To future generations reading this, Toys “R” Us (TRU) was a massive toy store chain which specialized in selling toys for girls and boys. That’s right, a successful company in business for seven decades dedicated tons of space just to toys. For a long time it worked, but then market innovation, a shift in tastes and values, etc. started to occur and TRU failed to keep up. After limping along in its final years, the intent to finally put TRU down was announced in early 2018, or last week for current generations reading this. They say you can sometimes learn more from failure than success, and there are certainly lessons to be learned from TRU’s impending closure.
According to a CNN Money piece “Amazon didn’t kill Toys ‘R’ Us. Here’s what did” consultants and even TRU’s CEO shed light on fundamentals they failed on which killed a seven decade old business. “The company’s biggest problem: It was saddled with billions of dollars in debt. That debt stopped it from making the necessary investment in stores. And that meant an unpleasant shopping experience that doomed the chain.” Greg Portell, lead partner at retail consultant A.T. Kearney added “If you’re going to have that breadth of inventory, you need someone in the store to help you find it, help you experience it. It’s hard to sell toys in a cold, warehouse environment.” If you consume the educational content VoiceComm creates and distributes this will be familiar to you. Presentation matters. Experience matters. Inspire your customers to buy in your store. You’ll have an exponentially harder time attaining success otherwise, as evidenced by TRU.
In an SEC filing TRU’s CEO conceded they had fallen behind the competition “on various fronts, including with regard to general upkeep and the condition of our stores.” External challenges also started cropping up. “The toy store faced several other big challenges at about the same time. There was the rise of big box retailers like Walmart (WMT), which now dwarfs Toys “R” Us in total toy sales. Last year toymakers Mattel (MAT) and Hasbro (HAS) each sold about $1 billion worth of their toys at Walmart, more than twice as much as what they sold through Toys “R” Us. Target (TGT) sold just about as many of their as Toys “R” Us last year. And like most retailers, Toys “R” Us also lost sales to online rivals such as Amazon that offered lower prices and quick shipping.” The mobile industry moves at a particularly rapid rate, and failure to change with the times and adjust to modern business practices will have an impact, usually negatively. That doesn’t mean you shouldn’t create a long-term strategy and goals for your business, but be open to adjustments and fine tuning of your plan as time goes on and things change.
“But much of the chain’s resources were devoted to paying off that massive debt load rather than staying competitive. That burden crowded out critical strategic priorities, like making its stores a nice place to shop and paying employees.” Motivating employees on a broad level produces great results. They’re the representatives of your business and the final consumer touch point before a sale. TRU’s CEO states it simply “Better employees make for happier customers.” We couldn’t agree more: motivate your employees to achieve and your business will succeed.
If it isn’t obvious, the analysis of success or failure can be complicated, and certain issues at hand may be misinterpreted. But that doesn’t change the fact that adhering to the basics, including in store experience and motivating employees, will help you become successful or maintain that success you’ve worked so hard for.