Recently, one of the largest toy emporium, which was created by Charles P. Lazarus, is gradually reducing to dusty floors as well as empty shelves. A lot has been said about this toy empire, Toys R Us’, as it continues to liquidate most of their properties globally. Due to uncertainties, fingers have been pointing at corporate raiders, big-box stores and Amazon as the main cause of this tragedy. However, the collapse of Toys R Us’ is majorly due to loyalty. During its early days, the store was able to foster devotion from both its clients and toymakers but today, it has unfortunately lost both. Some have argued that the core reason behind the fall of the toy empire is because the empire never bothered investing in its store and once new competition moved in, it was left vulnerable.
The toy empire begun with Lazarus, a visionary, a childlike scrawl who wanted the “R” written backwards despite all this, Lazarus vision to create a toy store resulted in him being regarded as one of the biggest merchants of his time as he was able to expand hi baby furniture store into the largest store within the country. By 1978, Lazarus has already developed a toy superstore that was large enough to become a public enterprise. Back in the 80s and 90s, Toys R Us’ had become the most crucial toy state ion the nation if not in the world. Its wings continued to spread once its competitors such as Kiddie City stepped down. As its wings spread so did its popularity as children across the globe began declaring themselves “Toys R Us kids. Parents ended up spending there morning weekends in the store and planners stocking up as they prepare for birthday parties. In 1994, Lazarus stepped down and handed over power to Michael Goldstein who was known for his passion for toys. Goldstein was ambitious and innovative something that resulted in the addition of more stores and gaining popularity. However, Goldstein stepped down back in 1998 and this is where problems began for the store which ended up to its current situation.
For starters, as the company continued to grow and open new stores, it forgot about the store base and never took care of it. Their neither pruned stores that were not bringing in profits nor put more resources to those stores that brought more profit. Additionally, it overlooked opportunities to make their store much nicer, cleaner as well as a destination for occasions. Toys R Us’ inability to translate the joy in the toys to something tangible was one of the biggest mistakes they made. It went an extra mile and began losing touch with the parents who were buying toys in the stores. The connection that the store had with the parents and kids which made it grow and surpass its competitors was gradually being lost.
Another mistake that the store made that resulted in its downfall is allowing the toys it sold become a commodity. By the time potent competitors they had began moving in, the store was already vulnerable. For instance the EToys and dot-com bubble, which were formed after the Toys R Us, became public and gained a market capitalization that exceeded Toys R Us’. Feeling desperate, Toys R Us ended up signing an expensive partnership with Amazon. With this deal, Amazon was given exclusive rights to put on the market Toys R Us products. They did this using their website and each year, Toys R Us was to pay roughly fifty million dollars. Toys R Us’ was paying for exclusivity, something they never got as Amazon started selling other toy brands in their website. Toys R Us decided to sue Amazon an act that left Toys R Us financially unstable and by the time the suit was over, the damage was already done.
Then, the discount chains came as other shopping stores such as target and Walmart began chasing after Toys R Us clients through slashing their toys prices. Bigger retailers had begun taking advantage of what had made Toys r Us exist for all that while. These bigger retailers aimed at increasing their margin products as they acquired more customers. This made the Toys r Us’ stuck to crumble terribly bringing about looses and loosing investors. As time went by, Toys R Us became a perfect private equity prey. By mid 2000s, private equity funds were being lured in and by 2006; private equity organizations were spending more than thirty million dollars on controlled buyouts of retailers. In 2005 Toys R Us decided to take money from three investors namely Bain, KKR and Vornado. This money resulted in Toys R Us’ indented to these investors a debt that largely affected them. By the moment the organization had reached bankruptcy in 2017,. It still had nearly five billion dollars in liabilities. The debt load that Toys R Us was incurring was too much to bear and this played a role in its downfall.
In summation, it is correct to say that Toys R Us’ problems had begun from long ago. What has resulted to the company’s downfall began long ago and if the organization was not ignorance it would have solved these issues. Ignorance, loyalty and desperation are what motivated the organization to fail as it ignored its stores, lost loyalty from its clients and was desperate enough to make a deal with the devil (Amazon). Every move the company made took the company to where it is now, bankrupt.
