Is Only Economics to Blame for Toys R Us’ Failure?
There has been a lot of online talk, written articles and whispered speculation about the future of Toys R Us. Everything from its restructuring bankruptcy in the fall of 2017 to announcements of liquidation six months later, Toys R Us has been in the negative news.
Toys R Us Bankruptcy
CNBC reported this week that Toys R Us (TRU) is trying to keep some of its base operations open in the US, or perhaps even have just an online presence. However, all of the plans and negotiations are going on behind closed doors. Anything, at this point, is an unknown for the future of this well-known company.
The U.S. Economy has had its shares of ups and downs over the decades TRU has been in business. Everything from wars, an energy crisis, a significant collapse (remember 1999-2000), and various depressions and recessions. So why is TRU failing now?
Some information has come to light about a business deal back in 2005 that required the company to take on lots of debt and defer said debt. Unfortunately, since that time, with the continued growth of online toy sales, digital media and more, TRU had to compete with more and more companies, and more and more products.
The iPhone launched in 2007. Then the explosion of apps and online games occurred. This reduced store-bought video games and board games. Online-retailers like Jet.com and Amazon.com continued to offer bargains due to more streamlined operations. However, in my opinion, those are the more obvious answers.
As a parent, I will tell you why I stopped shopping at TRU over 7 years ago and why the economics may not be the only answer to TRU’s failure. It wasn’t because of saving a dollar or two on Amazon, or my snazzy new iPhone.
I stopped shopping at TRU due to its customer service – or should I say, “What customer service?” Every time I went to the TRU store, I could find no one to help me. On the rare occasion I did find an employee in the aisles, they had no idea where anything was. Often I went to the checkout counter where I knew there had to be someone and often they had no idea what toys were. For example, “Can you tell me where the Fingerlings would be if they were in stock?”. Employee, “There are no such things as fingerlings. What is that?”
I often wandered the store looking for, say, a doll. There would be some dolls in aisle 5, then some in aisle 8, 11, 15, 22. I was exhausted trying to find what it was I was looking for. I dreaded going to Toys R Us and finally I stopped going.
When I gave the online ordering a go through TRU, it was no better. Often the toys were only sold in stores so the online part was not even practical. On the occasions the product was online and available for internet purchase, it was out of stock. Or, alternatively, it was an older model or 25-50% more expensive than their competitors. While I could price match at the store, it leads me back to the issue I mentioned earlier. Having to find the product in the store to price match to begin with.
It is easy to blame economics for TRU plight. However, it does not tell the whole story. It places the entire blame on other companies rather than looking at itself. TRU can, and should be, be a part of the blame for its lack of customer policies, procedures and preference for its shoppers.
While CNBC has reported that Toys R Us is working on one proposal that could keep roughly 200 U.S. stores open after it liquidates the company, TRU will only be postponing the inevitable if they cannot learn to care for their customer. Prices are important, but so is the store layout, quality products, educated employees and good ol’ fashioned customer care.
