Blog

Mar27

The Demise of Toys R Us

Trending E-commerce

Every year thousands of companies are making its way to the global market, it is surprising that only a handful of them have been able to make a mark for themselves and sustain the cutthroat competition. Have you ever wondered how? The answer is simple. All these successful firms or start-ups have one thing in common which is the urge to upgrade, invent and experiment. In a rapidly progressing world economy, trends keep changing from minute to minute and people no longer depend on a single brand or product for their needs given the wide range of choices that are available to them. Hence, it becomes important for a company to keep a tab on the market trends along with analyzing the strengths and weakness of its rival companies to outperform them.If a company refuses to explore new ideas from time to time, it’ll slowly lose out on not just its position in the market but also on the loyal fan base it has been able to accumulate over a period of time.

For example, Toys R Us, once a leading toy retailer brand based out of US has today lost its foothold in the market owing to not just the emergence of dynamic e-commerce websites like Amazon but also due to its own inability to adapt to the changes that were being instated with the introduction of the internet and the outbreak of a new section of online customers.  Here’s what USA Today, a popular website quoted as one of the key reasons that led to the biggest toy retailer going bankrupt earlier in this year.

Toys R Us Impact

Toys R Us is just another a reminder that retail is a brutally competitive business. When Toys R Us was down for the count, the company’s chief competitors smelled blood in the water. Amazon, Walmart and Target all ratcheted up toy discounts during the holidays, Toys R Us said in a court filing. Those discounts helped finish off Toys R Us at a time when it badly needed to pile up profits, the company said. Amazon, Walmart and Target priced toys “at low-margins or as loss-leaders” during the holiday shopping season and offered aggressive online shipping options, Toys R Us said in a court filing. The retailer simply “could not compete” with those prices because it relies “exclusively on toys for profit.” “The holiday season was disastrous” for Toys R Us, Debt wire analyst Joshua Friedman said. “It sort of killed any hope for a reorganized, whole Toys R Us.”

Vijay Govindarajan, a professor at Dartmouth’s Tuck School of Business believes that companies which have invested heavily in their systems or equipment turn a blind eye towards investing again in newer technologies, which he says is one primary reason why they fail to impress the market. Then there is the psychological aspect in which companies tend to focus on what made them successful and don’t take notice when something new comes about. There’s also the matter of strategic missteps, whereby companies are focused on today’s market and don’t prepare for change.

It is important for companies to pay heed to the change that is constantly taking place in the world economy in order to reach the zeniths of their playing field.

To know more about the debacle of Toys R Us: http://www.bbc.com/news/business-43210854