This paper analyzes Toys "R" Us as a specialty toy retailer, tracing its founding in 1948 through its evolution into an international brand. The paper examines the company's mission, three-pillar strategic transformation ("easy, expert, and fair"), and competitive landscape through SWOT analysis. Key focus areas include customer service differentiation, omnichannel expansion, and challenges from big-box retailers and e-commerce. The analysis concludes that customer-centric improvements and supply chain optimization are essential for Toys "R" Us to maintain its position as a premier specialty retailer.
For years, Toys "R" Us has been the largest specialty retailer of toys in the world. In a highly competitive market, Toys "R" Us has managed to survive by improving customer satisfaction, brand value, and strengthening the company as a whole. Through aggressive marketing techniques, Toys "R" Us continues to work toward the frontlines of the market as the premier toy retailer.
Founded in 1948, Charles Lazarus opened Children's Bargain Town in Washington, D.C. His original inventory consisted of cribs and baby furniture, which Lazarus managed single-handedly, overseeing everything from bookkeeping to delivering merchandise to customers' homes. Continually seeking ways to satisfy customer needs while expanding his target consumer group, Lazarus introduced infant products and toys for older children into the company's growing product assortment. The first toy he added to the inventory was a cradle gym. When it proved a strong seller, he added tricycles, books, and other toys. Lazarus learned early in the toy business that unlike furniture, toys broke or fell out of fashion with children, prompting parents to return to the store again and again.
Ten years after its founding, Charles changed the company name from Children's Bargain Town to Toys "R" Us. Lazarus made the strategic decision to use the backwards "R" as a way of grabbing attention and attracting customers. Seeking to diversify its portfolio, Toys "R" Us looked for new incentives to attract parents through an extension of the "R" Us brand. In 1983, the company branched out into children's clothing when it opened its first Kids "R" Us stores in Paramus, New Jersey and Brooklyn, New York. Although Toys "R" Us, Inc. closed its freestanding Kids "R" Us locations in 2003, the company remained committed to the apparel business and continued to sell a wide variety of name-brand designer and private label boys' and girls' clothing. In 1996, due to positive apparel sales, the company added apparel to most of its Toys "R" Us stores across the country.
Today, Babies "R" Us is the nation's leading baby products specialty retailer, with the chain growing to approximately 260 locations across the country since its first store opened. The stores offer new and expectant parents everything they need for their babies, including an extensive selection of baby products and supplies from leading manufacturers at prices to fit any budget. Toys "R" Us also operates 600 stores internationally in 36 countries. In 2009, to further enhance the company's appeal, Toys "R" Us purchased the rights to FAO Schwartz and operates both stores in New York.
As the premier toy retailer of the world, Toys "R" Us' mission is to be the world's greatest kids brand, not only offering parents and families a broad selection of products to create magical playtime memories along with everyday essentials, but also providing the resources to keep children safe. In order to live up to this mission, Toys "R" Us changed its slogan to "C'mon let's play," demonstrating that the company is a great place to work, fostering teamwork, employee development, and high levels of loyalty.
Along with changing the company slogan, the company also changed its corporate strategy. Antonio Urcelay, the Chairman of the Board and Chief Executive Officer, stated: "As we look to the future, our strategy will establish a path to sustainable business growth, building upon the company's unique strengths. Toys "R" Us is one of the most recognized brands in the world with a strong international presence and a large and loyal customer base. Our global network of stores generates strong profitability, and together with our $1.2 billion global e-commerce business, is integral to our growing omnichannel capabilities. And, as the world's leading dedicated toy and juvenile products retailer, we have well-established relationships with our manufacturing partners, and can provide them with a year-round distribution outlet that showcases the broadest selection of their products in 36 countries around the world."
In order to pursue this strategy, the company focused on three guiding principles: easy, expert, and fair. Furthermore, the company aimed to focus more on building customer relationships and loyalty by improving the shopping experience both in store and online. The President of TRU, Hank Mullany, explained: "Among our highest priorities will be to deepen our focus on the customer, build meaningful relationships through loyalty and targeted marketing programs, and improve the shopping experience both in-store and online. This will include putting more emphasis on the distinct needs of our customer base of new and expectant parents and gift-givers. We are committed to delivering on our mission to bring joy into the lives of our customers by being the toy and juvenile products authority and definitive destination for kid fun, gift-giving solutions and parenting services. For 2014, the objective of 'TRU Transformation' will be to slow the company's sales decline, stabilize cash flow and improve EBITDA to effectively position the business to grow revenue and profits in 2015 and beyond."
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