[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 Sunday, April 9, 2023. 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. Students should review others’ submissions and comment meaningfully (refer to this guide from MMSU for reference) to at least two other students. For reference, here is the difference between a comment and a post — you will be using both for this assignment. Make sure to refer to our Discussion Rubric as you work on your submission.

• This topic was modified 2 years ago by Brielle Buckler. Reason: Republish
• This topic was modified 2 years ago by Brielle Buckler. Reason: Updated Links
• This topic was modified 2 years ago by Brielle Buckler. Reason: Updated Links

[Naomi Stubbs]

This store had a strong presence in my childhood, even in the UK, and so its demise was sad yet perhaps inevitable, given (like many other large companies) its failure to pay heed to the changing landscapes in which they operated.

Social factors
In the US and elsewhere, while toys continued to play a role in the economy, children increasingly turned to video games and then online gaming. Toys R Us’s failure to respond (quickly enough and fully) to this shift placed them at a disadvantage.

Demographic factors
The target audience for the company could have been more carefully considered. If they decided to target parents primarily (people who grew up with the brand as part of their childhood), they could have played more on the idea of nostalgia, and/or focused on convenience and perhaps partnered with others to offer more of a “one-stop shop.” Alternatively, they could have focused more on the children themselves through targeted advertising, or creating more events and spaces for kids to play with the toys. Either option could potentially have helped.

Economic factors
An inability to invest in their stores to keep up with competitors (both retail stores like Bed Bath and Beyond/Buy Buy Baby and online companies such as Amazon and Diapers.com) meant they had a weak hand. The already weak position appears to have been further undermined by the “bank run” situation (which surely reminds us all of what recently happened with SVB and Signature) – once confidence is lost, it is hard for any business to survive. Saddled with as much as debt as they were, and having suppliers insist on COD and refusing to deliver otherwise, coupled with fears on the part of the consumer made it hard for them to do much to tackle the problem. I recall at the time of their liquidation that some customers were eager to snap up bargain basement prices but unwilling to purchase expensive items given the likely inability to return unwanted items.

Political and legal factors
While I do not fully understand the terms of agreement between Amazon and Toys R Us, it appears there was some huge oversight on the part of their lawyers either in the drafting of the contract or the enforcement of it. If the agreement was supposed to grant them exclusivity but instead led to them competing against every other online retailer within the very platform they had signed with, something must have been sorely amiss. The partnership with an online retailer probably seemed like a great idea at the time (and even looking back with the benefit of hindsight), and if it had been properly executed, this could have been exactly what they needed to get back on top. Yet their oversights on the legal front played a significant role in their failure.

Competitive factors
This is perhaps the most important (or second, after “economic”) factor in their demise, in my opinion. While the industry was shifting around them, Toys R Us failed to adjust quickly enough to compete effectively. Companies like Blockbuster had a similar issue. Instead of seeing the shifts to gaming and adjusting stock accordingly, or enacting the shift to online sales quickly enough, or building out their retail experiences to make clear what they offered that other big box stores could not, Toys R Us just kept doing what they were doing in hopes they would be fine. Their move to online sales came too late and with too many issues in the execution to save them – too little, too late.

Of course, this is all much easier to see with the benefit of hindsight, and we are left to worry what the equivalent business might be today. More recently, Toys R Us has begun to make a reappearance in Macy’s stores. Hopefully, based on past experiences, under new ownership, and being part of an established department store brand can lead to a little more success for this once-great brand.

[Rena]

I found something new in this post. I had not thought about the rise of online games n Indeed, there are numerous online games now, and there is no need to go to a toy store to buy a toy. I think this is another reason for the decline of Toys “R” Us.

[Djibrilla Issa Hamani]

Rena,

I think Toys will always be around, and people will continue to visit stores to purchase them. Additionally, as toys age, their value may increase due to nostalgia and scarcity, making them a highly sought commodity for collectors and enthusiasts.

[Ariel Peretz]

Hey Naomi,
Thank you for providing a thorough analysis of the factors that led to the downfall of Toys R Us.
Your insights demonstrate an understanding of the complex interplay of social, demographic, economic, political, legal, and competitive factors that can impact the success of a business. Toys R Us faced significant challenges in adapting to the changing retail landscape, particularly with regard to the rise of online gaming and e-commerce. However, it is encouraging to see that the brand is making a comeback through strategic partnerships with established retailers like Macy’s.

[Danming Li]

The closure of an old company is really heartbreaking, because there are many childhood memories in it, just like the number of old companies that have closed down in recent years. The times are developing, people are also developing, and many old companies will face the problem of not keeping up with the changes of the times. The various factors you mentioned are all correct, especially now that children are charging money online to play games. In the previous era, there were not so many electronic products and companies that developed computer games, but now we are in an era of advanced technology， toys are not very popular anymore.

[Jacob]

In addition to this comment, I can see the full factors in this discussion in which this company’s failures had cause for itself, I think when a business sees where it should evolve and thrive is what can bring great service potiental from look at what the consumer wants from it’s retail stores but in this case it has not.

[Aldon Lamb]

I really enjoyed your idea of changing some of the ideas and the atmosphere of ToysRUs. The idea of a play area where you could test out toys or they could do major demonstrations of toys is really cool.  I would go now even as an adult to try out new games, video games, etc.

[Rena]

Causes of bankruptcy
　One of the reasons for Toys “R” Us’ bankruptcy is the rise of online shopping, such as Amazon.com, and large supermarkets, such as Wal-Mart.
When Toys “R” Us began, online shopping was not common. In addition, Wal-Mart, for example, has also played the role of Toys “R” Us because everything is available in one place and toys can be purchased while shopping.

What could have been done to prevent bankruptcy?
　To prevent bankruptcy, Toys “R” Us had to change with the times. It needed to have sales items and restaurants that would attract adults as well as toys for children. Toys “R” Us also needed to offer a lineup of products that are unique to the toy specialty store.

　Toys “R” Us was well known and had a strong brand, and it was necessary to capitalize on that. The company needed to retain the company name and change its sales format to one that was in demand not only by children but also by adults, without focusing solely on toys. Changes in the times are inevitable, and if the company had been able to address these changes earlier, bankruptcy could have been prevented.

[Ariel Peretz]

Hey Rena,
Your analysis highlights the importance of adapting to changing consumer trends and preferences to remain competitive. To prevent bankruptcy, the company could have explored new sales formats, such as incorporating restaurants or other entertainment options, to attract children and adults. Additionally, Toys “R” Us could have focused on offering unique and specialized products unavailable at other retailers, leveraging its strong brand and reputation in the toy industry.

[Nicholas Cordoba]

Hi Rena,

I liked what you had to say about the fact that it was necessary to capitalize off their well-known, strong branding. Additionally, I completely agree with the fact that they should’ve marketed towards a sales format that prioritized adults since they are the ones doing the spending after all. It amazes me that they were unable to provide a better shopping experience, especially outside of Amazon. If they utilized E-commerce, and prioritized stress-free shopping (since the vast majority of adults have full-time jobs and other responsibilities that may prevent them from literally going to the store and shopping) they might’ve had a shot.

[Danming Li]

You are right, many people like one-stop shopping nowadays, so that they can buy all kinds of supplies and toys at the same time, but toy r us doesn’t have this advantage, they only sell toys for children, and adults are definitely more willing to pay for their own hobbies than children. So it is very normal for the company to go bankrupt because these toys are only for children.

[Joanne C.]

Hey Rena,

I found your comment interesting, especially about Toys R Us having restaurants. I should have considered them having the food aspect when reviewing their downfall/improvements. This strategy is used by many stores, Bjs, Target, Walmart, and even IKEA. Offering a place to buy and eat food in the store will increase customers’ time spent and the expected amount of money they spend. IKEA made a key strategy to sell their meatball at a low price to make that a reason for customers to go beyond the other products sold there because they know customers will most likely buy other stuff once they are in the store. The point is to get the shoppers in the door. Toys R Us would have benefitted from doing this as well. Nice that you pointed it out.

[Khadim Green]

Hey Rena, I totally love your consideration for the adults! They too would like to still feel like a Toys R Us kid. Incorporating many different people into your target can be very essential. In opposed to targeting kids, target the entire family. Also an exclusive toy store sounds unbeatable. Seems like they went down without a good fight; they could have used that idea for sure.

[Veronica Del Rio]

Hi Rena

Your so right incorporating restaurants would’ve been genius. It’s something that a lot of big retailers do or for example small Apple or Starbucks stores within stores. Like others mentioned one stop shops are ideal, it gives more convenience and saves time especially for families. Toys R Us had gotten us a little with the Ferris wheel in 42nd st. but it just wasn’t enough. This was an excellent point.

[Ariel Peretz]

The Toys R Us brand, a retail giant and market leader in the child toys industry, experienced a significant decline in commercial success, leading to the company’s bankruptcy and closure. This downfall resulted from various factors categorized into different marketing environment components. These factors and changes that contributed to the decline of Toys R Us include economic, competitive, demographic, social, political, and legal aspects.

Economic factors were the most significant contributors to the decline of Toys R Us. Increased competition from online retailers, particularly Amazon, which offered lower prices and convenience, played a significant role. Changes in consumer spending habits, with many consumers preferring to spend their money on experiences rather than physical products, also affected the company’s bottom line. Additionally, wrong investments in the baby industry simultaneously during the 2008 financial crisis led to decreased consumer spending, further impacting the company’s revenue.

Competitive factors also played a significant role in the decline of Toys R Us. The company faced increased competition from discount retailers like Walmart and Target, who began offering various toys at lower prices. The emergence of new toy retailers, such as specialty stores like Build-a-Bear Workshop and party stores like Party City, took away market share from Toys R Us.

Demographic factors were less significant but still contributed to the decline of Toys R Us. Declining birth rates in the US led to a decrease in the number of children and, therefore, a reduction in demand for toys. Additionally, the shift towards digital entertainment, with children spending more time on screens and less time playing with traditional toys, impacted the demand for Toys R Us products.

Social factors also played a role in the decline of Toys R Us. Changes in parenting styles, with parents becoming more focused on educational and developmental toys rather than traditional toys, impacted the company’s product offerings. The emergence of subscription-based toy services, which provided consumers a more convenient and affordable way to access toys, also affected the company’s sales.

Finally, political and legal factors, including the change in bankruptcy laws in 2005, which made it more difficult for companies to restructure their debt, and the changing regulatory environment, with new safety and environmental regulations increasing costs for toy retailers, contributed to the decline of Toys R Us.

In conclusion, Toys R Us’s downfall resulted from wrong management decisions and environmental factors. Economic factors were the most important, including increased competition from online retailers and changes in consumer spending habits, which were the most significant contributors to the company’s decline. The competitive factors, the second important factor in the company’s fall, including increased competition from discount retailers and the emergence of new toy retailers, also played a significant role. Instead of changing the prices of the products, the company just saw how the value of its brand decreased in relation to other competitive companies. Those reasons show that the board of directors has fallen asleep related to the management decision-making, and they didn’t make the right adjustments regarding the environmental changes in the same years. The most important thing in managing a company is to sense the field and adapt and adjust different strategies according to the situation.

[Rena]

I did not even think about the financial crisis of 2008. Indeed, the Lehman Brothers collapse may have influenced the decline of Toys “R” Us. I also think the decline in the birth rate is another contributing factor to the decrease in demand for toys. I believe that social issues and business are closely connected.

[Nicholas Cordoba]

This was very interesting Ariel, I did not take into consideration subscription-based services whatsoever. In fact, I never heard of such a thing. It’s a shame how uncoordinated their marketing teams were, I feel as if they would’ve had a legitimate shot at surviving as a business if they had just offered the same/similar services as other similar companies, not even being better would’ve been completely necessary per se.

[Naomi Stubbs]

Thanks for sharing your thoughts, Ariel. I found your observation about Build-a-Bear and Party City to be especially interesting. I had not thought about specialty stores chipping away at specific aspects of Toys R Us’s business — it appears that they were challenged by businesses thinking both more broadly and more specifically in terms of their product offerings!

[Jacob]

I totally agree, a company should be able to see what it can do for its consumers but also be more focused on their products being bought and view there stock in order to anylsis there spending and sales.

[Nicholas Cordoba]

Social factors:
A vast & quick shift in customer behavior toward e-commerce platforms/online buying, along with the detrimental rise of video game consoles. Not only were children’s choices shifting away from traditional toys and toward digital and electronic ones, but parents were also becoming more concerned about the quality of Toys R Us products and the safety of the toys they buy (compared to digital / video games), along with delivery speed and convenience shopping other e-commerce platforms provided that they did not.
Demographic Factors:
One major demographic factor was that were fewer potential clients due to the reduction in birth rates around this time. Also, there was an increase in stores that catered to particular ethnicities or ethnic groups, increasing multiculturalism, thus skewing some potential customers away and towards other toys that fit their demographics better.
Economic factors:
The 2008 financial crisis caused a significant drop in consumer expenditure, due to banks closing, real estate/stocks crashing, and an immense amount of job lay-offs. Since parents were the primary buyers, many of them were simply unable to buy their kids’ toys because of the economic turmoil. Also, increased competition from low-cost retailers like Walmart and Target which sold comparable goods was able to undercut Toys’R Us due to their more stable financial positions. Along with this, the higher cost of operating retail stores (Due to the recession) made it even more difficult for Toys’R Us to expand, let alone survive.
Political and legal factors:
Changes to legislation governing toy safety regulations and product recalls, resulted in higher expenditures for Toys R Us. Environmental organizations were putting more pressure on businesses to promote sustainability and eliminate packaging, which could be problematic for stores that rely heavily on packaged goods, like Toys’R Us.
Competitive Factors:
Online merchants like Amazon and other e-commerce platforms were becoming more competitive, due to the convenience of buying from home, and the excellent (quick) delivery times. Hence, parents were able to purchase toys for events (holidays, parties, graduations, etc) without having to worry about going into packed shopping centers or just leaving the house in general. Substantial competition from other toy sellers that provided comparable products at lower prices, like Walmart and Target was also detrimental to the fall of Toys R Us.

[Naomi Stubbs]

I hadn’t thought about quality and safety, Nicholas. Were there specific products/lines you were thinking of when you wrote that? I suspect there were several recalls of toys through the years, but do you know of some specifically tied to Toys R Us, or are you thinking of digital vs physical toys more generally?

[Will Kirksey]

The Rise and Fall of Toys R US

Toys R Us will be remembered as one of the great American, if not worldwide, toy retailers in history. At one time, they were the benchmark of how to market and promote a specific product for children that no one had ever considered. They had a stranglehold on the marketplace for approximately fifty years with minimal competition. The volume of toys that they were able to sell from one location was phenomenal.  Geoffrey the Giraffe was the face of the stores along with a catchy jingle that boasted “being a Toys R Us Kid.” They were the Roman Empire of the Toy Industry. Just like Julius Caesar was killed and the Roman Empire fell, so did Toys R Us. Here are some reasons why:

Management

This is without a doubt the number one area Toys R Us failed to innovate, advance, plan, structure, and properly forecast for the future. Marketing is all about planning for what’s next and what is coming up. I believe that they allowed themselves to be grossly arrogant in adopting the notion that if nothing was broken then fix it. Additionally, they failed to hire people who were aware of the new trends and how to prepare for what was coming. TRU management ingested financial “poison pills” that set them up for a long-term death by ignoring the upward trend of E-Commerce and social media, improperly and unwisely making a business associate with Amazon. They pulled the rug right from under them and worked with TRU competitors. They put their dollars behind more stores without it addressing the wave. As their loyal customers were getting older and growing up they didn’t do much to try to cultivate new blood (customers). Their branding message and look were old and out of touch with the new generation.

Marketing

As previously stated, there was no foresight for the future for them to come into a new era of toy distribution. I don’t recall them ever being at the forefront of any new technology as far as toys are concerned or how even how they can lead something into a new era. They didn’t show any specific plans on how to prepare for new launches in new markets. They seemed to of lost touch with their fan base by not making a fun time for them. For example, the TRU megastore in New York City was a big store in Times Square. They did have a big Ferris Wheel there that customers could ride on. At some time, TRU had acquired FAO Schwarz, which had a famous interactive exhibit that was featured in the Tom Hanks movie, “Big”. They had introduced the giant piano keys that you can step on where it lit up and played the note of that key you stepped on. FAO Schwartz’s philosophy was that toys should be “fun”, “engaging” and “captivating”. Adapt or Go Home. TRU could have followed this practice to help strengthen the retainment of its most precious resource, its customers. As the jingle said, I don’t want to grow up…” No Kidding,

E-Commerce/social media

By not respecting the trend that was coming in the form of E-Commerce TRU found itself really left behind. E-Commerce was becoming the new means of how people were shopping from the convenience of their own homes. Customers could see multiple things at once without having to walk down the aisle or push a cart.  Their failure to create a website without it including a way for customers to also purchase doomed them. They also missed an opportunity to be part of an online community that offered multiple impressions of opportunities by not using social media the way they should have. TRU really left themselves disconnected and out of touch.

[Will Kirksey]

Naomi,

Here are the lyrics to the TRU jingle,

I don’t wanna grow up,
I’m a Toys R Us kid
they got a million toys at
Toys R us that I can play with
I don’t wanna grow up,
I’m a Toys R Us kid
they got the best for so much
less, it’ll really flip your lid
From bikes to trains to video games
it’s the biggest toy store
there is
(gee whiz!)
I don’t wanna grow up,
cause maybe if I did
I couldn’t be a Toys R Us kid.

Also I believe, that the song goes hand in hand with their business practice to where they only thought of themselves and their way just like a child. The whole jingle is peppered with “I”. There was no *We” as in family or “Us” as in friends or siblings. They had that star in the logo of the name but that’s a backward message. Think about this. If you are targeting younger children mainly, sually, when you see stars that means it’s nighttime. Wouldn’t it be time for bed anyway? They can’t play with their toys if it’s time for bed. Children have buying power via through their parents.

[Medusa Gamble]

Why I think Toys R Us Failed and What They Could Have Done Differently:

 

1. Did not upgrade the look of their stores. Similar to Kmart, Toys R Us looked like it was stuck in the 1980s. They could have upgraded their brand image, and made the inside of their stores more vibrant and clean. I went to the Times Square location many times as a kid with my mom. Rode the ferris wheel, went inside the life size Barbie doll house. It was clean, vibrant, had large toy selections and life size toy displays. I remember the store felt reminiscent of a theme park. Not all of its stores felt or looked that way though, and I think that was a problem especially as years went by. They neglected a lot of stores.

2. Made the decision to go private. This caused them to go 5 billion dollars in debt, a decision that cost them because overall sales from their stores and website weren’t enough to make up for that much debt. Plus being in so much debt didn’t allow them to invest money into other areas to remodel their business.

3. Not paying attention to consumer wants. There was a shift in what children desired towards the early 2000s. Computers, tablets and video games like Play Station and Xbox were all the rage. Toys R Us could’ve advertised themselves as the largest seller of video games, online computer games, tablets, etc. and benefitted from heavy marketing of it. Big ads of kids playing video games in the windows of the stores, ads of kids using tablets to draw in, ads of kids doing their homework on the computer, in commercials, on the website, and more.

4. Didn’t study other business giants, like Walmart, who surpassed them in terms of toy sales in 1998. Once Walmart surpassed them, they should’ve studied what they were doing and implemented the same policies. Walmart’s policy is that if you don’t like a product, you can return it even if it’s been opened. Prices at Walmart are also more affordable. Toys R Us was expensive and had a policy that toys couldn’t be returned if you opened it, even if you didn’t like it. It was important to pay attention to that because interest in toys was on a slow decline starting in the early 2000s. A consumer doesn’t want to invest in a bunch of expensive toys if the kid(s) decides they don’t want it in favor of something else. They could have also included more women in their corporate business meetings – since mothers with children were the target audience – and get a woman’s opinion on how to improve since they were most likely to have kids, understand consumer’s wants and have a different perspective than just business meetings with all men.

5. Partnership with Amazon. As internet usage increased, more and more people were going online shopping. Instead of forming an alliance with Amazon (a separate business entity who was not struggling like Toys R Us) and getting rid of their website because of the agreement made between Amazon and Toys R Us, Toys should have kept their website and made it easy to navigate and heavily market their toys and baby products (plus again, heavily market themselves as a large [largest] supplier of video game consoles and other digitals). Also provide faster shipping equal with other competitors or even faster especially during holidays. Toys R Us downfall was allowing the competition to literally own part of them and place restrictions on them. They were not able to stand out on Amazon’s website because Amazon allowed other companies to sell toys too, and this diminished Toys R Us presence online when online shopping was growing in popularity.<!–/data/user/0/com.samsung.android.app.notes/files/clipdata/clipdata_bodytext_230409_200939_566.sdocx–>

[Djibrilla Issa Hamani]

Medusa,

I actually did not know about their no return policy, and I think in business that can damage the reputation of the seller. A customer wants to be heard even if the company can’t provide solution to their issue and when that can not be in place the public will dissociate itself to such company and the competition will again”another one” Dj Khaled.

• This reply was modified 1 year, 12 months ago by Djibrilla Issa Hamani.
• This reply was modified 1 year, 12 months ago by Djibrilla Issa Hamani.

[Khadim Green]

Hey Medusa I do agree that they neglected a lot of stores. You describing the Times Square location honestly just made me think about how beautiful that experience was especially in comparison to a lot of stores. That led me think maybe it could have been more effective if they reinvented themselves into large toy stores in major cities like Hollywood and Orlando, similar to how Disney does many locations globally. Perhaps too many stores was what held the brand back. I can only imagine how impactful many Times Square Toys R Us store would be if they rebranded into being a tourists attraction.

[Veronica Del Rio]

Hey Medusa the no return policy is a major factor of its business. That would immediately steer me away for any product so i could imagine what it did for their consumers. You hit everything on the nose. They simply just didnt pay attention to important factors that overtime couldve been adjusted appropriately and efficiently. Allowing them to save money and like you said invest into other areas that would’ve made a huge difference for the company. Well said!

[Jacob]

Having been such a huge business in the past, it goes to show how much a business can suffer if not paying attention to a marking environment today, in this video that was given discusses a well insight at what happen to the well marketing kids industry that provide toys is what gave this business a future but due to poor marketing to the lack of information the business was to be evolving with made the company go down drastically. In today’s marketing environment the world now shops by the internet and competitors do a better job in delivering what the consumer wants in offering great prices giving these companys the upper hand into being a top service and providing great strategies, another reason is the lack of what this company was suppose to do from the start which was seeing how the world was more towards shopping through the internet than going in person, for example during the pandemic many companies had gone bankrupt and it cause huge profits for others and in this case it’s the same. Lastly another reason is that many kids are now moving to the factors of today’s virtual reality or video games and it has changed the industry, from the advancing technology we can see that marketing has played a huge part like “Apple” that is a fantastic marketer is the future of gaming to communcating in which kids are more involved in. To conclude this part of the discussion is to see what this company has learned from its mistakes to how it can evolve better in the future and it is still in its phase of developing and collaborating.

[Joanne C.]

Hi Jacob,
I agree that Toy R Us should have adapted to the changing needs of its customers and society by realizing how technology was becoming essential and is still the future. They should have started earlier on their online presence rather than focusing on expanding in the brick and motor stores since they would have saved money by selling online. Having this early start would have given them an edge and expertise in e-commerce to adapt to many, if not all, changes, such as the recession and pandemic. As you mentioned, kids are moving to virtual reality and video games. Toys R Us could have created a site to play games on and sell and had a virtual reality experience in the brick and motor stores for a lower cost, to allow kids that couldn’t afford to buy their own still to be able to play for a reasonable price. This would have helped their reputation for caring for the community and increased time spent in the stores, leading to higher revenue.

[Djibrilla Issa Hamani]

I was in my second year in America when I first learned of Toys R Us’s problems, which eventually led to its closure. Despite being a pioneer in the kid’s toy sector, I had never shopped at the store and had only heard of it through news coverage of its demise. It was startling to see such a well-known company encounter financial issues and go out of business, but it also served as a reminder of the obstacles that firms face in trying to stay competitive in a quickly changing retail world.

Social Factor
I think consumer behaviors were one of the key societal factors of Toys R Us’s ruin. People were increasingly moving to video games and online as technology advanced, which harmed the traditional retail industry, particularly Toys R Us. Furthermore, as the US population aged, there were fewer children in homes, resulting in fewer people purchasing toys.

Demographic Factors
We can enumerate that Toys R Us was forced to close also due to some demographic factors. The majority of the company’s customers were aging baby boomers who were buying less regularly as their children became older. At the same time, millennials, who were starting families, had different buying habits and were more prone to look for bargains and purchase online. Furthermore, the demographics of the United States were changing, with a greater number of people from various ethnic and racial backgrounds, and Toys R Us failed to connect with these new client bases. Finally, technology had a role, with younger generations more prone to shop online and evolve into using video games or tablets as new ways to entertain themselves. Toys R Us failed to stay up with evolving technologies, making it tough to attract younger customers. These demographic trends, among others, contributed to Toys R Us’ decline and collapse.

 Factors
Coming next are the Economic factors which played a big part in the closing of Toys R Us. The 2008 recession, which resulted in a drop in consumer expenditure, was one of the most significant contributors. As a result, Toys R Us suffered a sales drop from which it never fully recovered. It’s important to note that “from 2012 to 2017, the toy industry declines annually at a rate of 3.1% “CNBC.  Furthermore, the company faced fierce competition from other retailers like as Walmart, Amazon, and Target, who provided lower-cost toys. Toys R Us struggled to remain profitable in the face of this competition, and the company failed to keep up with the changing retail scene. Furthermore, the company was heavily in debt, making it impossible to invest in new ventures and stay competitive.

Political and legal factors
We need to consider political and legal considerations that contributed to the collapse of Toys R Us, as well as a number of specific incidents. One of these was a lawsuit against Amazon, alleging that the online retailer was engaging in anti-competitive activities and driving down toy costs. This lawsuit, filed in 2004, increased the expense of doing business for Toys R Us and exacerbated the company’s financial difficulties. Furthermore, the increasing competition in the toy sector, with competitors such as Walmart and Target offering toys at reduced rates, had a political and legal impact. Toys R Us failed to compete with these pricing while remaining profitable, ultimately leading to its closure. Finally, 40% of vendors refused to deliver merchandise to Toys R Us without payment, exacerbating the company’s financial woes. These merchants were concerned about the company’s financial health and were afraid to risk nonpayment.
Competitive factors
A company’s performance can suffer if it fails to adapt and evolve in response to industry changes. In this part, we will explore how Toys R Us was forced to close due to competitive pressures and the impact of technology and changing marketing strategies, among other things. Competitors such as Walmart and Target were able to use technology to improve their online shopping experiences, allowing customers to purchase toys directly from their websites. These shops also spent a lot of money on marketing and promotions, reaching out to customers through social media and targeted advertising. Furthermore, with chosen goods and knowledgeable employees, specialist toy stores were able to provide distinct shopping experiences. Discount stores might also compete by providing greater offers on toys. Toys R Us, on the other hand, failed to keep up with the competition, thanks to an antiquated website and ineffective marketing techniques. It was also difficult for the corporation to adjust to changing client preferences due to its reliance on massive physical storefronts. Overall, the toy industry’s severe competition, combined with competitors’ use of technology and successful marketing methods, contributed to Toys R Us’s downfall and eventual collapse.

I also wanted to add that the quantity of counterfeit toys in China could also mention as a big cause in Toys R Us’ downfall. The market was flooded with cheap copycat products, harming the company’s reputation for quality and originality. As a result of this, as well as rising competition and other economic and social factors, the company was compelled to dissolve.

• This reply was modified 1 year, 12 months ago by Djibrilla Issa Hamani. Reason: text is showing p[age code
• This reply was modified 1 year, 12 months ago by Djibrilla Issa Hamani. Reason: text is showing page code

[Joanne C.]

Competitive factors

Toys R Us needed to differentiate itself more to stay ahead of competitors. As mentioned in the chapter, a key strategy is for businesses to offer Unique Value to Customers. Toys R Us tried to compete by pricing low; however, the competitors beat them on that front, which backfired because they brought in less money in the long run while still losing their customers. Instead, they should try to be innovative and develop specialized toys or offer unique items that only can be sold at Toys R Us.

Toys R Us should have made marketing a priority. They should have put more money into having celebrities in commercials and advertisements on social media. They should have paid to be visible in popular shows/series to remind customers that they are still present and subconsciously get them to want to shop there.

Legal factors

Toys R Us needed to strategize for the long-term business plan. While struggling, they tried to do a quick fix by partnering with Amazon and either needed to fully understand the contract before signing or were not thinking long-term. Toys R Us should have negotiated a better-partnering deal or not partnered at all and instead tried to learn from Amazon’s business model to improve theirs. This legal fight caused them to drain money that could have been used elsewhere, such as creating a more substantial online presence.

Social factors

Toys R Us should have focused on listening to its customer’s needs. Toys R Us also needed to understand their target (kids) preferences were changing from old-school toys to more tech toys and games. They should have adapted to the times by offering more technology products and having a gaming section in the store to sell video games and play them, which would also increase the customer experience. They also did not ensure the stores had a modern appearance. When I used to go there, the store was more on the dingy side and not cleaned well. The store employee also seemed not to want to be there. This might be because Toys R Us did not focus on employee satisfaction, which led to customers not getting the best customer service/experience that would make them want to keep shopping there.

Demographic factors

Toys R Us decided to open multiple versions of its store for different shopping needs; Babies r Us, Kids r Us, and Toys R Us Express. While the products were for kids, parents/adults were the actual consumers since they made the purchases; Toys R Us would have made it easier for shoppers to access all of these store versions at one location. They did this for some sites having both stores either connected or side by side; however, the majority were split, which caused shoppers to go to different ones and for their rental costs to increase. Toys R Us should have used the straight of other competitors and kept all products under one roof, like Walmart, Target, and Amazon.

Economic factors

Toys R Us had too much debt and insufficient resources to get through unexpected events like the pandemic. They leveraged their debt incorrectly by opening too many stores too quickly, making bad deals such as Amazon, not being honest and misleading supplies which caused them to be left in a worse predicament than imagined. Even before the pandemic, the recession from 2008 caused people more skeptical about spending money on unnecessary things such as toys. Toys R Us should have prepared for another unexpected event by ensuring they had enough assets to cover any liabilities if needed.

[Aldon Lamb]

Your response about all of the different “R Us” brands is so correct. They got as my mama says, “too big for their britches” and thought they had all of these things in the bag. They could have even become a company like Bed Bath and Beyond and sold all things for all ages. Different areas of the stores for different ages so that the parents had something to do while their kid explored. The idea of like a kid’s play area popped into my head. IKEA has a kid zone so that the parents can do their thing. They could have used that and partnered even with big box stores and had new toys and games for kids that were available for purchase when their kid got picked up.

[Aldon Lamb]

Social Factors: Toys R Us’s biggest issue was not changing with the times. Instead of creating a marketplace for themselves, they teamed with Amazon in a less than stellar deal and it ended up biting them. Less and less time was being spent in store and they were not on the forefront of the online marketplace.

Demographic Factors: Toys R Us chose to focus on children and children only and that really hurt them. They had plenty of time to partner with other companies and adapt to a growing market for video games, consoles. As society changed and became more tech driven, the physical toy market fell off. The company was also battling the slowly decreasing birth rate around the world and the fact that those who were having kids were also born in the age of technology so they’re less likely to return to Toys R Us for their own children.

Economic Factors: I think that TRU’s choice to not create their own marketplace and make a heavy-handed deal with Amazon was a big play in their downfall. When it came down to it, Amazon had them in a choke hold and forcefully made them compete with other toy makers in the same place. It caused a lot of issues when TRU couldn’t lower their prices and consumers could instantly see that another seller had it for cheaper. TRU decided to stay private for far too long so instead of getting the influx of new money from going public, they tried to save themselves via bankruptcy. A lot of TRU’s downfall can be attributed to this one major mistake in their economic strategies.

Competitive Factors: I have touched a few times on this, but Amazon’s deal seems to have been a major double-edged sword. TRU got to put their items online in a convenient place, but they also had to compete with other toy shops who may be able to run deals and lower their prices. We also must consider the amount of big box stores that popped up all over the country and had everything the parents needed for home plus a very sufficient toy section to keep the kids happy. TRU became too much of a niche store to compete with most of their competitors. I believe that even smaller game stores were doing better because they had much less overhead.

Political and Legal Factors: TRU let themselves get consumed with their Amazon deal and then when they didn’t recover, they prepared for a bankruptcy. Their legal battles got worse and worse when the public found out and they couldn’t bring themselves back to even a functioning capacity. I think a lot of companies now have learned major lessons from TRU and are extra cautious with the deals they strike up to better their brand.

TRU was an incredible company for many years and it’s very unfortunate that they met the demise that they did but poor leadership did that to them. A lot of companies make the mistake of not moving forward with the social climate. Today we see many companies deny social media or only use certain ones when they should be using every avenue. It’s funny because everyone always says “Kids are the future” but then they don’t listen or pay attention when those kids are now making money and changing the ways of society.

[Djibrilla Issa Hamani]

Joanne,

Do you think striking a better partnership deal with Amazon potentially would  improve Toys R Us’ position in the market or even save the company?

[Khadim Green]

<span data-contrast=”auto”>Social Factor I believe that the way the world has adopted digital technology is what burnt out Toys R Us. The reason I say this is because there were days when having a new action figure or race car was cool, but at many times, companies would try to influence kids to visit their websites or game systems. When the kids that used to purchase from Toys R US grew into teenage years, they were still into video games which are like toys but in virtual reality. Furthermore, there was a cross focus on video games and mobile devices. I think the social adaptation to digital technology showed a lesser need for physical entertainment and I think many companies knew to adjust to the online population. Maybe if Toys R Us had online gaming or perhaps incorporated the need buy specific toys to unlock the characters in these Toys R Us online games would have given them the opportunity to at least keep the interest of their targeted generation. </span><span data-ccp-props=”{"201341983":0,"335559739":160,"335559740":259}”> </span>

<span data-contrast=”auto”>Demographic Factor- I think that if they put more focus into studying digital device sales and internet usage in relation with regions in the U.S. with largely growing populations would have allowed them to target families that do not use internet and mobile devices. This would leave more probability that if the population is growing from families bearing children and not just high migration rates, then they could have stable business for at least when these new children begin to grow too old to play with toys. Sure New York is a large place, but there is so much more to do than visit this toy store.</span><span data-ccp-props=”{"201341983":0,"335559739":160,"335559740":259}”> </span>

<span data-contrast=”auto”>Competitive Factor- The rise of superstores has changed the world. Walmart. Target, Best Buy, and now online purchasing of these stores in addition to Amazon, allowed people to replace the need for visiting stores. The main focus of Toys R Us as a store was that it was the experience that brought joy to children. These superstores bring adults convenience (and joy); they get what they want, they can get their kid an affordable toy, and it limits the attraction to every toy they see which is saving them money whilst keeping them happy. Adults are less likely to need toys so one less car fueled ride to the toy store or 16 less opportunities to hear “Mommy can I get this toy” in one hour is probably more rewarding than they would have imagined. The 80’s valued teens in marketing; they wanted to be cool. The 90’s valued kids; people marketed how to make things fun. The 2000’s valued adults, they marketed useful means of technology. The 10’s valued social communities. Toys R Us lacked social community, Adults are talking about their new finds at these superstores or on other sites on the internet, not toys; since adults have the dollar, Toys R Us definitely loses business.</span><span data-ccp-props=”{"201341983":0,"335559739":160,"335559740":259}”> </span>

<span data-contrast=”auto”>Economic Factor/ political factor- America seems to always be in some sort of money conflict, but I do believe that around 2008-ish when Barack Obama came in office, there were millions of people being laid off from their jobs. I remember being a kid and not really understanding how serious that is, but I surely understand what it would look like in today’s time. Adults losing money to fund their household seems a bit unfortunate for the toy industry. Any household necessity whether it be for bills, house products, or food would hold way more significance in this particular economic climate, causing Toys R Us less chance to appeal to money conserving adults.</span><span data-ccp-props=”{"201341983":0,"335559739":160,"335559740":259}”> </span>

 

[Tania Maree]

Social and Demographic Factors
During its peak, the company became extremely comfortable being #1 in its industry.
As the 21st-century technological revolution evolved more rapidly, products like tablets, computers, and gaming consoles became more popular and widely available. As the children of the late 2000s and 2010s became more interested in this technology, the toy industry as a whole began to see rapid decreases in profits.
After pre-packaging its bankruptcy plan, major news outlets caught wind of this and reported on it. This caused manufacturers to distrust the company’s ability to pay for their products and served as ammo for Toys-R-Us’ competitors.
Economic Factors
Instead of closing or reevaluating the business plan for locations that were not making enough revenue, Toys-R-Us used revenue earned by other locations to subsidize the lower-performing stores. I believe that by not reevaluating their business plan at this stage, they missed out on sufficiently preparing for the dot-com era of sales.
E-Commerce (dot com era) came about and the company did not have the foresight or money to compete well, especially after their deal with Amazon went sour.
The toy industry as a whole was plummeting and the trio was never able to take the company public as a result.
KKR Bain and Vornado purchased the corporation for $6.6B USD in 2005, hopeful they could turn it around.
The trio was unable to turn the business around and were unable to keep up with their debt payments as a result.
Due to large news publications picking up on their 2017 plan to file for bankruptcy, 40% of the manufacturers they sourced from ceased to offer credit-based shipments to Toys-R-Us.
Unable to meet its sales goals, Toys-R-Us was left with no choice but to liquidate its stock and close all of its stores. It wasn’t until 2022 that the company began to reopen brick-and-mortar locations.
Political + Legal Factors
As per the video, once e-commerce became more widespread, and, in my opinion, due to their lack of analyzing their business plan, they rushed into an extremely expensive and deceptive contract. According to the video, they then spent so much money on their legal battle with Amazon that they did not have enough funding to compete with big-box stores once they began to sell toys.

 

 

I believe that the combination of social factors and economic factors was the biggest player in Toys-R-Us’ downfall. The leaders of the company got entirely too comfortable being #1 and, in my opinion, failed to understand that the contemporary tech revolution that was rapidly progressing during their peak years would eventually impact them. Their failure to analyze their business plan, to close or downsize stores that were performing poorly instead of subsidizing them, and falling into the predatory deal with Amazon created a tragic ending for the company. Well, not so tragic since they were able to start reopening brick-and-mortar locations in 2022.

• This reply was modified 1 year, 11 months ago by Tania Maree.

[Veronica Del Rio]

Social factors

Toys r Us failed to adjust to the newer generation. With technology soaring the new target market of kids weren’t so interested in old traditional toys from a toy store. Apps became huge, online and console games became a trend, and YouTube was booming.

Demographic factors

Online shopping also made it more convenient for consumer to shop right from or a device without having to go in store. Toys R Us target consumer were kids of a generation who are reaching their 30s. I get more excited with feelings of nostalgia when i see an old toy get reintroduced to the market again. Just like how Old Spice knew how to target women to help their products flourish, Toys R Us should’ve took the time to reassess their plan. But with the new consumers you have to make it more interesting, modern, and economically friendly.

Economic factors

They failed miserably in this factor. Toy R Us was already struggling financially and their deal with Amazon was to me overlooked and pointless. Which made it even more of a money loss for them. Then legal matters came into play which costed them more money putting the toy company in a deeper hole. Trying to revive the company also wasn’t a success. With so many megastores opening, online retailers, and also new in store retailers it became very competitive.

Political and legal factors

Toy R Us’s contract with Amazon was a complete waste. When reading into it it just made the toy company seem desperate without having to do the work and it ended up firing back on them. It was kind of a contradicting platform to join ties with to promote growth of the toy company. Even with the turnout of the lawsuit against Amazon, Amazon is a flourishing company. The legal matters just made Toys R Us more vulnerable at the moment. Allowing other companies to come in and attack the market while they were at their lowest.

Competitive factors

So many new stores and means of shopping were being brought to the attention of the consumer. Instead of Toys R Us preparing for the future and having well thought out moves, they suffered a major loss. Stores like Target, Walmart, BuyBuyBaby, Amazon, and so on raised a very competitive environment for the retailer. Which made it hard for them to revive after the lawsuit situation. These stores had competitive prices, more variety of toys and tech, and almost have constant promotions going on. Also more over these retailers know how to quickly adjust to the target market and switch their strategies to keep the consumer coming back.

In all honesty it was really disappointing to see the retailer go down hill but its isn’t easy for companies to adjust to such a demanding consumer market, especially when stuck in their old ways. I think demographic and economic factors were the companies biggest part of their demise. They weren’t targeting the correct demographic and they were losing money from right under their feet and had nothing to really fall back on. They had to adjust to the new and everything could’ve been executed more realistically and organized. With that said im glad to see Toys R Us getting back on their feet and expanding within due time.

[Hunter Luciel]

Social Factors:
One key factor was the changing preferences of parents and children. Parents became more focused on educational and developmental toys, which was not the focus of Toys R Us. Additionally, children became more interested in digital entertainment, such as video games and mobile apps, which decreased demand for traditional toys.

Demographic factors:
The millennial generation, which was a key consumer group during the period when Toys R Us struggled, was less interested in traditional toys than previous generations. Instead, they were more interested in experiences and digital entertainment. Another demographic factor was the increasing diversity of the U.S. population. Toys R Us was criticized for not being inclusive enough in its product offerings and marketing, which made it less attractive to diverse consumer groups. Another thing to mention was the growing popularity of online shopping, particularly among younger consumers, meant that traditional retailers like Toys R Us were less able to attract and retain customers.

Economic factors:
Toys R Us experienced a downfall due to various economic factors, which included increased competition from online retailers like Amazon, changing consumer preferences, and not to mention the company’s heavy debt burden. The rise of e-commerce made it easier for consumers to shop online, which led to a decline in foot traffic. Toys R Us took on significant debt in a leveraged buyout in 2005, which made it difficult for the company to invest in areas like e-commerce and store improvements, ultimately leading to the company’s inability to adapt to changing market conditions and competition. The company’s high prices and reliance on promotions and discounts also hurt its profit margins and made it less attractive to price-sensitive consumers.

Political and legal factors:
One factor was the company’s struggle to comply with changing regulations related to safety and product standards. Toys R Us had faced numerous lawsuits and fines related to product safety issues, which damaged its reputation. Additionally, the company faced increasing pressure from advocacy groups and policymakers to make its products more inclusive and gender-neutral, which added to its costs and made it more difficult to differentiate itself from competitors.

Competitive factors:

Online competition was a huge factor. Toys R Us was slow to adapt to the shift in consumer preferences towards online shopping. Online retailers such as Amazon offered a wider selection of toys at lower prices, making it difficult for Toys “R” Us to compete. Toys “R” Us also struggled to compete with discount retailers such as Walmart and Target, which offered lower prices on toys and other products.

 

[Author]

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