The Digital and In-Store Failure of Toys R Us

Author’s Note: Our office is located in King of Prussia, so for this article we decided to run to the local Toys R Us/Babies R Us store that has since been closed down and snap some pics for our devoted readers!

Toys R Us – King of Prussia, PA Store

UPDATE 8/19/2021: Toys R Us will be coming back with 400 stores opening in Macy’s!

UPDATE 6/21/2019: According to Bloomberg, Toys R Us plans to open open a handful of stores and relaunch the site. Apparently the new stores will be smaller than the original stores and have “experiences” for both parents and kids…has someone been reading my posts :)

Toys R Us was always the place to go for, quite simply, a magical toy experience. When I was young, even just seeing the store while riding in the car with my parents elicited feels of excitement and joy. Geoffrey the Giraffe never did much for me but the thought of all the toys, lights, and colors in the store made my mind race. And what kid didn’t feel the same way? Well from my generation, I know not one. Until now, as Toys R Us is closed for business (aside from the attempted online revival we are seeing as of late). And it shouldn’t be a surprise, because if you go to their Facebook page, users were posting messages like this:

“I’d love to purchase items from Toys R Us but I forgot… you’re closing! 😡 So many things have gone out this past year in Albany, GA… add one more to the tragic list. My kids were so upset, now all we have left is Target and Walmart, which neither store has that great of a toy selection. I have always been loyal to you… but now I can’t be.” (bold and underline added for emphasis)

From an objective view, sales have suffered resulting in the company having to file Chapter 11 and close up shop. When revenue was declining, as a business minded individual, you look at it and say, “Ok we need to increase sales and reduce expenses. Let’s close some stores, reduce our workforce, renegotiate with our suppliers”. But what about from the consumer view? Why do the customers shift to Amazon and Walmart other than due to prices? Well unfortunately it is because Toys R Us has been trying to compete on prices and not excel at what Toys R Us used to do best, which is drive those magical feelings in both kids and parents alike.

What has Toys R Us done?

When it comes to digital efforts for Toys R Us, the focus moved to just ‘etail’ or selling products and driving a direct ROI. Other retailers who can focus on just etail and survive, like those mentioned by the customer in the quote above, have already moved towards an LTV approach as part of their digital efforts. Meaning, Amazon will spend $50 to sell a $5 product.

Why? Because they thrive on razor thin margins due to low prices and know that their shopping experience will keep the purchaser of that product for life. And they can do that because they make shopping super easy, convenient, and price competitive. If I need copy paper, I open the Amazon app, find the paper with the best reviews and purchase it. Then it is sent to my office in 2 days. I rely on the community to give me the best quality, and Amazon to have the lowest price or at least the most convenient way of getting the paper at a tolerable price. And they can do this for many reasons, the biggest being that their focus has always been on price and margins.

Toys R Us was never a price player until late in the game. And as a result, they failed.

Should Toys R Us have done this (which they did)?

Well yes and no. Toys R Us should of course kept prices in mind to a degree, but not made it a priority. Instead they should have focused on their in-store experiences, which eventually and unfortunately followed The Sports Authority, who was in a similar situation of increasing price competition and being crushed by the big players due to losing their in-store experience. To quote the article, “’Someone who wants to shop in a brick-and-mortar store and try on the baseball glove, or get the feel of a golf club, wants a better shopping experience,’ said Larry Perkins, of SierraConstellation Partners, an expert in retail reorganizations. ‘That’s not Sports Authority any more.’” Other players like Dicks outdid The Sports Authority and beat them there. In the case of Toys R Us we see examples of people frustrated with losing that in-store experience and it cost them dearly, yet there was and still is no other general toy retailer out there creating that experience.

The focus should be on creating that experience, but it needs to be done in a way that the customer is fully engaged. You cannot rely on just an in-store experience anymore and the experience should be created through both digital and in-person experiences.

A Digital / In-Store Marriage

Toys R Us needed to reinvigorate everyone with that excitement to want to visit their stores again. In the past, seeing a store made a child euphoric (parents too seeing that child’s smile). Not anymore as stores more recently brought thoughts of cheap toy bins and last-minute gifts.

So in a perfect world, what should Toys R Us do? For starters, it is a digital age and Toys R Us lost their mark there years ago. But not just from a digital sales perspective but an experience perspective. Create that same experience online as you did in-store. Drop the gimmicky “viral” and social media plays given to you by run-of-the-mill marketing agencies. Every drop of creative, every word, should elicit a feel of excitement from your customers…think Disney. See how that works? I just mention the name and it brings up images of fantasy, fun, and excitement. Toys R Us? To me, it brings back far away memories of fun and excitement that turned to “Toy Retailer” (which is exactly what upper management simply labeled the company as, which is terrible). If you plan a revival and want to make it work, focus on the feels. Just look at Radio Shack’s recent attempt…you are both so similar in more ways than one, maybe you two should get together sometime and chat.