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Toys R Us, Bankrupt, Transformation, Marketing

Toys R Us: Lost in Transformation

The massive shift in consumer shopping behaviors continues to rock retail. With shoppers moving online to buy and seeking out more convenient options (aka Amazon) the old giants of the bricks and mortar world are reeling, as they fail to keep up with the omnichannel demands of consumers.

The toy industry is no different. In September, Toys “R” Us filed for bankruptcy as they faced a looming deadline to payback $400M of the $5B in long-term debt on its balance sheet.

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Toys “R” Us has been trying to turn things around for awhile. They recently announced that they will be offering an in-store, augmented reality experience to pull consumers into stores. Their hope is that this will drive some traffic to their stores and spur some multi-channel purchasing. As I discuss in my recent article on Entrepreneur.com, their current turnaround effort will likely tank.

Why?

Without taking a transformational approach to their 3S’s,  Story, Strategy, and Systems- they won’t be able to break out of the death spiral that is “better sameness”. A successful turnaround must begin with addressing the Brand Story:

A Brand Story Stuck in Time

Toys “R” Us isn’t looking at a shrinking toy market- it’s growing! Last year, U.S holiday sales grew 4% to $658.3B. So, how can it be that a company with brand recognition like Toys “R” Us isn’t seeing their share of that growth?

With more than 65 years in the toy business, the Toys “R” Us brand story has always centered on being the “toy authority” for parents and children alike. They truly were the place to go for the best toys. Their brand story was all about quality, value, selection, and an in-store shopping experience focused on making the shopper the “hero.”

The game has changed though and that same shopper’s expectations have changed.

Let’s be honest… No one wants to be IN a Toys “R” Us store.

My mind goes to the Toys “R” Us a few blocks away from our office. Would I rather:

  • Drive through horrible Atlanta traffic to a store, where I have to meander the aisles trying to find what I need (regardless of how helpful the staff is… it still is a chore)?

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  • Or go on to a little site called Amazon.com, quickly search for what I want, read a peer review and check out via a one-click purchasing experience?

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While it may not be truly “zen” to fuel the Amazon growth machine, a story that forgets the importance that consumers place on convenience is doomed to fail.

Their Strategy is still misaligned

Back in early 2014, Toys “R” Us announced its “TRU Transformation” strategy to address this shift in shopper experience expectations. This vision included many in-store improvements, but also that these in-store efforts would coordinate with an aligned web experience. This vision of online/offline alignment never came to life.

Most people today are “hybrid” shoppers. Their buying journey is both online and in store. For example, they may do their browsing and research online and then make a “targeted strike” at a brick-and-mortar store, or they could reverse that and want to just demo the product in-store.

Although shoppers won’t ever ditch physical stores entirely, they are shifting most of their holiday toy shopping online because cluttered stores and slow-moving checkout lines deter them. Shoppers expect instant gratification.

The Systems upgrades are too little, too late

Toys “R” Us admits that it fell behind on its ecommerce systems. Now the company is stuck making some big bets to try to close the gaps in its Systems. Their revamp is part of a nearly $100 million investment over the last three years that is geared toward jump-starting an online experience that it acknowledges lagged some of its retail peers.

The new in-store augmented reality (AR) experience is a novel idea.  I suspect kids will love being able to interact with their favorite toys, but AR isn’t a silver bullet. While it may drive foot traffic, Toys “R” Us may just become the place for “toy demos”. Shoppers will likely still end up looking for the best price online and buying there.

A successful turnaround at Toys “R” Us is going to require a leadership commitment to a transformative approach that delivers a compelling story where the shopper is the hero, a strategy to deliver a remarkable shopper experience and the systems to execute with ruthless consistency.

Learn how you can utilize the transformational powers of your marketing department to drive organization-wide change. Check out TopRight’s ebook: Transformational Marketing: Moving to the TopRight. This ebook is the best place to learn how to create a compelling story that delivers its promise at every customer touchpoint.

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