Lessons Learned

What we can learn from the Toys ‘R’ Us experience.

By Dan Westmoreland

Toys ‘R’ Us occupied a special place in the hearts and minds of children. As the go-to store for toys, video games and other imaginative forms of entertainment, Toys ‘R’ Us was on a pedestal. That is until it was abruptly knocked off by its own finances.

Forced to shutter 800 locations this past summer and teetering on the brink of bankruptcy, is it possible for this once megastore to reclaim its previous position? And what lessons can other retailers learn from watching Toys ‘R’ Us as it attempts to climb back up?

First, Why Failure?

How could a seeming titan like Toys ‘R’ Us fail in the first place? There’s a variety of reasons, the first being that kids are playing with toys less. Instead, kids aged eight and younger are spending about two-and-a-half hours each day staring into a screen. A reported 42 percent of those same kids have access to their very own personal tablet. This means that the Toys ‘R’ Us’ target audience is habitually spending less time with dolls and action figures, and more time with electronic devices.

While today’s adults certainly had their Super Nintendo and Atari, the current generation of kids have multiple gaming systems, tablets, phones and smart televisions, and are able to stream any content at any time. The point is that kids are interacting with each other and entertaining themselves digitally versus occupying their playtime with toys.

This trend means that it’s not just Toys ‘R’ Us feeling the effects; the physical toy industry is hurting overall. Some large toy manufacturers have had to reduce their workforces due to decreased revenues.

Thus, all retailers need to learn the basic lesson of not getting too comfortable. Consumers are always changing their habits, and you need to work to evolve with them or risk getting left behind.

Catching Up

It may seem like Toys ‘R’ Us will join the likes of other brands that have become obsolete. But the reality is that they are down – but not out. Taking a few cues from other brands that are thriving in the toy industry is the first step.

Build-A-Bear Workshop provides a shining example of a toy store using digital technology to leverage their customer base instead of interfering with their progress. They gave their customers the option to build teddy bears online, as well as offering an online portal where consumers can give their bear a name as well as reap rewards. Their employees are attentive and well known for providing top-notch customer service. These strategies ensure the brand stays consistent both online and in-person.

Staying Relevant 

To stay relevant, companies need to embrace the digital frontier, as well as align online and with in-store experiences to stay on track with a focus on the customer. With kids spending so much time online, it’s necessary to create excitement in the space where the customers are. Just like Build-a-Bear Workshop enticed customers to create products online and reap awards, offering a way to encourage interaction and loyalty can help sustain an audience.

FAO Schwarz prides itself on providing a one-of-a-kind experience to each and every one of its visitors, and Toy ‘R’ Us would be well served to emulate – or at least be inspired by – its toy store competitor. Toys ‘R’ Us also needs to empower employees to provide a consistent experience to customers. Employees should be equipped to answer all questions related to the store’s products as well as being able to recommend products to everyone.

Takeaways for a Comeback

Toys ‘R’ Us is a brand that holds nostalgic value. As a thriving business, it has taken a nosedive, but by taking measures to digitally transform their model and amp up the customer multi-channel experience, it’s still possible for them to reclaim the toy throne.

Dan Westmoreland is director of inbound marketing for Deputy.