Amazon and TRU After the Split
Once they were online partners but that time seems long ago. Now, Amazon.com and Toys R Us are fighting it out online for customers searching for the hottest toys.
Toys R Us reported that the recent holiday selling season was its best in years. The company saw same-store sales increase 4.1 percent during the season. The chain did not break sales for its online business but will report fourth quarter and annual sales numbers in the coming months. Toys R Us is privately-held.
Amazon is on record as saying this past holiday season was its best ever. Whether that best ever tag applies to toy sales has yet to be confirmed. The company did say among its top sellers on Dec. 11 (the company’s biggest ever sales day) were Laugh & Learn Cuddly Learning Puppy and Princess Genevieve Doll from Barbie.
As the break with Toys R Us was taking place, Amazon stepped up efforts working with toy manufacturers such as Fisher-Price and Leap Frog along with retailers such as Target and eToys to expand its selection beyond what it had when the two companies worked together.
Both companies are working in an increasingly competitive space as demonstrated when Wal-Mart began some aggressive price cutting on toys in the lead up to Christmas. The rationale for Wal-Mart and others has been that slashing prices on toys during the holidays gets customers in stores where they will buy other items without the deep discounts.
Cliff Annicelli, editor of toy-industry magazine Playthings, told The Seattle Times that stores that exclusively sell toys such as Toys R Us do not have the same luxury. "The toy business is one of the only market segments where, when demand for the products goes up, prices go down," he added.
Toys R Us and other toy retailers also continue to see kids turn from toys to video games and other electronic gadgets. While Elmo T.M.X was very hot for the holidays, sales of Nintendo Wii and Sony’s Playstation 3 were outstanding. Apple’s iPod was once again one of the top holiday gifts.
Amazon, because of its wide product category depth, was and is less dependent on a strong toy market than its former partner, Toys R Us.
Gerald Storch, chairman and chief executive officer of Toys R Us, said the company’s position is strong and the company is taking further steps to make it easier for consumers to do business with the retailer.
Mr. Storch said bricks and clicks retailers have an inherent advantage over online-only merchants. For the 2007 holiday season, for example, consumers will now be able to order online and have the choice of home delivery or picking up products in Toys R Us stores.
Discussion Questions: What are your thoughts on how Amazon and Toys R Us are faring without each other? What is your assessment of how Toys R Us is progressing under the leadership of Gerald Storch? What has he brought to the company?