Strengths:

- Toys "R" Us Canada had a 25% market share in the Canadian toy market in 2018 .

- The Canadian market had experienced relatively strong growth in comparison with the US market in
the years leading up to 2018 .

- Despite strong online competition, the most lucrative channels for generating sales remained
hypermarkets, supermarkets, and hard discounters, which generated total revenues of $223.3 million
in 2017 .

Weaknesses:

- Toys "R" Us Canada faced digital pressures in recent years .

- The company had experienced a decline in growth and profitability .

Opportunities:

- The Canadian toy market was forecasted to grow at a slightly slower but still comparable pace of
3.3% by 2022 .

- Demand for lower-end value products and high-end toys were both increasing as mid-ticket items
gave up market share year over year .

Threats:

- The advancement into the toy market of online sellers such as Amazon and large retailers such as
Walmart showed no signs of stopping .

- The survival of Toys "R" Us would depend on its ability to differentiate itself and its product base
from these competitors

SUMMARY

Toys “R” Us, a once-dominant player in the toy industry, faced a multitude of challenges leading to its
closure in the US in 2018. However, its Canadian counterpart managed to survive by separating from
its American parent company and undergoing an independent restructuring. The Canadian division,
led by Melanie Teed-Murch, aimed to revamp its business strategy to adapt to the changing retail
landscape and combat the growing online competition, particularly from giants like Amazon and
retail chains like Walmart. Here’s a breakdown of the key points:
Toys “R” Us Canada Overview

 Founded in 1984 as part of the US parent company’s international expansion.

 Managed to remain financially stable despite facing digital pressures.

 Separated from the US parent company and was acquired by Fairfax Financial Holdings
Limited, becoming an independent, 100% Canadian-owned business.

Challenges Faced by Toys “R” Us

 Online Competition: The rise of ecommerce giants like Amazon disrupted the toy market,
leading to the bankruptcy of Toys “R” Us in the US.

 Debt Burden: High debt levels crippled the company’s ability to invest in store upgrades and
compete effectively.

 Shift in Market Dynamics: Big-box retailers like Walmart and Target encroached on market
share, posing significant challenges.

Response and Strategies by Toys “R” Us Canada

 Rebranding and Store Upgrades: Invested in renovating stores, focusing on interactive

experiences, mobile payments, and improved checkout processes.

 Customer Engagement: Introduced a loyalty program and planned various in-store events to
engage families.

 Long-Term Vision: Explored partnerships for food services, piloted smaller store formats, and
aimed for rapid decision-making in a changing retail landscape.

Canadian Toy Market

 Market Growth: Canadian market showed growth and demand for value and high-end toys.

 Competitors: Walmart and specialty stores like Mastermind Toys posed strong competition.

Competitor Insights

 Mastermind Toys: Focused on educational and specialty toys, expanded both in-store and
online presence.

 Walmart Canada: Utilized its massive scale and online presence to offer a wide range of toys.

Future Prospects

 Challenges Ahead: Continued online competition, market rivalry, and the need for
differentiation to survive.

 Opportunities: Emphasis on experiential retail, innovative strategies, and agile decision-

making.
Overall, Toys “R” Us Canada faced significant hurdles but showed resilience through its restructuring
efforts, focusing on customer experience, and exploring new avenues for growth in an evolving retail
landscape.

Q.1 what are the strengths , weaknesses, opportunities and threats for toys R Us in the 2018
canadian market

Here's an analysis of the strengths, weaknesses, opportunities, and threats (SWOT analysis) for Toys
“R” Us in the 2018 Canadian market:

Strengths:

1. Established Brand Recognition: Toys “R” Us had a strong brand presence and history in
Canada, holding a significant market share.

2. Diverse Product Offering: They offered a wide range of toys and related products, including
exclusive items, catering to different customer segments.

3. Track Record of Financial Stability: Despite challenges, the Canadian division had showcased
consistent financial stability and sales growth.

Weaknesses:

1. Debt Legacy: Although separated from the US parent company, past inter-company loans
and financial ties had limited the Canadian branch’s ability to reinvest.

2. Lagging Online Presence: The company struggled with a lower online sales percentage
compared to competitors, hindering its reach and competitiveness.

3. Legacy Store Format: Outdated store layouts and merchandising might have alienated
customers seeking a more modern and engaging retail experience.

Opportunities:

1. Experiential Retail: The shift towards experiential retail provided an opportunity to revamp
store layouts, introduce interactive experiences, and attract families seeking more than just a
shopping trip.

2. Partnerships and Events: Collaborations with food service partners and hosting in-store
events like workshops or parties could enhance customer engagement.

3. Digital Transformation: Investing in a stronger online presence, including improved website

functionality and a more seamless omnichannel experience, presented growth
opportunities.

Threats:

1. Online Competition: Intense competition from ecommerce giants like Amazon, which had a
strong foothold in the Canadian market, posed a threat to traditional retailers like Toys “R”
Us.

2. Strong Competitors: Established competitors such as Walmart and specialty stores like
Mastermind Toys offered diverse product ranges and robust online platforms, intensifying
rivalry.
 3. Market Dynamics: Changes in consumer behavior towards online shopping and preferences
for value-driven products posed threats to traditional toy retailers.

Conclusion:

Toys “R” Us in Canada had a recognizable brand and a history of success but faced challenges in
adapting to the changing retail landscape. The company had opportunities to innovate through
experiential retail, digital transformation, and strategic partnerships. However, threats from online
competition, strong rivals, and evolving consumer preferences necessitated swift and effective
adaptations to remain competitive in the market.

Q.2 does toys R Us have a sustained competitive advantage in the canadian market? why or why
not

Toys "R" Us in the Canadian market faced challenges in maintaining a sustained competitive
advantage due to various factors:

Challenges to Sustained Competitive Advantage:

1. Online Competition: Ecommerce giants like Amazon had a strong foothold in the Canadian
market, offering convenience, competitive pricing, and a vast product range. Toys "R" Us
struggled to match their online presence.

2. Debt Legacy: The company had a history of financial ties to its US parent company, limiting
its ability to reinvest and innovate. This legacy debt burden restricted their agility and
capacity for growth.

3. Market Dynamics: The shift in consumer behavior towards online shopping and preference
for value-driven products posed a challenge. Established competitors like Walmart and
specialty stores like Mastermind Toys also held significant market shares.

4. Outdated Store Format: The traditional store layout might not have aligned with evolving
consumer preferences for interactive and experiential retail environments, potentially
impacting foot traffic and sales.

Areas of Potential Advantage:

1. Brand Recognition: Toys "R" Us had a well-established brand name and a history in the
Canadian market, which could have been leveraged to attract customers seeking a trusted
toy retailer.

2. Exclusive Offerings: The company had a history of offering exclusive products, which, if
strategically managed, could draw in customers looking for unique items not available
elsewhere.

3. Renovation Efforts: Investments in store renovations and upgrades to provide interactive

experiences and improved layouts indicated a willingness to adapt to changing consumer
preferences.
Conclusion:

Toys "R" Us in Canada faced significant hurdles to maintain a sustained competitive advantage due to
challenges in digital transformation, financial constraints, and evolving market dynamics. While the
brand recognition and exclusive offerings were potential strengths, overcoming the challenges of
online competition, debt legacy, and modernizing its retail approach were crucial for the company to
secure a sustainable competitive edge in the Canadian toy market. Success would depend on the
ability to innovate, adapt swiftly to consumer demands, and differentiate effectively from both online
and brick-and-mortar competitors.

Q.3 IS TOYS R US WELL POSITIONED IN THE CANADIAN TOY INDUSTRY ? WHY OR WHY NOT?

In 2018, Toys "R" Us in Canada faced a mix of challenges and opportunities, making its positioning in
the Canadian toy industry somewhat nuanced:

Factors Influencing Positioning:

Challenges:

1. Market Dynamics: The shift towards online shopping and the presence of ecommerce giants
posed a challenge to traditional retailers like Toys "R" Us, impacting their competitiveness.

2. Debt Legacy: Past financial ties with the US parent company limited their ability to invest,
innovate, and compete effectively.

3. Intense Competition: Established competitors like Walmart and specialty stores like
Mastermind Toys offered diverse product ranges and strong online platforms, intensifying
market rivalry.

4. Outdated Store Formats: The traditional layout might not have aligned with the evolving
consumer preference for experiential retail.

Opportunities:

1. Brand Recognition: Toys "R" Us had a well-established brand and history in Canada,
potentially attracting customers seeking a trusted toy retailer.

2. Exclusive Offerings: The company historically offered exclusive products, which could attract
customers looking for unique items.

3. Renovation Efforts: Investments in store renovations and upgrades for interactive

experiences showed an effort to adapt to changing consumer preferences.

Positioning Evaluation:

Toys "R" Us in Canada had a recognizable brand and a history of success, but its positioning might not
have been as strong due to challenges such as online competition, financial constraints, and evolving
market dynamics. However, initiatives to revamp stores, offer exclusive products, and invest in
customer experiences indicated a willingness to adapt.

Conclusion:

While Toys "R" Us possessed inherent strengths like brand recognition and exclusive offerings,
overcoming challenges like online competition, debt legacy, and store format modernization were
critical to solidify its position in the Canadian toy industry. The company needed to leverage its
strengths effectively and innovate swiftly to align with evolving consumer preferences and
competitive market dynamics for a more robust positioning in the industry.

Q.4 CAN TOYS R US BE SUCCESFUL BY FOCUSING ONLY ON ITS EXPERIENTIAL SHOPPING

ENDEAVOURS OR ONLY ON ITS DIGITAL EXPERIENCE ? WHY ARE BOTH NECESSARY FOR THE
COMPANY'S SUSTAINED COMPETITIVE ADVANTAGE

Focusing solely on either experiential shopping endeavors or digital experience would likely not
secure Toys "R" Us' sustained competitive advantage in the evolving retail landscape. Both aspects
are crucial for several reasons:

Experiential Shopping Endeavors:

1. Customer Engagement: Interactive experiences in-store can create memorable moments,

fostering a deeper connection with customers.

2. Differentiation: Unique in-store experiences can set Toys "R" Us apart from competitors and
encourage foot traffic.

3. Brand Loyalty: Positive experiences could enhance customer loyalty, driving repeat visits and
word-of-mouth recommendations.

Digital Experience:

1. Accessibility: A strong online presence provides convenience for customers, especially those
preferring to shop from home.

2. Reach and Convenience: An optimized digital platform widens the customer base, catering
to those who might not visit physical stores.

3. Omnichannel Approach: Seamlessly integrating online and offline experiences ensures a

cohesive customer journey and offers flexibility.

Why Both Are Necessary:

1. Consumer Expectations: Modern consumers seek convenience and varied shopping

experiences. Offering both fulfills diverse preferences.

2. Market Trends: Retail success increasingly relies on an omnichannel approach, providing

multiple touchpoints for customers.

3. Competitive Landscape: Competitors, including online giants like Amazon and brick-and-
mortar retailers, excel in both experiential and digital realms.

Conclusion:

To achieve sustained competitive advantage, Toys "R" Us needs a holistic approach that blends
experiential shopping with a robust digital experience. Emphasizing only one aspect might alienate a
segment of customers and limit market reach. A seamless integration of both strategies aligns with
evolving consumer preferences, enhances brand perception, and ensures the company remains
competitive in the dynamic retail environment.