a rule in the US that each party has to pay for their own legal fees, while in other parts of the world, the loosing side has to pay for both their attorneys AND the attorney costs for the winning side.  Just something I looked up based on your comments, that would discourage bad behavior and breaches of contract.

[Horatiu Pui]

Thank you Edward.

I think you are right. As I know the general rule in the US, both parties (plaintiff/defendant) pay their own legal fees, regardless of the winner. However, for instance, in the UK the general rule is that the loser pay’s the winner’ costs. </span>

 

[Fioriliana Cuadrado]

Hi Horatiu, I love what you said about how Toys R Us was making excuses. I 100% agree. They weren’t taking their customers into consideration and as a result, failed. The birth decline shouldn’t have even been a consideration if they actually looked into expanding digitally.

[Joana Berger]

Hi Horatiu! I think the social factor points you made are very interesting in realizing Toys R Us’s downfall. It does make it seem that they not only didn’t have their customers first but also their employees.

[Amanda Hines]

Toys R Us had an extreme opportunity for growth prior to is contractual obligations with Amazon, Toys R Us had brand recognition and were well known globally. They had the footprint to be in the position that Amazon is in now had they shifted and made better choices.

The top reason for their demise in my opinion was their lack of consideration for the changing lifestyles of their consumers, the Social Factors. Games were no longer being played the way they had been since the start of Toys R Us. Digital technology took over and our children hardly know what building blocks are.

Another reason in my opinion was their competitor factor, Toys R Us lost its battle against mass market stores like Target and Bed Bath and Beyond. I believe they should have started to create Toys R Us branded catalogs and held space in these new booming retail channels which would have put them almost everywhere. I believe this would have open doors for new territories, target audiences and products outside of toys.

[Fioriliana Cuadrado]

Hi Amanda, I really agree with what you said. How did Toys R Us expect to stay in business when the times were changing? Technology is a huge advancement and the fact that Toys R Us didn’t actually take the time to understand what their target audience liked was a bad move. I love the branded catalogs idea. It honestly could’ve been a great way to expand. You’re right when you say that they could’ve been where Amazon is now.

[Ashley Rivera]

As Toys R Us grew in popularity, they faced some challenges and factors that caused them to lose business and ultimately become their demise. I’ve ranked the factors that I believe influenced them in order of importance, from most significant impact to least significant impact.

1. Social Factors: Social factors contributed to Toy R Us’s demise because, as time passed, children’s interests shifted away from toys and toward video games, game devices, tablets, online games, and other electronics. As a result, parents continued to buy fewer and fewer toys. And if children aren’t interested in toys, their business will suffer.
2. Competitive Factors: Many stores and businesses began to emerge, and with this emergence came some businesses that sold toys for much less than Toys R Us. Not only did they sell cheaper products, but some stores also had an online presence, making shopping much easier and faster. Other companies even invested in better stores, whereas Toys R Us did not have the funds to do so.
3. Political and Legal Factors: When Toys R Us signed the partnership agreement with Amazon, it allowed Amazon to sell their products. This backfired on Toys R Us because Amazon began to sell third-party products on its site, making it a competitor to Toys R Us. This impacted Toys R Us financially even more, causing them to slip further behind. This was due to Amazon selling other products, which did not bring in enough traffic to Toys R Us but instead drew more attention to their competitors.
4. Economic Factors: Discount retailers such as Walmart, Target, and others emerge. These two companies specialized in selling toys and other products at lower prices than Toys R Us. As a result, Toys R Us went into debt, making investing unattainable. Not only did they go into debt, but their vendors refused to ship products without cash on delivery in case Toys R Us didn’t pay them which affected them more.
5. Demographic Factors: Toy R Us advertised for children, and their products were geared toward children’s entertainment. They could only target one group of people with this, whereas businesses like Target or Walmart cater to multiple age groups, which is a benefit for parents because they would not only be able to shop for their children, but they would also be able to shop for themselves and make online purchases.

[Horatiu Pui]

Hi Ashley,

I think that you touched a very essential issue that Toys R Us ignored and lost customers. Not being able to satisfy different aged groups was one of the key points of failing. Also, as you mentioned, once a different organization offered a waster list of products to customers, it was much more interesting for families to go to that store instead of passing a “boring time” for example, in the toddler section at Toys R Us.

 

• This reply was modified 2 years, 5 months ago by Horatiu Pui.

[Adrian Ceballos]

hi Amanda, I agree with you toys r us could’ve went about this in a whole different way if they would’ve focused on expanding and making things more adaptable.

• This reply was modified 2 years, 5 months ago by Adrian Ceballos.

[Adrian Ceballos]

Toys R us was a dominating company and they had many opportunities to grow and expand. They were on the verge of even being better than some of the companies that are thriving right now. I personally think their main issues were not being able to keep up with the new way of life. With everything being more technological toys r us was quickly left behind and kids were slowly started to turn too new toys and games. Also toys r us was quickly being left behind because of their huge competitors. Like Target and other huge businesses. I feel like toys r us could’ve adapted and expanded if they developed new ideas and developed a better of branding and attracting a bigger audience. Also one of their biggest issues is that they only targeted one group of people which were children, whereas other business like target and Walmart targeted all types of ages and were able to make themselves a huge competitor.

[Ferliana Cuadrado]

Hi Adrian, I agree. Toys R Us definitely could not keep up with the new age of modernity. If they worked harder in pushing out products that aligned with the interests of their demographic, maybe they would still be around today.

[Fioriliana Cuadrado]

Toys R Us was a powerful company that once brought joy and excitement to children but has now failed to do so. Many factors played into the liquidation of Toys R Us. Below I listed the reasons why I believe the business declined in order:

Demographic factors: The target audience for Toys R Us is children but with the advancements in technology, children don’t really play with toys anymore. Many kids prefer to play with their tablets because they can do so much more with the internet at their fingertips than they can with a plastic batman figure. Children aren’t as interested in physical toys as they once were. Thus, resulting in a decrease in sales.

Economic factors: In the time when children started becoming more interested in the online world, the real world was dealing with a recession. The economy was terrible and many parents couldn’t afford to buy from Toys R Us. With the high prices of these toys, parents still wanted to reward their children with a shiny new toy to play with and that brings me to my next point.

Competitive factors: In a parent’s eyes, a toy is a toy. There was no difference if you bought a toy from Walmart and if you bought it from Toys R Us. There were many stores that sold the same toys for such a cheaper price. During the great recession, many people lost jobs or their paychecks were cut. So as a result, everyone needed to buy cheaper items. Even after the recession has ended, people still buy from cheaper stores because the idea of saving money is ideal for them.

Social factor: In schools, many children decided toys weren’t cool anymore. You were cool if you had a gaming system. Children would then tell their parents that they don’t want them to buy them toys anymore. The appeal to have something so improved in a time when technology was fairly new was huge. Everyone wanted a DS, not a barbie. In the toy industry, children are the prime trendsetters. So when new trends happen within children, of course, the parent would want to get the child what is trendy. Leading to a decline in toys, which is in fact not trendy.

Political and Legal Factors: The final blow in the decline of Toys R Us had to have been the contract made with Amazon. Amazon swindled Toys R Us into a contract that would not benefit them at all. Buy selling Toys R Us’ products and selling the competitors’ products. That does not help Toys R Us but only helps the pocket of Amazon. The contract was so harsh that even after suing, there was nothing Toys R Us could do. In the end, the many factors that had to push the company to where they signed a contract pushed them further into having to claim bankruptcy.

[Ferliana Cuadrado]

Toys R Us, the super power company, has received success since they were founded in 1957. That is until they announced their bankruptcy in 2018. The cause of their immediate fall, falling into several categories; social factors, demographic factors, economic factors, political/legal factors, and competitive factors.

Demographic Factors – With the rise of the Internet, Toys R Us was immediately set up to fail. The interest in electronic devices drew in not only adults and teens, but children as well. With many electronic devices that were geared towards children, such as a Nintendo DS, a GameCube and more made toys lose their original appeal. With the interest of the demographic evolving, Toys R Us could not keep up since they only sold physical toys such as dolls, action figures and such. The drop in sales in their demographic becoming grand.

Political/Legal Factors – Amazon offered a deal with Toys R Us to sell their toys on the Amazon catalog for purchase. But with this expensive deal, also followed Toys R Us’ misstep. The Amazon catalog contained not only toys from Toys R Us but as well as Toys R Us’ competitors and 3rd party toy sellers. Normally, a customer would compare the prices and opt for a cheaper option of a toy that many times Toys R Us did not always offer. With this disadvantage, Toys R Us tried to leave this deal with Amazon, but for legal reasons they could not.

Competitive Factors – No matter how hard Toys R Us tried back then, they could never amount to the popularity of the new age internet. Toys R Us had nothing new that appealed to the public that involved the new age electronics that were popping out at this time. As well as, they could not compare to the appeal of cheaper priced toys that were available alongside Toys R Us on the Amazon catalog. Toys R Us also could not compare to popular companies such as Nintendo, Sony, and Microsoft that were actually creating items that people wanted to see and use.

Social Factors – Children were known to be Toys R Us’ main demographic. We all also know that a child’s attention span is not long and if they see something new and cool, they will drop what they were doing to be with that new, trendy item. So when Toys R Us didn’t accommodate for any new products that followed the trends of the internet, they already knew set themselves up for failure. If they cannot follow the social trends that children were participating in, how did Toys R Us to stay open?

Economic Factors – Toys R Us quite obviously could not understand what their demographic wanted. They also didn’t understand what the demographic’s parents were willing to spend. They could not compare to the cheaper prices of their competitors. If a doll at Toys R Us is $10, a doll at their competitors could be $5 and they cannot compare. Toys R Us also could not compare to prices for consoles that could have started from $100. Either way, Toys R Us could not compete with cheap prices and expensive prices. And there was no middle ground.

• This reply was modified 2 years, 5 months ago by Ferliana Cuadrado.

[Rechal Kajla]

Hi Ferliana, I agree with your Social Factor rationale that kids want what’s latest and popular, which Toys R Us didn’t concentrate on, causing children to lose interest in their business.

[Jesliann Mercado]

Hi! I agree with what you shared for competitive factors. I personally believe Toys R Us will never make a comeback and return solely because they are unable to continue innovate and create there own ideas that would keep there business afloat.

[Jaqueline Cap-Waller]

Hello Ferliana,

I have to agree with you that  Toys R Us dropped the ball when it came to their demographic changing. I feel like although they knew who they were marketing to, what they marketed was off. If Toys R us  began to focus part of their resources to video games and an older kid group they may have been able to make it.

[Klaudia Przybyla]

Ferliana I completely agree with you – How could they stay open if they didn’t want to follow the social trend? Brands need to learn about costumer and their needs to stay open.

[Adrian Ceballos]

Hey joanna, I agree toys r us basically walked in to a deal blindfolded with out knowing how that would drastically impact them. I feel they were desperate at that time so they weren’t really thinking

[Rechal Kajla]

Toys R Us was once the most popular toy retailer before it went bankrupt and had to close its doors for good. This predicament resulted from a number of factors.

1. Social factors – Toys R Us, I feel, lacked contact with its customers, resulting in a failure to meet their demands. Building a community and drawing brand love, loyalty, and trust are at the heart of business, which Toys R Us failed to do. Furthermore, the corporation was not adaptable enough to adjust its strategy in response to shifting consumer preferences for preferred web portals.
2. Political and legal factors – The deal with Amazon to become Amazon’s sole seller of toys was a failure. Where Amazon permitted third-party sellers to sell their toys, leaving Toys R Us in the debris.
3. Competitive factors – Toys R Us lacked a competitive edge since their competitors adopted their consumers’ ideals. In addition, unlike their competitors, they failed to modify and adapt.
4. Economic factors – Their debt prevented them from expanding their firm. Furthermore, the announcement of the bankruptcy caused the vendors to doubt in them.
5. Demographic factors – Toys R Us needed to broaden their market reach. When the competition was already fierce, selling or marketing to only children was insufficient. As a result, they should have offered things for people other than children, which may have helped them stay relevant in their industry and avoid being laid off by Amazon, Target, Walmart, and others.

[Amanda Hines]

Rechal, I agree, Toy R Us should have had plans to offer more that just toys to kids. Once they saw things shift in a negative way for them, they should’ve close a number of stores and made the last few an experience based brand. The goal no longer being to just sell toys, but to experience hands on play and witness retro toy stores and their history.

[Rechal Kajla]

That’s a great concept regarding hands-on playing, and it would have helped them maintain their popularity.

[Jesliann Mercado]

I agree especially when you discussed how they failed to evolve with society trends and consumers preferences. By doing so they didn’t catch the eyes of their consumers, but drew them away by overpricing their products as their organization went downhill.

[Jaqueline Cap-Waller]

Hello Rechal,

I would agree that the deal with Amazon.com was a big mistake. I think Toys R Us had no idea what they were getting themselves into by partnering with a self serving company like Amazon. I also believe that the deal with Amazon was what ultimately brought on Toys R us demise. I would have to say though, that I disagree with you that Toys R Us failed at “Building a community and drawing brand love, loyalty, and trust are at the heart of business” as you put it. I think that if the company did anything right they did this right. Toys R Us played on peoples nostalgia. They used theme songs like “I don’t want to grow up” to keep people remembering what it was like being a kid, and as we grew up Toys R Us became a symbol of our childhoods.

[Jesliann Mercado]

Toys R Us was once a globally recognized company for many. It was especially recognized to anyone who went there as a child, me included. Toys R Us grew into a success, however it could not survive the liquidation of its company and eventually had to close down its stores and file for bankruptcy. Listed below are the factors I believed contributed to the closing of Toys R Us.

Social Factors- One of the social factors that contributed to the falling out of Toys R Us was children’s interests. Their interests in toys diminished and was instead channeled into video games and the newer game systems. As well as tablets and other online games you can play. As a result, this business suffered because they were no longer grabbing the attention of the children. Toys R Us did not stay up to par with any of the newer trends and society in order to keep people, children interested in their products. They were unable to provide that.

Political and Legal Factors- Amazon provided a deal for Toys R Us to sell their toys on Amazon catalogs. The contract made with Amazon did not benefit Toys R Us, instead it tore their business apart. Amazon was buying Toys R Us products and was making a profit of it by selling its competitors products. Another contributing factor was the upbringing of Amazon success and how quickly they were becoming successful in the modern market. The demand for Amazon increased and Toys R Us decreased. Along with the lawsuit of Toys R Us suing Amazon for violating their contract and still losing the lawsuit causing further debt and bankruptcy.

Economic Factors-  Toys R Us being in debt already decided to raise their prices even more in hope that consumers would still buy their products and make a profit out of it in order to stay afloat. While Toys R Us raised their prices other companies actually lowered their products such as Walmart and were selling products that were either the same or similar to the same ones for a much lower price. Since the products prices were much lower consumers were going to other big chain stores with the lower prices and purchasing the same products Toy R Us provided but for a lot less.

Demographic Factors- A demographic factor that played a role in the decline of Toys R Us was the amount of children being born at the time. The decrease in families having children means less families have to buy toys. However, Toys R Us can’t solely blame the birth rate decline for the fall of their company. They failed to keep creating goods that consumers would want.

 

• This reply was modified 2 years, 5 months ago by Jesliann Mercado.

[Emmalyn]

Toys R Us is really an easily recognizable brand globally. You would think they’d figure out a way to use this to their advantage rather than making poor business decision after business decision.  I agree that Toys R Us did not stay up to date with current trends and interests of children, and thus were overall unable to provide that new service and product to their customers and consumers.  Price is such an important factor in business, and as you identified here you can see how greatly it impacted them as a company and how it was a contributing factor to them losing their customers and consumers.  I didn’t realize that Toys R Us blamed the birth rate decline for causing their fall as a company, and I’m glad that you included it in your response as well—it’s really interesting to see what companies will use as a scapegoat.  They definitely can’t blame the birth rate decline for being a lead reason as to why they had to liquidate and file for bankruptcy.

[Desire Acevedo]

Toy r us was a very powerful brand and recognized by many of us in our childhood, it created its name and its popularity over time, but it had failures caused by the following factors and the evolution of the market:

 

• Competitive factors: Toy r us is a business based on the sale of toys and as the years passed, new forms of entertainment appeared and the children were leaving behind the tradition of playing with toys, so that is where new competitors come in, such as technology that were not previously considered by the time to sell a toy, since that one was not as developed… then the company no longer only had to focus on as a threat the toy distributor just like them, but also technology stores where they sell new entertainment and children’s recreation via electronic devices, which was already out of their hands.

 

• Social Factors: The company could not have any control that society was changing since children were interested in iPad and computers overcrowding this. The market is evolving constantly, and the purchase of toys was declining.

 

• Demographic factors: Now consumers have the way to satisfy their needs from the comfort of their home through digital purchases, something that played against the Toy R Us concept since it was a store based on a world of toys for the emotion of children but not the comfort of his parents that also offered to them the department stores that offer everything from essential needs such as food to entertainment ( convenience good and shopping goods )in one place

 

• Political and legal factors: The company did not know how to handle itself in the legal area since they had to go to court for trying to breach and this is because before signing a contract with another company, they should have set the clear political conditions that they expected for their company as What is the exclusivity with the sale of your products on the digital platform before a payment.

 

• Economic Factors: The company got heavily into debt trying to keep all its branches open instead of closing the ones with the least income. Competitors with the information that they were bankrupt used it in their favor and cut their prices to hasten the closure of the company and it is not able to sustain itself with all the accumulated debts… basically the stores that had the most income were weakening by those that did not.

[Jaqueline Cap-Waller]

Toys R Us went from being the powerhouse of toy stores to ultimately becoming extinct. The once beloved toy store quickly became a thing of the past when they couldn’t keep up with the changing times. As a new generation of online retailers and big box stores started to emerge, Toys R Us couldn’t keep up. Its failed efforts to try and partner with the online store Amazon.com became its ultimate demise. ranked and categorized by marketing environment factors I will attempt to explain why this demise occurred.

• Competitive Factor- With time comes change and Toys R Us was unable to keep up with the changing times. New online stores were taking business from the powerhouse toy retailer, by giving the convenience of shopping from the comfort of your home. Also, the rise of big box stores like Walmart grew in popularity and became huge competitors. They could lower their prices giving customers a cheaper option for the same value.
• Political/Legal Factors- To try and salvage the losses of having to compete with online stores, Toys R Us partnered with Amazon.com, giving them exclusive rights to their products. Unbeknownst to Toys R Us, Amazon.com, being a self-serving business whose goal is to accumulate as much profit as possible, began having Toys R Us products bid against third party products for cheaper prices.
• Economic Factor- As an attempt to try and save itself from making a bad business decision by partnering with Amazon.com, Toy R Us tried to sue Amazon.com to get out of their contract. The legal fees from the suit cost Toy R Us a ton of money. The company kept going downhill no matter what they did. Eventually Toys R Us sold to a trio of investors. The new owners had the goal of reviving and taking the company public to use those funds to pay off its debts. Unfortunately, this did not work and to pay off the debts the only option was to start liquidating its assets.
• Social Factor- As times changed so did children. Kids began playing with more electronics than physical toys. As the rise of video games and computer games began, Toys R Us again, was not able to keep up. When Toys R Us couldn’t keep up with this new trend of games they lost a huge part of their customer base.
• Demographic Factor- The one thing I personally think Toys R Us had down pact was their demographics. They marketed toward not only the children but also to the parents. playing on nostalgia, like their famous theme song ” I don’t want to grow up”, they were able to pull the parents in. Toys R Us made their customers feel like family, this was a place all generations could enjoy together. Although they were able to get this one factor right, the change in technology and the competition they faced from online retailers and big box stores with lower prices, they were no match.

[Emmalyn]

I agree that Toys R Us’ failure to adapt is what ultimately contributed to their decline and liquidation.  Convenience, price and location was an overarching issue that they failed to meet despite multiple attempts by various CEOs.  Toys R Us definitely had their marketing to children down as well with their jingle, bright colors and multitude of toys in one location.  I also think that after the lawsuit with Amazon, Toys R Us did not fair well at all and went downhill, as you said; despite different attempts at staying relevant, Toys R Us really failed to think about the needs of their customers (parents) vs their consumers (children).

[Kamila Soopy]

Toys R Us was once on of the largest retailers of children’s toys which failed to adapt with the changes of a modern consumer society. There are many factors which affected its failing business.

Competitive factors: In this day and age, there will always be an alternative option, either price or quality wise. In this case Toys R Us offered the same products at a higher price compared to competitors. The experience of shopping at their store was not enough to compensate the difference. In staying true to their original model, innovation was missed.

Economic factors: Toys R Us lost its credibility with its increase in debts and inability to pay them off. The companies which sold to them began to put in cash on delivery policies due to the lack of assurance that the products would be sold.

Demographic factors: People in the US are having less children. As each year passes by there is a significant decrease in the number of births; just considering the last two years, there has been a decrease of 4%.

Social factors: The company did not try to bridge the gap between their ideals and the needs of their customers. Children nowadays lean more towards electronics and video games. Another important point to note is they did not work on building a social media presence which is very helpful in staying up to date. This is something that could have solidified their waning presence in a persons everyday life.

Political and legal factors: Joining hands with a large e-commerce company like Amazon ended up being detrimental for them as Amazon took full advantage of the deal that was set in place. This further added to the debt they were in with the court cases that followed.

[Charmain Smith]

For decades, Toys R us was THE premium toys store in America with shares also in the global market. But in 2017 they filed for bankruptcy. A business strategy should take the changing environment into account. A number of factors led up to their demise.
Demographic Factors
During the filing process the company actually cited declining birth rates, not only in the US, as part of the reason for their downfall. It seems millennials are opting to have fewer children or much later in life or none at all. So as small children are their target market it supposedly affected their profits. However, they failed to take into account that children’s’ interests were changing.
Competitive Factors
To remain a reckoning force, businesses need to take stock of their competition by assessing the market. Customer feedback still plays an integral role in decision making. Other companies were able to bypass Toys R us because they catered to the wants and needs of their customer base. Amazon, Walmart and Target are three of the businesses that cut into the toy market. Amazon and Walmart, among the largest of the competitors, catered to the emerging market of on-line shopping. In addition to cheaper prices, it had become a lot more convenient to shop by just using your electronic devise. Toys R Us prices remained among the highest and competitors were using promotions like price matching to get ahead.
Social Factors
Children from this era are vastly different from those of the introduction of Toys R Us. Toys that children played with have taken a backseat to electronic toys and games. The smallest child can take your cell phone and work it. They needed to add a digital component to their products. The store of itself was not aesthetically pleasing, they were too large and warehouse like. Even the CEO admitted that the general upkeep and condition of the stores were not of the best.
Economical Factor
The company was in debt long before they filed for bankruptcy. They mostly relied on holiday sales to survive and as kids are less interested in physical toys these days, it was a hardship for them. They used their returns to deal with the large debt. Maybe if the company was still public and there were shareholders to account to, management decisions may have been different. They moved from being a public company to a private one after they were bought out in the hopes of saving them financially.
Political/ Legal Factors
In a bid to turn things around, they entered into contract with Amazon to solely sell their products on line. However, Amazon reneged and also started selling other toys. They were able to win a lawsuit challenging that, but the damage had already been done.
They could have utilized the SWOT analysis in not only considering product alternatives, but also distribution alternatives.

[Klaudia Przybyla]

Founded by Charles Lazarus, Toys R Us was once the largest and most known children’s toy retailer.

It was the go-to children’s shop. However, in the spring of 2017, the company filed for bankruptcy and closed its doors after 70 years.

Poletical and legal factos.
Factoid about the internet. Online shopping became really popular. People have noticed how easy and convenient it is to buy toys online, rather than spending hours at the toy store.

Toys R Us decided that it was time to become a player in the online market.

Partnering with Amazon was their biggest mistake.

The brand trusted Amazon, and they got an expensive partnership. They didn’t give them exclusive rights, and they started selling 3rd party products.

Children’s toy retailer Toys R Us should have created their own internet platform instead of signing a 10-year contract with Amazon
– Economic factors

Why would someone buy toys from Toys R Us when they could have gotten the same thing at Target, Walmart, or Amazon?

Most children don’t want to spend money on toys – They get bored of them fast.

Rather than keeping the price high, the company should have closed the stores that did not make a profit and lowered the prices at the other locations.

 

Competive and social factors

 

We all know that children’s needs change every year. Things change from the time they are born until they turn 15 years old.

Companies should’ve always paid attention to their clients – <span style=”font-weight: inherit;”>Toys R Us was a brand that focused on kids. Child-related needs change every year. </span>

At some point, playing with toys is no longer cool – that is when the video stage comes.

The digital world has become even more popular. Why haven’t Toys R Us embraced technology more?

 

Demographic Factors

For the decline in toy sales, Toys R Us blamed the birth rate decline.

Yes, families are having fewer children now, but they are able to spend more money on their children.

The brand could have invested the money into electric devices for kids. People were more inclined to purchase more

expensive electric devices for their kids.

[Emmalyn]

I want to preface this by saying the reason that I listed the factors in the order that I did is because I believe that if they would have taken the time to address these specific factors first (social, demographic), then Toys R Us could have potentially prevented the spiraling that greatly contributed to their decline (competitive, economic, political and legal).

Social Factors: Toys R Us overall failed to recognize the shift that was occurring in the toy industry and how severely it would affect their business.  Many children were becoming more interested in digital games and instead of figuring out ways they could make exclusive deals with video game companies and producers, they stuck to the same business model of more traditional-esque toys.  One of the greatest social factors that led to their decline was convenience—with the growing popularity of mega-online retailers, customers were won over as they could fulfill their needs at a lower cost without ever having to leave their home.  Rather than developing an in-company strategy to address this social shift of online sales, they outsourced this responsibility to Amazon which would later be a great contributor to the beginning of their decline competitively and economically.  Also, another social factor to consider is the impact that CNBC had on Toys R Us when they exposed Toys R Us’ plan to file for bankruptcy and it had great negative repercussions on Toys R Us’ business relationship with vendors.

Demographic Factors: Toys R Us did not work to identify and adapt to the changing needs of their customer demographic which bled into other issues which led to their downfall. Rather than taking the time to look into expanding their business early-on by identifying new products or related markets they failed to consider potential alternatives which could have let them remain in competition with big-box stores.  Although they were selling toys aimed at children, they failed to consider meeting the needs of parents and guardians who would be the ones purchasing the toys and bringing in revenue and lost much of their customer base.

Competitive Factors: As more big-box stores began appearing, customers were able to make a physical one-stop for groceries, clothes, household necessities, and toys in Walmart, Target and Kmart.  Toys R Us failed to consider other ways they could have strategized to potentially expand their product in order to address this threat so that they could keep customers and consumers coming to their brick and mortar mega-toy store locations.  When it came to Toys R Us’ online presence, however, they had decided to take on a different strategy with market development and began a partnership with Amazon as Toys R Us claimed they did not have the inventory or fulfillment capabilities to process the high demand of online orders they were receiving.  Had Toys R Us shifted their focus from opening more brick and mortar stores to expanding and developing their online business internally to having a department and leadership who could specifically overlook online order fulfillment and online customer service, they may not have seen their decline so soon as their contract with Amazon would cost them dearly.  When Amazon began to sell toys from Toys R Us’ competitors at a lower cost, it directly threatened and interfered with Toys R Us’ ability to compete in the e-commerce sector;  these losses in online sales had a negative impact on them, and they also were kept out of the online market for six years while they took Amazon to court for breach of contract.

Economic Factors: The aforementioned social and competitive factors, and the lack of foresight in developing strategy to address these internal weaknesses and external threats would be one of the greatest contributors in the economic decline of Toys R Us.  As previously mentioned, Toys R Us was forced to spend millions of dollars taking Amazon to court, which further contributed to their economic troubles.  Toys R Us also did not consider implementing a strategy that other stores had developed in response to the rise of big-box store competitors—price matching.  They also focused too much on the expansion of brick and mortar stores without consideration for the long term financial impact of having so many locations even when they were not bringing in revenue.  Rather than closing more of these stores earlier on and more strategically placing their locations, they left many of them open, such as their Times Square location which remained open until 2015.

The overall economic issue Toys R Us was faced with was managing accumulated debt.  When Toys R Us was bought for $6.6 billion by Vornado Realty Trust, Bain Capital Ventures, and KKR, the firms had to borrow money and were entering with about $5.5 billion in long term debt.  They privatized the company—presumably in hopes of getting it back on track—but missed their chance to go public.  Although in 2016 they were able to boost their earnings, the debt incurred from this buyout still weighed heavily on them which led to their plan to file for bankruptcy.  They were planning to file for bankruptcy in 2017 after the holiday season, but were caught by CNBC before the holiday season even occurred, which caused 40% of their vendors to demand cash on delivery in order for Toys R Us to receive toys.  This directly affected their supply chain and impacted one of the busiest seasons economically for the toy industry as they had minimal product.  This then forced them to file for bankruptcy without a plan to reemerge.

Political and Legal Factors:  The company having to deal with their lawsuit battle with Amazon set them back millions of dollars, and disadvantaged them in terms of developing a separate online presence which would have allowed them to better compete in e-commerce. Their filing for bankruptcy as well negatively impacted their relationship with toy vendors.  They also frequently had changes of  leadership which contributed to company difficulties in focusing on specific goals, strategies, and tactics.

• This reply was modified 2 years, 5 months ago by Emmalyn.

[Onii]

Toys R Us faced a multifaceted decline, with various factors spanning different components of the marketing environment. In terms of social factors, the shift in consumer preferences towards online shopping and digital entertainment impacted traditional toy retailers. Demographically, the declining birth rates and changing family structures reduced the target market for Toys R Us.

Economically, the economic downturn of the late 2000s impacted consumer spending, affecting the toy industry. Additionally, the rise of discount retailers and online competitors intensified competitive factors, making it harder for Toys R Us to compete on price. Political and legal factors, such as increased regulations and bankruptcy laws, also influenced the company’s ability to adapt.

As well as Toys R Us amassing unnecessary debt, as an former employee of FAO Schwartz, once the company was acquired by Toys R Us it created the final nail in the coffin nimbus not being able to handle both debt loads.
<p class=”p1″><span class=”s1″>Ranking these factors in terms of significance, the shift in consumer preferences and the rise of online shopping might be the most impactful, followed by economic challenges and competitive pressures. These factors collectively created a challenging environment for Toys R Us, ultimately contributing to its commercial downfall.</span></p>

[Onii]

<p style=”text-align: center;”>Toys R Us faced a multifaceted decline, with various factors spanning different components of the marketing environment. In terms of social factors, the shift in consumer preferences towards online shopping and digital entertainment impacted traditional toy retailers. Demographically, the declining birth rates and changing family structures reduced the target market for Toys R Us.</p>
Economically, the economic downturn of the late 2000s impacted consumer spending, affecting the toy industry. Additionally, the rise of discount retailers and online competitors intensified competitive factors, making it harder for Toys R Us to compete on price. Political and legal factors, such as increased regulations and bankruptcy laws, also influenced the company’s ability to adapt.

As well as Toys R Us amassing unnecessary debt, as an former employee of FAO Schwartz, once the company was acquired by Toys R Us it created the final nail in the coffin nimbus not being able to handle both debt loads.
<p class=”p1″><span class=”s1″>Ranking these factors in terms of significance, the shift in consumer preferences and the rise of online shopping might be the most impactful, followed by economic challenges and competitive pressures. These factors collectively created a challenging environment for Toys R Us, ultimately contributing to its commercial downfall.</span></p>

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