Thinking Out Loud

"Straight from the horse's mouth"
Oliver Bailey Co-Founder, Absurd

Opportunities for Toys R Us in the US

Having followed the recent financial issues facing Toys R Us in the States, we decided to look at what we can learn from this.

I was particularly interested in the relaunch of their brand positioning that went live on Friday.

Their agency, BBDO, has launched the ‘today we play’ campaign after finding that children’s free play has declined by 25 percent since 1981 and that kids today spend 50 percent less time playing outside than children in the 1970s. So the new positioning is designed to be more relatable and promote playtime, therefore increasing toy usage and sales etc.

Toy R Us Today We Play Campaign

But is their decline really due to a decline in toy usage?

It seems an unlikely story when here in the UK, a newer entrant to their market, Smyths Toys, are reporting double digit revenue growth every year (and profit!).

We know Toys R Us’ decreasing sales, losses and $billion debts led to their chapter 11 filing, but it could be argued that they missed a number of opportunities over the years.

#1 Ecommerce investment

Their initial reliance on Amazon to enter the online world hindered their growth. In late 2000 they signed a deal with Amazon to launch toysrus.com; Toys R Us provided the brand and stock whilst Amazon provided the site build, technology, fulfilment and customer service.

Having signed the deal for 10 years, Amazon soon started allowing other retailers to sell toys through their marketplace thus diminishing the presence of Toys R Us products on their site. After a two year legal battle, Toys R Us eventually got out of the deal, whilst Amazon had been building its brand and customer base for toys.

Their reluctance to invest in their online channels certainly lost them traction. In essence, they had helped one of the largest retailers in the world enter their market, and left their own brand exposed.  If Toys R Us had initially invested in their own operations and technology, they could be in a much stronger position now.

#2 Effective CRM & loyalty

I don't have inside knowledge of how Toys R Us manage their data or CRM, but from what I can see it's a loyalty scheme. They have two sets of audiences; kids (the consumer) and adults (the purchaser) - both audiences work hand-in-hand; the pester power of the children open the wallets of the adults.  

Both audiences are equally important, but the challenge is recognising that whilst children don't have money, they one day will.  Toys R Us consumer base is an ageing population and therefore it's important to build relationships as the child ages to becoming the purchaser.

I noticed there is a birthday club on the site, but the link is dead, so I hope they are already doing this if they are capturing the data.

#3 Relevant content

We've highlighted that children are an extremely important audience, but beyond the simple look and feel, the website doesn't do anything to engage this audience.  Games, videos and product photography beyond a cutout would be more appealing.  This will make no difference to parents, but it's going to engage the child and further drive demand.  Disney do this really well.

I remember as a kid, the trip to Toys R Us was a big afternoon out. We were encouraged to climb on climbing frames, drive cars, play with the computers and ride bikes around the store - it was a great experience for kids. We would then take the leaflets home and highlight the toys we wanted to buy (we also did this with the Argos catalogue).  Children spend so much time online now and I think Toys R Us have missed the opportunity to bring this offline experience, that adults of my generation remember so well, online. 

#4 Personalised experiences

There's nothing new here, but I've just spent the last 15 minutes looking at lego for my 3-year old nephew. There are a lot of variables that Toys R Us could use to personalise my experience now - I'm looking for presents for a male, the age range of toys I was looking at was generally for under 5s and I was flicking through Lego products.  Yet the homepage is still promoting interactive unicorns to me - you can't even really argue that this is a cross-sell.

There are so many good example of personalisation in ecommerce now due to it being so accessible to retailers (think Nosto), there isn't really an excuse to not be leveraging this functionality.

#5 The in-store experience

I've been to Toys R Us in New York and the experience there is completely different to that of any UK branches I've been into.  New York has interactive stands, toys that can be played with and just generally a lot of energy and enthusiasm from the staff in the store.

Here in the UK, the stores I've visited haven't changed for years and feel quite tired.  When they're competing with the likes of Hamleys, which replicate a lot of the features of the New York Toys R Us, a tired store isn't going to inspire shoppers. 

Moving forward

Toys R Us is an institution and I really hope that they can rebuild their experience, and in turn their brand. There are a lot of alternatives, so they have a tough task ahead.

But is their decline really due to a decline in toy usage?