Factors and Changes

Contributing to Toys R
Us Decline

Toys R Us, once a retail giant in the toy industry, faced a dramatic decline that
ultimately led to its bankruptcy in 2017. This presentation will analyze the key
factors that contributed to the company's downfall, exploring the internal, micro-
environment, and macro-environment changes that shaped its fate.

Abhik Jindal - 20105073

Vishal Reddy - 20105097
Pranshul Dhiman - 20105101
Factors Contributing to the Decline

1 Changing Consumer Preferences 2 Intense Competition

Toys R Us faced stiff competition from e-
Consumers shifted towards online shopping commerce giants like Amazon and discount
and experiences, moving away from traditional retailers like Walmart and Target.
brick-and-mortar toy stores.

3 Debt Burden 4 Ineffective Strategies

The company's heavy debt load, acquired from Toys R Us struggled to implement effective
a leveraged buyout, made it difficult to invest strategies to compete with online retailers and
in modernizing and adapting to the changing evolve with consumer trends.
market.
Internal Environment Factors
Outdated Business Model Poor Strategic Decisions Debt Burden

Toys R Us carried a significant

Toys R Us relied heavily on The company made missteps in debt load from a leveraged
physical stores, failing to adapt its expansion plans and buyout, limiting its ability to
to the rise of e-commerce and inventory management, leading invest in innovation.
online shopping. to financial struggles.
Micro-environment Factors

1 Increasing 2 Changing Consumer 3 Supplier Negotiations

Competition Preferences
The rise of e-commerce Strained relationships with
giants like Amazon and Consumers, especially toy manufacturers and
big-box retailers like younger generations, suppliers made it difficult
Walmart intensified shifted towards for Toys R Us to secure
competition in the toy experiences and digital favorable terms and
industry. entertainment over competitive pricing.
traditional toy purchases.
Macro-environment Factors
Technological Disruption
The rise of digital platforms and mobile gaming significantly impacted traditional toy
sales.

Economic Conditions
Weakened consumer spending during the 2008 financial crisis and the ensuing
recession put pressure on the company.

Demographic Shifts
Changes in consumer demographics and preferences, such as the growth of e-
commerce, altered the toy industry landscape.
Ranking the Significance of Factors

Changing Consumer Debt Burden Failure to Innovate

Preferences
The shift towards online
shopping and e-commerce was
a primary driver of Toys R Us'
decline.
The heavy debt load from the
leveraged buyout significantly
hampered Toys R Us' ability to
adapt and invest in necessary
changes.
Toys R Us' inability to
modernize its business model
and keep up with technological
and industry changes was a
major factor in its downfall.
Conclusion and Key Takeaways

Adaptability Financial Prudence Strategic Foresight Collaboration

The failure of Toys R Maintaining strong
Us highlights the Careful management of Proactive planning and relationships with
importance of adapting debt and financial a clear vision for the suppliers, partners, and
to technological and resources is crucial for future are essential to the broader ecosystem
market changes to the long-term navigate evolving can provide a
remain competitive. sustainability of a consumer preferences competitive edge.
business. and industry dynamics.