Introduction and

History of Toys
"R" Us
BY -
• Raghav Chhabra (20104009)
• Kanwar Preet Singh (20104011)
• Rupak jee Kashyap (20104125)
Business Model and Mission
1 Diverse 2 Superior 3 Joy
Product Range Shopping and
Experience Quality

Offering a wide Providing exclusive Committed to

assortment of toys products, feature bringing joy to
and baby products shops, and children's lives with
through retail stores knowledgeable staff high-quality,
and online. for an exceptional innovative toys.
customer journey.
Major Factors in the Decline

1 Changing Consumer Behavior 2 Online Competition

Preferences shifted towards online E-commerce giants offered competitive
shopping's convenience, impacting foot pricing and convenience.
traffic.

3 High Debt Burden 4 Failure to Adapt

Accumulated debt constrained financial Slow adaptation to evolving retail trends and
flexibility and investment. experiences.
Internal Factors Contributing to Decline

Lack of Innovation Changing Consumer Needs

Traditional store layout, failure to adapt to Struggled to keep pace with shifting demands,
evolving consumer preferences. especially in the digital age.

Supply Chain Inefficiency High Debt Burden

Issues in inventory management and Debt from leveraged buyouts limited financial
distribution led to higher costs. flexibility and investment.
Micro-Environment Factors

Discount Retailers Online Retailers Changing Declining Birth

Shopping Habits Rates
E-commerce giants
Walmart and Target like Amazon provided Shift towards online Reduced demand for
offered competitive greater convenience shopping and toys and children's
pricing and and selection. experiential retail. products.
convenience.
Macro-Environment Forces

1 Economic Downturns 2 Rapid Technological Change

Recessions like the 2008 financial crisis The rise of e-commerce and digital
reduced consumer spending on discretionary marketing disrupted the traditional retail
items like toys. model, posing challenges for brick-and-
mortar stores.

3 Regulatory Changes 4 Socio-Cultural Shifts

Shifts in tariffs, labor laws, and regulations Growing emphasis on sustainability and
impacted operations and profitability. ethical consumption influenced consumer
behavior and preferences.
Ranking of factors (most to least significant)
• Failure to adapt to changing consumer behavior and technology trends: This encompasses the emergence of specialist
competitors, the broader choice of media options for kids, and the wider choice of toys, including gaming. Toys R Us
failed to keep up with these changes and adapt their business model accordingly, leading to a loss of relevance among
consumers.

• Reliance on a costly business model: Toys R Us maintained a large retail footprint and staffing, which became
increasingly expensive to sustain, especially as consumer preferences shifted towards more efficient and cost-effective
online shopping.

• Limited enhancements to the in-store experience: Toys R Us failed to innovate and improve the shopping experience
over time, while other retailers were investing in creating exciting and engaging environments for customers.

• Souring of the online partnership with Amazon: This impacted Toys R U's ability to effectively compete in the online
space, especially as e-commerce grew in importance in the retail landscape.
• Heavy competition and loss-leading strategies from Walmart and Target: These competitors leveraged their size
and resources to undercut Toys R Us in pricing, further eroding its market share and profitability.

• High level of debt: Operating with a significant amount of debt put additional strain on Toys R U's financial
health, limiting its flexibility and ability to invest in necessary changes to its business model.

• Ownership by financial investors: The lack of retail expertise among the financial owners may have contributed to
strategic missteps and an inability to navigate the changing retail landscape effectively.

• These factors combined to create a perfect storm for Toys R Us, ultimately leading to its bankruptcy and
liquidation.
References
This presentation draws upon a comprehensive list of sources, including industry reports, news articles, and
other relevant resources, to support the analysis and findings presented. These sources provide valuable
insights, data, and perspectives on the factors contributing to Toys R Us' decline and the broader
implications for the retail industry.

1 Research Studies 2 Industry Reports

Cohan, P. S. (2018). Why Toys “R” Us Failed. Perez, S. (2018). The Rise and Fall of Toys “R”
Harvard Business Review, 1-4 Us, Explained. Forbes

3 News Articles 4 Other Resources

Feloni, R. (2018). How Toys R Us went from a CNBC. (2018, March 15). Inside the Rise and
dominating toy store chain to bankruptcy. Fall of Toys 'R' Us [Video]. YouTube.
Business Insider.. https://www.youtube.com/watch?v=7Actdg5Jc
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