Toys R Us: The Demise

Toys R Us

Retail giant Toys R Us recently went into administration. 105 UK stores are expected to close in the coming weeks, resulting in 3,000 job losses. The toy brand has been plunged into financial chaos. As well as a £15 million tax bill, it owes £238 million to its creditors, including £74 million to its employee pension fund.

Children still love toys, and other toy retailers are thriving, so what went wrong for Britain’s biggest toy store?

Toys R Us

Founded in the USA by Charles Lazarus in 1957, this Aladdin’s cave, pile-it-high, out-of-town warehouse style of toy store originally appealed to the masses. It entered the UK market in 1985, complete with a catchy jingle.

Experts claim Toys R Us failed because it remained stuck in the 1980s. They say it was dated and tired, and it didn’t adapt to the trends. Even the cartoon giraffe character on its logo heralded from the 1990s and was long overdue a revamp.

As with many high street stores, the popularity of the internet will have also played its part in the demise of Toys R Us. Online shopping sites such as Amazon has soared, as consumers can search for the best products at the cheapest prices from the comfort of their own homes. Although Toys R Us established its own online presence in 1998, it failed to gain a reputation for offering competitive prices. Even when it did offer a price promise, it never marketed it successfully to make customers aware.

Toys R Us claimed to be ‘a magical place to shop’, but it lost its magic somehow, as newer brands such as Smyths, The Entertainer and The Lego Store offered a more enticing proposition, with interactive, in-store experiences and hands-on, highly-informed staff ready to help.

Toys R Us failed to offer this kind of in-store experience, and instead of being a fun, dynamic and exciting destination, it became a bland and uninspiring place to shop. Indeed, the fact that customers were greeted with a warning that bags would be checked on leaving the store hardly made for a warm welcome. These days, if toy stores want to survive, the in-store theatre and experience is just as important as the product range and prices.

Toys R Us also failed to keep up with the interests of youngsters, particularly with the advent of high-tech toys, where the brand just slotted these into its aisles in a generic fashion. In 1999, it was the second biggest retailer for video games and software, but this dipped to less than 1% of the market share. Other toy retailers, such as Smyths and The Entertainer, have been better able to spot trends and bring these to the fore in their outlets.

Although the warehouse style of store that Toys R Us has become famous for once offered appeal, particularly with its generous car parking provisions, this format may now be less enticing to customers who prefer to shop in smaller, more convenient stores in town centre locations – where they often make spontaneous purchases. The warehouses have become expensive to run for Toys R Us, resulting in mounting costs in an already difficult market punctuated by increasing inflation and rising wage pressures.

It’s not just the UK where Toys R Us has collapsed. Last year, it was declared bankrupt in America and Canada, resulting in the loss of 400 stores and 4,500 jobs in the USA alone. Despite this, it continues to thrive in Asia.

The unfortunate collapse of Toys R Us shows that a range of factors were involved in the brand’s demise. Having a good reputation can certainly help the success of a business, and achieving positive reviews can greatly assist with this. Psydro’s review platform offers a great opportunity to obtain customer feedback, and it allows businesses to follow the latest consumer trends, giving them real feedback from real people. To prosper in the retail minefield, it is important that businesses listen to their customers. There is no better way to maintain or even improve store appeal.

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