Toys ‘R’ Us transformation to be built on fun
For years, analysts have said Toys "R" Us (TRU) could not hope to compete on price with the likes of Walmart and Amazon. They also said the keys to TRU achieving success were an expanded and unique product selection, cleaner and more kid-friendly stores, and a vastly improved team of sales associates who would provide a superior level of service. For years, management at the toy chain has promised changes that would transform the business. Is the current group actually going to make it happen?
Last year, the retailer’s chairman and CEO Antonio Urcelay, announced a plan to help stabilize the company’s business. Recently, Mr. Urcelay issued another announcement that the first phase of the "TRU Transformation" was a success and the company was entering a new stage in which it would make strategic investments to improve the customer experience.
One of the ways TRU intends to do this is a new concept that transforms the store into more of a playground for kids. The company will open up additional floor space as play areas for children and add technology enable further interaction in stores. TRU also plans to put tablets into the hands of its associates to enable them to answer customers’ questions.
Analysts appear to be on board with the TRU Transformation strategy, which also involves upgrading company e-commerce operations, streamlining the supply chain and reducing overhead costs.
Last month, Gerrick Johnson, an analyst with BMO Capital Markets, told The Record that the chain was "on the right path" with its playground approach. "When I was a kid, I bugged my parents to go to Toys "R" Us," Mr. Johnson told the paper. "Kids don’t do that now. They don’t need to."
- Toys "R" Us, Inc. Provides "TRU Transformation" Strategic Update – Toys "R" Us, Inc.
- Toys ‘R’ Us Seeking to Ward Off Discounters by Adding Play Space – Bloomberg
- Wayne-based Toys "R" Us puts emphasis on profits – The Record
- A Cure For Bad Business? Toys "R" Us Adding Playgrounds, Interactive Technology to Stores. – Forbes
- Run on Fun: Toys "R" Us Playing Customer Experience to Win Against Walmart, Amazon – Forbes
Discussion Questions
Do you think added play space and interactive technology will get kids asking their parents to take them to Toys “R” again? Will providing mobile devices to its staff improve customer service in Toys “R” Us stores?
This could help as the stores today are stale and unexciting to go through. Massive change is needed to just survive in this industry as online sales are growing, and parents pretty much know what they want without the hassle of taking their kids into a store, which believe me is no fun. If they actually make the store a place for kids to explore new stuff and actually have associates engaged in the process, than yes they will do well.
Adding a play space will succeed in adding liability to the Toys “R” Us burden. A number of issues quickly come to mind: injury, cleanliness, safety and supervision are all potential liabilities. It is difficult to imagine that the resulting benefits to the Toys “R” Us brand outweigh the long list of liabilities.
The opportunity lies in kids and parents being able to actually touch and play with the items for sale in the store. This was the magic at FAO Schwarz in New York. Old-school interactivity is the reason shoppers will come to the store. If not for that, just order it online and have it delivered!
I definitely think it will get people into the store. I hope that translates into sales, rather than just showrooming.
It’s all about the execution. The play spaces and the interactive technology are a step forward, but you also need employees who are trained and motivated to make it a consistent reality over time.
But no matter what, I won’t believe that Toys “R” Us is on the right path until I see it at my local Toys “R” Us store. Last time I was there it was the most depressing thing I’d ever seen, from the lousy merchandising (hey, in a store that aims to sell to kids, let’s have shelves eight feet high!) to the dated decor a la Kmart tiling, to the zombie employees who barely knew how to use the register to check me out. All that experience did for me was confirm that it was not a place to ever return to. I can’t believe I’m the only one who has come to that conclusion.
My kids are getting old fast, but when I look at the next generation of youngsters who have an opportunity to become “Toys ‘R’ Us Kids” I see parents who are too time-starved to bother going to a store—they just order that stuff online. Toys “R” Us is going to have to spend almost as much on advertising and enticing these shoppers to give them a chance as they spend on updating their stores. And after all of that, it may still be too little, too late.
This is good news for the toy industry. Having Toys “R” Us successful in their transformation will entice others to follow so the market will not be owned by Walmart, Target and Amazon. I am having a problem believing children will ask their parents to take them to Toys “R” Us so they can play. More likely, the parents will ask the children to go, telling them they can play while they are there.
Toys “R” Us was once a place people went to buy stuff. That isn’t necessary anymore. The alternatives are not only cheaper, they are more convenient.
When my kids were kids Toys “R” Us was a destination for them. It was a playground, not to play in, but to step into a dreamworld of toys. Today the kids have different kinds of dreamworlds. They are no longer enchanted by aisles of toys.
It appears that Toys “R” Us is reinventing that dreamworld and again making Toys “R” Us a destination for kids. Come, play, try and buy. “Papa, this is the coolest thing!” How could I say no?
This is definitely on the right path for Toys “R” Us. It’s about the experience for the kids, not the adults. As pointed out above, you can get their toys anywhere. So make the store a theater/playground/dream world for kids and they’ll flock to it.
This move is a sign that Toys “R” Us is recognizing that it’s not just about clean stores or unique inventory—it’s about giving the endusers of their products what they value most and reaching them with what they desire: fun experiences.
The old strategy of bringing the warehouse indoors has lost its shine thanks in large part to online retail. Why expend the effort to leave the house and expose yourself (and your child) to the sensory overload of towering toy shelves when you can just research and order the item online?
That said, a major advantage to Toys “R” Us is the instant gratification that can come with an in-store purchase. As anyone knows, children are not the most patient of consumers. To get Toys “R” Us’s endusers in the store is another story, however, and the company is obviously seeking ways to overcome those barriers. Empowering staff with mobile devices to combat any questions or uncertainty from parents who are used to researching toys online and may waffle at point of sale is also a smart move.
Bottom line: It has been established that not all retailers can compete on price like Walmart, or on scale and convenience like Amazon. Toys “R” Us is aware of that and is trying to own the competitive category of play.
I just wrote a piece for Forbes on this topic. You can see it here.
Absolutely! I think it’s the same strategy when McDonald’s started building the playgrounds to drive more traffic in 1987. Today my friends with children generally go to Barnes & Noble because it’s kid-friendly and engaging. Toys “R” Us looks more like a Walmart right now so I think it’s a step in the right direction!
Toys “R” Us is a bit tardy to the physical-scale-leverage party. However, if it executes phase two in a clean and compelling way, TRU could gain an engagement advantage over Walmart and others in the bricks space (digital is another matter). It’s a pretty safe bet that TRU’s multi-category competitors won’t dedicate the resources to creating a truly interactive toy experience. Price is the fly in the ointment. These days, few customers are so engaged in a store that doing smart phone price comparisons is out of the question. The only hedge will be for TRU to double down on truly innovative exclusives and “better-than” private brands that can’t be found anywhere else.
Responses all over the place with this one, and I’m not surprised as I’m struggling to visualize the logistics of this: parents drop off the child, who will (presumably) play with TRU-supplied toys, ultimately leading to sales…but what do the parents do while this is going on? The stores are usually standalone, meaning they can’t just go shop for themselves; they can “play” themselves (with smartphones), but the whole process starts to sound more like a chore than something people will want to do. I guess I’ll have to stick with “not sure.”
Definitely sounds like a step in the right direction. Don’t know if kids will ask to go to TRU, however, I do see it as a carrot that parents can hold out to kids to get them to behave while shopping.
“We’re going to go shopping today and then we will go to TRU just for you.”
Now the big question is, how will TRU take advantage of the traffic? They will need to augment with demos, games (that they sell), new ideas, new toy concepts, exclusives, etc. That will prove the concept. The playground will only get them there.
For my 2 cents.
Providing instruction as an after sale to TRU customers only is a great idea that will generate some showroom havoc from the “I got it cheaper elsewhere” clientele. Staging this properly is critical to recoup the investment and generate positive customer opinion. I would recommend they try something else.
One advantage Toys R Us has over the Best Buys and other showrooming victims of brick and mortar retail is when the kid’s in the store, there’s more urgency to buy now. Children don’t have the same tolerance to wait a week for a delivery so mom saves a few bucks.
This will certainly help Toys “R” Us. However we still have to address the questions regarding competitive pricing and product selection, while still making a profit.