Toysrus under siege

[cody]

No toying around, no funny business

MegAsia takes a close look at the tug of war between traditional toy stores and retail discounters wanting a bite of the toy pie.

Like every other shopper in the US enjoying last-minute bargains offered by major retailers, housewife Cindy Miller is busy shopping for the perfect presents for her kids. Instead of visiting traditional toy stores to look for her ideal toys, she decides this year to get all her shopping done under the roof of Wal-Mart. "I still like to go to specialised stores like Toys R US," she explains, "but the low-priced toys I find at Wal-Mart are simply too good for me to ignore."

Cindy Miller is not alone. More and more consumers, in particular those who are in need of toys and children-related products, are now choosing to shop at Wal-Mart (which, initially, was not a specialised toy-selling chain to begin with). The Wal-Mart chains are now luring in shoppers with a variety of merchandise at the lowest prices consumers cannot find elsewhere. The unbeatable bargains seem to be welcomed by consumers alike, who are constantly on the look out for the best deals possible, especially during the peak shopping periods.

It's all in the numbers

Toys R Us, an American toy-retailing empire, taking pride on its specialty stores and variety of toys, has been serving millions of households since its opening in 1978. The retail giant is now wrestling to survive even though it is still on top of the list as the world's largest toy retailer.

The story began a few years ago, when discount chain stores such as Wal-Mart began to spend much marketing effort to generate traffic during the holiday seasons. It has been reported that despite the aggressive marketing effort, Toys R Us still recorded a 1 per cent drop in sales over the 2003 Christmas holiday season, while Wal-Mart claimed a sales rise of 2.3 per cent during the same period. The upside figure is further encouraging Wal-Mart's ambition to conquer the world of toy retailing, as Mr Lee Scott, Wal-Mart's chief executive commented "The toy division is a very profitable category for Wal-Mart with a very strong gross margin...we are very encouraged about toys and our positioning in that particular market. I am excited, I do not feel particularly compelled to apologise for it."

The "Wal-Martisation" phenomenon

Founded in 1962 in Arkansas, US, Wal-Mart is currently operating with 3, 550 stores scattered across US, and is also known as the world's largest retailer. Striving to provide with customers a value-for- money shopping experience, the retailer is well-known for its enormous product variety and the low price range attached, helping it lure more consumers than Toys R Us in the toy division. How is the newly emerged "Wal-Martization" changing the US and the rest of the world? The leading discounter rides on the following cutting-edge statistics:

1) Wal-Mart is the world's No. 1 retailer in the US, Canada as well as Mexico, with over 4, 800 stores operating worldwide along with its other affiliates.

2) It has reported a 20 per cent increase earnings in the fiscal year of 2003.

3) According to an article recently featured at forbes.com, the retailer also has stores running in South America, Asia and Europe. Wal-Mart International's annual revenue, which has gone up to as high as USD $47.5 billion, is expected to grow steadily with effective marketing and proper technology utilisation. Countries that have been "Wal-Martized" over the 11 years of international exposure include: Argentina, Brazil, Canada, China, Germany, Korea, Mexico, Puerto Rico as well as United Kingdom.

4) The retail giant currently has stores operating in 17 cities in China, one of the fastest-growing and high-potential economies in the world. Wal-Mart is determined to conquer this mega market by stepping up market penetration and new store openings across the country.

The retail giant surely knows what its consumers want and has done much better to meet their needs than its competitors. "One of Wal-Mart's strategies is to undercut several 'must-have' products to boost traffic," said Geoff Wissman, vice president of its consultants Retail Forward.

What gives Wal-Mart another impeccable edge is that it has such a wide variety of products in its stores that one visit to Wal-Mart is enough to satisfy a consumer's daily need in almost every aspect: from clothes to food to kitchenware to electronic goods to toys, the list goes on. The product diversity, which cannot be found at Toys R Us, provides a perfect one-stop, hassle-free shopping experience for every consumer entering the stores despite their different backgrounds and preferences.

Specialised toy stores - once the leader, now on the edge?

Toys R Us, on the other hand, has been working hard to capture and retain consumers' attention. Over years of development and expansion, the company has become the leader in the toy-selling industry with its headquarters located in the US and stores spread across the world, operated by a total of 65, 000 employees. Despite the USD $116 million spent on advertising last year, the renowned toy retailer chain has posted a net loss of USD $38 million, while having to close down all of its 146 Kids R Us stores and 36 Imaginarium stores across the US due to underperformance.

While troubled with such weakening sales results, Toys R Us should consider itself one of the fortunate ones, as the intense price war has in recent years cost the lives of a few long-established, reputable toy stores, driving these "victims" to the road of bankruptcy. A perfect example would be the closing of FAO Schwarz in the US. A prestigious toy retailing icon famous for its one-of-a-kind merchandise, FAO Schwarz was eventually defeated by drastic competitors such as Toys R Us and Wal-Mart towards the end of year 2003. FAO Schwarz was forced to seek bankruptcy protection twice and is still searching for prospective buyers to take over the business. In the Securities & Exchange Commission filings, officials from FAO Schwarz even pointed out specifically that the throat-cutting competition with discount chain stores was causing the devastating threat to their business survival. Another toy giant trapped in the very same destiny was KB Toys Inc, which used to be one of the largest toy retailers in US but has filed for bankruptcy in January 2004. The bankruptcy has resulted in the closedown of 350 KB Toys stores, as well as 3, 500 employee layoffs.

Restructuring tactics to make a turnaround

Fighting back is no picnic for Toys R Us, despite its abounding experience in the field. On the whole, the company is still holding up nicely due to its effective marketing strategy developed over the years. Understanding that it is not always wise to put all its eggs in one basket, Toys R Us has learned to diversify to net as many sources of revenue as possible. This explains the launching of many of its other divisions, namely Toys R Us International, Kids R Us, Babies R Us, Imaginarium, as well as Toysrus.com. Investments in these divisions had proven to be paying off well, as sales figures in recent years have shown that they do play a crucial role in generating business revenues for Toys R Us. For instance, Babies R Us, which currently has 199 stores operating in the US, achieved a profit of USD $202 million in 2003. Decision makers at Toys R Us are positive about Babies R Us's future, as Jon Elyer, the company's Chief Executive said recently that the baby division has definite potential to achieve "a very solid earnings performance for the full year". The uplifting financial results and market response in the babies' department can be attributed to the emerging social trend in which parents are now spending more on babies than ever before. This new tendency provides an explanation for the company's move to close down underperforming Toys R Us stores in exchange of the Babies R Us division's expansion. Such restructuring plan is welcomed and encouraged by many investors and analysts, who have expressed concerns over the company's seemingly unfavorable future.

While shutting down stores that are not performing well, Toys R Us has also learned to utilise its existing stores to a greater extent. The company is now projecting a new division called "Geoffrey" in order to better compete with Wal-Mart. Named after the company's mascot, Toys R Us is expecting the brand new division to upgrade shoppers' toy-purchasing experience by providing value-added services such as hair-cutting, as well as party rooms which can be used to hold special events catered for children. Stores in the US also hold regular seminars and talks on subjects ranging from parenting to anything children-related to generate in-store traffic, while giving consumers an extra incentive to visit the stores.

Meanwhile, the company's official website, toysrus.com (which operates in alliance with Amazon.com) reported an encouraging 2.8 per cent increase in sales over the holiday seasons last year. As the internet continues to become a popular shopping platform, Toys R Us is expecting more consumers looking for their merchandise online in the future. The company's website is currently the most-visited online toy store in the US.

On the other hand, Wal-Mart is gradually catching up on the online shopping craze with its fast-improving official website. With its corporate dotcom division based in Silicon Valley, US, Wal-Mart's online store combines expertise in technology with its thorough knowledge in retailing to swiftly complement its existing stores.

Though Toys R Us seems to be losing its local consumers in midst of stiff domestic competition and ever-changing shopping pattern, its local shortfall is counterbalanced by an increasing number of consumers base worldwide. With its very first overseas stores opening in Singapore and Canada back in 1984, the company's international unit has now grown to a worldly toy empire with 573 international stores in 27 countries. The company has recently revealed a slight increase in international store sales in local currency.

The war will go on

Almost no business sectors can be exempted from the troubles of the unpredictable global economy, which is now even more fragile than ever since terrorism struck across the world in 2001. Toys R Us is now facing another battle with Wal-Mart, which has been working closely with amazon.com to leverage the online commerce pioneer's expertise. Nevertheless, the future may not be all that gloomy for the Toys R Us after all, as its effective marketing strategies will give the toy veteran an edge to outwit the rivaled chain store next door. Under the crossfire of heated price war, it seems that the consumers have now gotten the upper hand and will be claiming triumph and reaping the benefits in it.

[Lord Admiral Helden Ravensdorn]

Ah, yet another reason why I have no use for Wal-Mart.

[Joebot]

Ah, yet another reason why I have no use for Wal-Mart.

Amen, brother. I refuse to step foot in a Wal-Mart store, just on general principles. I hate the company, I had their business practices and their labor policies. The world would be a far better place without Wal-Mart.

[Grand Moff Viceroy]

I , like you, hate walmart.Death to non-complete toy stores that sell toys. *vader*

[Corpreal363]

Wal-Mart Sucks. ;-) What Movie Was that from

[Grand Moff Viceroy]

Wal-Mart Sucks. ;-) What Movie Was that from

What is from what movie?

[Lord Admiral Helden Ravensdorn]

I have two Wal-Marts within a 15 mile radius. We, as a family, refuse to stop at them unless there is something that cannot be found anywhere else (which is incredibly rare).

[Corvus]

Even though we don't have a Toys-R-Us remotely close to us, I still like the place. Recently, Bend has fended off an attack by wal-mart threatening to build a supercenter, about ten miles or so from the wal-mart already there. *wacko* Now they are trying to make one in the town nearby. I really dislike wal-mart. |-/

[maiq the liar]

eh, i prefer target anyway...though it doesnt have all the new sets.

you try convincing my parents to take me to Toys r us...

Edited July 17, 2007 by maiq the liar

[trooperdavinfelth]

I don't hate Wal-mart with the exception of these few thoughts: The massive incompetance of the employees and the unrestockability.

I remember one day I went there and they had the Wal-mart only Commander Neyo 3 3.4 in. two pack. It had Neyo and another clone from his regiment and two speeder bikes. The next day, it was gone. And it still doesen't have the new 2007 star wars sets! Not the Landing craft line, the new-new ones. Nor do all three Toy's 'r' us's that I can easily reach!

I chiefly go to Wal-mart often because of these reasons: The food section is hardly unstocked, I have found several other-wise unavailable 3 3/4 in. SW figures there like Rep Commando Scorch, Comm. Cody, and the new helmet-removable Stormtrooper, and my family mainly comes here for food and basic household items.

Ok, enough about the ups and downs of Wal-mart, but if Wal-mart buys TRU, then I hope they will get new stuff in as fast as TRU. Wal-mart doesen't even have Mars Mission! Target is closer, and they have good stuff, but as usual, TRU always gets it first. Although, if this means every Walmart becoming 50% like a TRU, that could be good! 8-

Edited July 17, 2007 by trooperdavinfelth

[Joebot]

I don't hate Wal-mart with the exception of these few thoughts: The massive incompetance of the employees and the unrestockability.

As a former Wal-Mart employee (my first job out of college -- yay for English degrees!), I don't think that the employees are incompetent. It's simply that they DON'T CARE. And why should they care? It's a horrible place to work. Wal-Mart pays slave wages. They also staff as few people as possible so there's never enough time and manpower to circulate inventory and keep the shelves stocked. I'll bet your Wal-Mart actually does have the Star Wars and Mission to Mars sets. They're most likely sitting in a box in the back somewhere.

Here in Chicago, the city council tried to pass a law that would require higher wages for "big box stores" (Target, Wal-Mart, Best Buy, etc.). I haven't heard if the law passed, but it seemed like a good idea. Wal-Mart is a corporate vampire. They suck the life and soul out of a community.

[ghoulrealm]

Toys R Us lets me bring my dog in the store. That is very important to me. Since Lego is the same price reguardless, I'll go where my dog can follow. My dog is a small breed and I carry her. I doubt even Toys R Us will let folks bring large breeds in with them.

I like Target stores far more than Walmart as well. Target carries several better products IMO, but they are not open 24 hours :-(

[Piranha]

I like Wal-mart

However I prefer TRU and Target over wal-mart anyday

Its just that we don't have any TRUs or Targets here

Just Walmart :-(

So I buy all my Lego there now

Plus they are going to have a huge Lego sale soon :-P

Piranha

[SavaTheAggie]

I have no sympathy for TRU, every single one near me charges $1-$2 a set more than anyone else. Me? I like Target - normal prices and huge LEGO selection, compared to my Wal Marts, anyway.

--Tony

[5150 Lego]

I have no sympathy for TRU, every single one near me charges $1-$2 a set more than anyone else. Me? I like Target - normal prices and huge LEGO selection, compared to my Wal Marts, anyway.

--Tony

Yup. Same here. TRU prices are higher than wallmart,or target. I like sava prefer target over wallmart. I'd like to support TRU, but i gota go were the better deal is. Sorry.

[Corvus]

I like shopping at Target most. The usual place I do my lego shopping is Fred Meyer, but sadly their lego inventory is slipping. They barely have anything star wars, and most of it is still 2007. Also, the lego section is slowly shrinking, while the megablocks section expands to fill the gap... :'-(

[trooperdavinfelth]

Joebot: I guess that's what I see as incompetance. I mean, it's not like you have something to look forward to working there. It's just standing there seeing all the dregs and elites of society coming and going. I am sympathetic to all those who work there. A dreary lifestyle such as this is no fair reward for the hard work that they try to do, and the unrewarding life of working there creates uncaring, and by golly I don't blame them! >:-( It's like a slow torture, draining the life from them, turning them into slaves of the store. It's just plain sad.

Wal-mart should treat its workers better, that way it makes it a worthy job to hold, not just a last grab for particularly unskilled people. Of course, the store and all other stores have their good employees who do the job because they know it's worth it and it needs to be done if they are to hold their job. TRU emplyees, same story. I think I've said enough on this topic. If TRU goes down, then Wal-mart had better do a damn good job of making it a better place.

Edited July 18, 2007 by trooperdavinfelth

[zouave]

I don't have choice when it comes to stores. Wal-Mart is cheap. X-D And TRU has all the good sets.

So I shop at both. I have Target but I don't go there. They support gay rights. The bible says not to support them.

[cody]

They suck the life and soul out of a community.

very good, glad to hear it. i am on your side pal.

I'd like to support TRU, but i gota go were the better deal is. Sorry.

Sorry? is that all you can say?

what about the employee who got fired because all those toysrus sub-branch got shut down?

you going to say:

"I am so sorry you lost your job, unable to support your family and feeding your kids. I'd like to support TRU, but i gota go were the better deal is. Sorry."

do you not care about the "deal" other people are getting because of your action?

Toys R Us lets me bring my dog in the store. That is very important to me.

maybe you should leave your dog behind when you are doing shopping in a PUBLIC AREA.

what if your dog (you know) in the shop? regardless of whether it is Toysrus or Walmart.

what would that have on the shopping experience of other customers?

I am glad you brought this up. It just shows how Toysrus doesn't mind losing one inconsiderate customer to protect the benefits of thousands of customers.

You wonder why Wal mart let you in with your little puppy? this is because they do not care.

their store is just a place for them to make $$$$$.

forget about hygiene, forget about customer health, forget about the shopping experience.

just make me money

now that is Walmart.

[5150 Lego]

I don't have choice when it comes to stores. Wal-Mart is cheap. X-D And TRU has all the good sets.

So I shop at both. I have Target but I don't go there. They support gay rights. The bible says not to support them.

Whoa whoa whoa there dude. Before you go and start a war like this, i'd like you to please quote the exact scripture where it says that. Obviously not about target, but about not supporting gay rights.

[zouave]

Whoa whoa whoa there dude. Before you go and start a war like this, i'd like you to please quote the exact scripture where it says that. Obviously not about target, but about not supporting gay rights.

I don't remember the scripture but I heard it just last Sunday. It talked about not involving yourself with or supporting gays and other bad guys.

[cody]

Whoa whoa whoa there dude. Before you go and start a war like this, i'd like you to please quote the exact scripture where it says that. Obviously not about target, but about not supporting gay rights.

you know what? i will bet you a box of 7261 clone turbo tank he can't find it.

why?

because he made it up. :-D :-D :-D

[Starwars4J]

Cody, I'm not sure you read the posts you quoted :-D

Sorry? is that all you can say?

what about the employee who got fired because all those toysrus sub-branch got shut down?

you going to say:

"I am so sorry you lost your job, unable to support your family and feeding your kids. I'd like to support TRU, but i gota go were the better deal is. Sorry."

Well first of all, it's not his responsibility to keep their jobs. Stores close all the time, if he doesn't shop at a Target for example, because he shops at TRU, wouldn't you make the exact same argument?

I am glad you brought this up. It just shows how Toysrus doesn't mind losing one inconsiderate customer to protect the benefits of thousands of customers.

You wonder why Wal mart let you in with your little puppy? this is because they do not care.

their store is just a place for them to make $$$$$.

Actually he said it was TRU that let him bring his dog into the store, not Walmart.

forget about hygiene, forget about customer health, forget about the shopping experience.

just make me money

now that is Walmart.

Again, for hydiene and customer health, that's TRU you have an argument with, not Walmart (and I hate walmart!). Shopping experience? It's the same in all the big stores, completely impersonal and random. TRU has sets in the most consistently at least, but their customer service is horrible. Ever try to call them? *wacko*

[cody]

Cody, I'm not sure you read the posts you quoted :-D

Well first of all, it's not his responsibility to keep their jobs. Stores close all the time, if he doesn't shop at a Target for example, because he shops at TRU, wouldn't you make the exact same argument?

Actually he said it was TRU that let him bring his dog into the store, not Walmart.

Again, for hydiene and customer health, that's TRU you have an argument with, not Walmart (and I hate walmart!). Shopping experience? It's the same in all the big stores, completely impersonal and random. TRU has sets in the most consistently at least, but their customer service is horrible. Ever try to call them? *wacko*

very good, then let's all support Toysrus and BOYCOTT WALMART!

[5150 Lego]

Sorry? is that all you can say?

what about the employee who got fired because all those toysrus sub-branch got shut down?

you going to say:

"I am so sorry you lost your job, unable to support your family and feeding your kids. I'd like to support TRU, but i gota go were the better deal is. Sorry."

do you not care about the "deal" other people are getting because of your action?.

You need to calm down a bit. I understand what you mean, but at the same time im not going to pay 5$ to 10$ more for somthing if i can get it cheaper somwhere else. That adds up after time. Espeacailly if i'm buying more than one item. Though TRU lego selection is better, i don't just collect lego. TRU DUB car selection is horrible, as is there transformers. Wallmart is also alot closer to me. About 10 miles. I'm not going to go an extra 10 miles if i know my local wallmart has it. People aren't so happy go lucky at TRU as you seem to think. I've gotten just as much grief from people that work at TRU as from wallmart.

maybe you should leave your dog behind when you are doing shopping in a PUBLIC AREA.

what if your dog (you know) in the shop? regardless of whether it is Toysrus or Walmart.

what would that have on the shopping experience of other customers?

I am glad you brought this up. It just shows how Toysrus doesn't mind losing one inconsiderate customer to protect the benefits of thousands of customers.

You wonder why Wal mart let you in with your little puppy? this is because they do not care.

their store is just a place for them to make $$$$$.

forget about hygiene, forget about customer health, forget about the shopping experience.

just make me money

now that is Walmart.

Uh, maybe you should read what you acttualy quote . He said that TRU let him in with this dog. NOT wallmart. I can understand that since it is a toy store, and wall mart carries food items were a dog can cause problems.

you know what? i will bet you a box of 7261 clone turbo tank he can't find it.

why?

because he made it up. :-D :-D :-D

Well cody, at least you and I are agreement on one thing! :)

Edited July 18, 2007 by 5150 Lego