The toy shop Toys 'R' Us is going under. The news reported that they could not keep up, they were based out of town and they were not good online. All of that is true but they are missing the key point; children play on tablets today and not with toys.
Now it’s easy to forget that Toys 'R' Us used the Wal-Mart retail model of big shops in retail parks outside of towns where they could offer lower prices because of their high-volume purchase from suppliers. This was simple and effective for a product that is concentrated on a few suppliers like Hasbro and Mattel.
Granted Toys 'R' Us did not keep up with their customer and they could have easily gone online by purchasing an of-the-shelve platform from Amazon, but they did not because they lost touch. A visit to a shop showed staff stocking shelves or at the till totally ignorant of what the customers did. Toys 'R 'Us never updated the Wal-Mart model.
This missed opportunity is especially sad because just observing the kids at the store would have given Toys 'R' Us a hint of how children played. This market research was on their doorstep and they missed it, but now it’s too late. They key question now is which other toyshops are not paying attention to how children play? Now it’s easy to recall Cat Stevens song, “Where will the children play?”
Tell us what do you think? what else could Toys 'R' Us have done to survive?
Ignacio Canales is a Professor of Management at the business school of the University of Aberdeen. Previously he held posts as Professor, Reader and Senior Lecturer in Strategy at the Adam Smith Business School in the University of Glasgow and at the University of St Andrews. His research interests in strategy process focuses on asymmetric relationships between managers as they interact to formulate and implement strategy.