Why Toys R Us Went Bust – (And How You Can Avoid Following Suit!!)

When Toys R Us went into administration, some people were shocked. However, for many retail experts, its failure was no surprise. The company had suffered years of losses and was in significant amounts of debt. So, what caused such a famous brand to fail, and what can other companies learn from its mistakes?

Children's Toys – Competition & Changing Tastes

In the pre-digital world, a trip to Toys R Us, with its wall-to-wall toys and games, was a thrilling experience for children. However, although a trip to a toy store may have been part of a fantastic family day out in previous decades, people now tend to shop online or head to one-stop-shops where they can buy a wider range of goods. Argos, for example, currently leads the UK market when it comes to sales of toys, and Amazon is also a significant player in the sector. There are still some specialist bricks-and-mortar toy stores in the UK, but nowhere near the number that there used to be – remember Gamleys (RIP 2008)?

Children still play with traditional toys, and crazes – such as fidget spinners – can still take off. However, today's youngsters are now more likely to seek entertainment in digital form. Apps and computer games can be downloaded at home with ease, so there's no need to go to a toy store to buy them. That means that it's become difficult for toy companies who aren't prepared to adapt to survive.

The Problems With The Company's Online Marketing Strategy

Toys R Us should probably have focussed on online sales and modernised their marketing techniques several years ago. This would have enabled them to increase brand awareness, provide the service that modern shoppers wanted, and cut their acquisition costs. However, they failed to do this.

They launched a website in 1998 but didn't deliver goods on time in the crucial Christmas period the following year, damaging their reputation. In 2000, they went into partnership with Amazon, so customers visiting the Toys R Us website were directed to Amazon's site instead. Toys R Us were supposed to be the only toy supplier that Amazon used, but Amazon reneged on that part of the deal. Although Toys R Us took Amazon to court and won their case, they subsequently found it hard to keep up with their competitors in the digital marketplace. While it's impossible to predict what would have happened had they have created a better online offering and marketed it properly from the start, it's safe to say that not doing so cost them dearly.

What Can We Learn From Toys R Us?

While several factors contributed to the failure of Toys R Us, it's easy to see areas where the company could have done things differently – and they certainly should have stayed up to date with retail trends. Nowadays, it's crucial to meet your customers' needs and utilise online sales channels if you want to stay ahead of the game. That means that you'll need to develop a comprehensive digital marketing plan to drive people to your website, without depending on a third party (such as Amazon) to do it for you. Contact us today to find out how we can help.

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