Areeba Aamir

Department: Textile Design

Marketing – I
Course Instructor: Saima Rana/Aiman Gillani
Assignment No. 3
Submission: 27 March, 2020

Case Study -The Rise and Fall of Toys R Us

➢ List all the factors and changes that contributed to the decline in Toy R
Us commercial success:

Here is the list of all factors that contributed to the decline of Toy R Us:

• Internet (dot coms, e toys and online stores)

• Competition (Rise of Big Box store, discounted chains, rank the factors, amazon)
• Accounts (debt payment, Bankruptcy,)
• Technology (Digital, e-commerce, updating)
• Suppliers and Intermediaries (vendors didn’t deliver)
• Market share (other companies)
• Publics (no investors, TV and advertisements)
• Demographics (customer behavior, declining of toys purchasing)
• Customers (upgrading, needs and demands)
• Top Management (updating of business model, adapt changings, Innovation)
• Finance (contract with amazon – legal tussles)
➢ Categorize those factors into micro-environment and macro-
environment:

Micro Environment Macro Environment

• Internet • Technology
• Competition • Demographics
• Accounts
• Suppliers and Intermediaries
• Market share
• Publics
• Customers
• Top Management
• Finance
•
➢ Rank the factors in terms of which ones were the most significant in the
downfall of Toys R Us.

Following is the ranking of factors according to my study:

• Top Management: The top management has the biggest hand in the decline of the
brand. They failed to upgrade their business model follow latest trends as well as
they could not acquire a strong position on digital platform. With passing time, they
could not adapt to the changes properly.
• Internet: Secondly, with the advent of internet, almost everything had shifted to
online platforms. When dot com and e-toys became available on the internet, Toys
R Us also signed a contract with Amazon to shift some of its business to the online
market. However, Amazon did not keep the exclusivity of Toys R Us; it promoted
other brands as well. On top of this, Toys R Us did not even launch its own website
to grow its business.
• Technology: Toys R Us did not digitally evolve when children preferred to spend
their time on screens playing videos games and using applications.
• Competition: With the rise of Big Box, the needs of the customers were easily
fulfilled at a single store. Competitors of Toys R Us smelled blood in water as the
brand dug its own grave. These opponents had discounted chains that sold toys at
relatively cheaper prices. These companies snatched away most of the market share
as they were successful in catering to the needs of their customers.
• Accounts & Finance: Toys R Us challenged Amazon in court due to their
agreement. Hence, much of their money was wasted in these legal tussles. After
that, the company started taking huge loans which it was unable to return on time,
therefore It faced bankruptcy.
• Customer: The company failed to engage its customers in fun activities and
schemes, resulting in a decline of customer traffic.
• Demographics: With new innovations and inventions, evolution in customer
behavior was perceived which Toys R Us failed to recognize. Arrival of internet
and social media hurt the sale of toy industry as it decreased by 3.1 percent.
• Publics: Seeing their failing business, investors also became reluctant to give any
money to the company whereas competitors found affluent investors tp upgrade
their stores.
• Supplier & Intermediaries: When news of the company’s bankruptcy came to
light, 40 percent of the vendors and suppliers stopped their provision of toys as
they feared that they will not receive their payments timely.