CDS Team 3 Business Report
future-oriented experiences. Even if the children do not
Mission Statement:
To provide a unique platform and feasible solutions to go
hand-in-hand with the Information-oriented Age.
Company Description
The tangible toys have experienced the strong
sense of crisis. The development of portable electronic
devices reduces the consumer demand for tangible toys.
Children are more intrigued by the things that the video
games are offering. The variety of challenges and the
sandbox nature of the game, “You can do anything you
want” are the sensational temptation that children can
never experience through the tangible toys. The fantasy
that the children ever dreamed of becomes true.
Furthermore, children are not buying toys at the store
anymore. At the present day, people prefer the company
providing the online shopping website that delivers the
toys to their residences. E-Commerce’s recent report
reveals that in 2017 69 percent of U.S. shoppers were
found to prefer to make electronics purchases in person.
However, most of the toy stores including Toys R Us
have critical issues in the infrastructure prevents strong
customer service.
Toys R Us ends in failure to satisfy the
consumer demand due to the failure of culture and
modernization of business. Thus, our consultants suggest
following two strategies to prevent the further loss.
Solution I (Culture) - Digitalization Toys
With the development of portable electronic
devices, the video games have produced various
systems. Digitalization toys are one type of modification
of this system, the collaboration of media (game and
animation) and tangible toys. Production of toys related
to animation is just one type of the big plan. Toys R Us
can produce the toys with the codes that can be used to
buy rare items in games. For instance, the toys shaped
like the item from the game can be used online when
children buy them. Limited edition can increase the
additional consumer demand. It can be defined as the
multipurpose toy.
Solution II (Modernization) - Adventurous Toys
In order to increase the purchase, people have
to visit the physical toy stores. The toy stores need to put
an interest that ToysRus is not just a place to buy toys,
but also a place to have fun and socialize. Toy Hunt
Zone is one way to provide children the active and
buy any toys, they can just come and hang around and
VR theme park, Toy construction sets and the small cafe
for exhausted parents can be freely used by the children
those who bought the toys from Toys R Us store.
Breaking the image of toys - Wad of Cotton
covered by fabrics - can be the first step that Toys R Us
can show to the world. Furthermore, the development of
technology is not the obstacle that the tangible toys are
facing anymore. The development of digital media may
draw new innovative idea to Toys R Us. With two
solutions, our client can restructure the $5.77 billion of
long-term debt on our balance sheet, which is our
objective. However, our vision through this project with
Toys R Us is not only paying off long-term debt but also
be the pioneer at the new toy industry.
Industry Analysis:
Toys “R” us is the world’s leading dedicated toy
maker company and baby products retailer that offers a
variety of shopping experiences to wide range of
customers. Unfortunately, this toy company is currently
facing a massive structural challenges and is
experiencing a loss. Toys “R” us is in the monopolistic
competition where marketing and advertising is their
prioritized method of making profits. Toys “R” us is a
well-known and an once the top winning industry that
earns about $2,000 million per quarter. The growth rate
of the revenue, however, has experienced a decrease of
-7.51% to $ 2,107.00 millions, from the same quarter in
2016.
Currently the market is dominated by Amazon
or Walmart; therefore, they the primary competitors for
Toys R Us and successful in this industry due to their
development of E-Commerce. They have shown the
customers that their service through internet is very
convenient. This allowed them to establish strong
customer loyalty. For the case of Amazon, they have first
introduced their online shop, then they are planning to
open cashier-free shops called Amazon-Go. On the other
hand, Walmart was able to develop their offline shops
first then develop their E-commerce.
Although they have very few weakness and high
barrier that prevents other companies to enter, some of
the few would be their lack of specialization. They are
widely known as retail shops, but they are not
specialized in toy industry. Although they might have
toy section both on their websites and offline stores, Toy
R Us has better image to the customers as toy retail.
SWOT Analysis
Culture:
CDS Team 3 Business Report
Strengths: Since the new product that this solution
suggests to develop is unique in the market, the demand
toward this product is high. It takes long time for other
firms to imitate the technology used to develop the
product. In other words, Toys R US has long time to earn
economic profit and has enough time to develop brand
name, which strengthens competitiveness of Toys R Us.
Weaknesses: One weakness that this solution possesses
is that development of a new technology requires
relatively high cost. Therefore, it is hard to expect high
revenues in the beginning. However, since this
technology is unique, Toys R Us will have constantly
increasing revenues. Eventually, total revenues will
exceed total cost, which leaves economic profit.
Opportunities: Since the industry is now moving into
the Fourth Industrial Revolution, shifting its focus on
developing new technology will provide bright future to
Toys R Us. Since this product is new and unique, it
provides relatively high utility, or satisfaction, to the
customers. This strength of the product will attract more
and more customers, leaving greater amount of revenues
to Toys R Us. Also, as already mentioned above, the
firm does not have direct competitors when it first
releases the product because it is new in the market.
Threats: The firm may encounter few threats because
new technology continues develop in a very fast pace.
Since the barrier is low, when economic profit occurs,
new firms will enter into the market or the existing
competitors, such as Amazon, will attempt to imitate the
product, which threatens the firm’s competitiveness.
This signifies the importance of recognizing
fast-changing preferences of the customers and building
up brand name before new firms enter into the market.
Modernization:
Strengths: Modernization through fully utilizing the
excess space in the store would help to attract the
customers. By providing the places to allow the
customers to enjoy and experience the goods/toys before
the purchase, this will ensure them the quality of toys.
Also, by arranging small cafe, the adults who are there
with the children may spend time while the children are
having glad experience with the toys provided.
Weaknesses: One weakness that this solution possesses
is that it requires high start-up cost. However, this
modernization of the stores is not only a change in
physical stores, but also a new marketing strategy. This
change in the shape of the store changes the image of the
firm from an old toy firm to a up-to-date toy firm.
Opportunities: Since modernization of the stores also
plays a role of marketing strategy, it attracts an
increasing number of customers. In long-run, this
implants a positive brand name in the minds of the
customers.
Threats: Since the technology is fast-changing, the
existing competitors may build similar shape of stores
that provide similar service to the customers. Therefore,
it is essential to identify the change in the customers’
tastes and continuously develop new service to meet up
their tastes.
Financial Statistics
Through the project, Toys R Us will be able to
clear off its debt and reach the break even point. Until
the end of third quarter of 2019, the company will have
net loss, due to change in its products; however, the net
profit is anticipated to gradually increase according to
the graph. The increment of net profit during third
quarter of 2018 to the second quarter of 2019 will be at
increasing rate as the company pays back its debt, and
reduces cash outflow of interest on the loan. Break even
point is expected to be met somewhere between third
quarter of 2019 and fourth quarter of 2019 in which the
company returns all of its debt. According to the grap
h below, the company’s money inflow will overlap it’s
money outflow after fourth quarter of 2018, which
means the company will start making profits at that
point. Although enormous amount of money (about
$5.14 billion) will be spent on reorganizing stores and
developing new products at second quarter of 2018, the
marginal cost is expected to decline over time and will
become stable at around $12 billion. To elaborate,
expected money spent on altering physical toys to
electronic toys will be about $2.47 billion and that on
making stores attractive will be about $1.86
CDS Team 3 Business Report
billion.
Additionally, employing expertises and staff for making
website less complex and stores—safer will cost around
$0.81. On the other hand, total revenue will show
dramatic increment after third quarter of 2018, and will
continue to increase. Because of limited number of
customers, the rate of increment will become negative at
third quarter of 2019.
Marketing Plan & Sales Strategy
The main target audience for Toysrus are
obviously the children. Unlike the kids from the past,
they now heavily rely on electronic devices. Therefore,
creating Kids SNS, a new type of social media will
advertise Toys R Us in more effective ways. Any
children who bought the toys from Toys R Us will post
on the SNS page about how they built the toys or the
pictures of their own toys. Then, just like the other social
media, other children will either react or like their page
and the post. However, there are some restrictions that
young children cannot use texts, they are only allowed to
use emojis and pictures and security team are always on
track if anything goes wrong. By posting and sending
pictures to other children, they will start to have interests
in toys and will eventually lead them to want to afford
the toys just like the other children.Furthermore, children
more likely to read the advertisements on SNS.
The targeted customers aren’t only kids.
According to recent researches, grown-ups are buying
children’s toys. One in every 11 toys sold was bought by
adults. The kidults - meaning adults buying kids’ toys
for themselves - has grown 65 percent in value since
2012. It increased by 21 percent in 2016. The main
reason adults buy toys is because playing with toys is
one method to gain entertainment - they help any stress
they are feeling to go away. These kidults buy mostly
games and puzzles, building sets, action figures, and
vehicles. These growth in the older audience can be
attributed to the rise in collectable toys and popular
characters. It’s normal to see adults playing games in
public, so the advertisements would be effective to be
put in mobile phone games. Another way of advertising
can be using the public transportation areas. The
research found that Star Wars and Lego were the
favorites of the mature toy buyers, so by updating
information on new events and collectable toys,
advertisements can be done effectively.
Future Outlook (Long Term)
Since the current indebtedness of the company is
expected to be long lasting, the goal of our company to
the distant future will be to overcome and restructure the
5.77$ billion debt and to keep the pace of our company
with the quickly transforming technological era. Once
we have gained interest from the current generation by
overcoming the technological limitation on our products,
we must ensure this implementation to be long lasting
for the newer generations to come. Not only to the
products but also to the stores it is equally important to
transform. The physical shopping experience should be
transformed periodically to endlessly provide an
entertaining attraction to the customers. The
organization’s prolonged failure to keep up with the
modernization of business will only result in a financial
ruin; therefore, it is crucial through constant feedback
from the customers and through big data management,
that ToysRUs continues to adjust and modify their
company to meet the ever-changing desires of the
society.
Works Cited
Saundras, Neil. “Analysis: Beyond Debt, Toys 'R' Us
Faces Massive Market Structural Challenges.” Chain
Store Age, 6 Oct. 2017,
D'Innocenzio, Anne, and Bill Cormier. “Toys R Us Files
for Bankruptcy But Keeps Stores Open.” NBC Chicago,
NBC Chicago, 19 Sept. 2017,
“Toys‘R‘Us, Inc. Reports Results For First Quarter
2017.” Edited by Toysrus Inc, PR Newswire: News
Distribution, Targeting and Monitoring, 13 June 2017,
Pasquarelli., Adrianne, and Adrianne Pasquarelli. “Days
After Filing Chapter 11, Toys R Us Is Ready to Play.” Ad
Age, 29 Sept. 2017,
Toysrus Inc. “Toys ‘R’ Us, Inc. Reports Results For
Third Quarter 2017.” PR Newswire: News Distribution,
Targeting and Monitoring, 19 Dec. 2017,
Kelly, Guy. “Rise of the 'Kidults': Why Toys Are No
Longer Just for Children.” The Telegraph, Telegraph
Media Group, 11 Oct. 2017,
Mailonline, Harry Pettit For. “Rise of the 'Kidults':
Growth in the Toy Market Is Being Driven by
CDS Team 3 Business Report

Millennials Playing with Children's Games.” Daily Mail

Online, Associated Newspapers, 11 Apr. 2017,