The Reasons Of Toys “R” Us Failure

Bankruptcy is more common in young-businesses and startups than in big companies. So that, a 70-year long legacy such as Toys “R” Us being bankrupt is not an easy thing. It means that it must have happened a huge failure in their decision-making process to fall from high profits to bankruptcy in just 5 years, Toys “R” Us haven’t made any annual profits since 2013.

Here are some reasons of their failure:

Their wrong decisions about the stores location

They thought that having a lot of stores outside the town with cheaper prices is better than having few stores in a vital place. Toys “R” Us used to choose cheaper out-of-town real estate, but nowadays, out-of-town can mean out-of-sight. In addition, they closed their main store at Times square in 2015 which was also their most popular attraction for shoppers. As a result, people chose to buy toys from the stores on their way because it is easier which led to decreasing the number of customers of Toys “R” Us.

They couldn’t compete with other competitors in logistics

At the time the competitors were opening online stores, making a lot of promotion, and developing their shipping process to be faster, Toys “R” Us was concentrating only on the small-town stores and didn’t open their own online store. So that they couldn’t compete with the world’s leading warehouses.

Their wrong inventory management

Customers complained that the newest products being advertised weren’t available. Also, when somebody order a stock, the company does not have. As a result, costumers shifted to the other competing companies.

The number of employees in each store and the customer experience

Toys R Us ceased the number of employees in each store. They used a few number of employees in each store in comparison to Lego. This made Lego a better place for children because when children enter Lego they find a lot of team members who are there waiting to build Legos and play with them. On the other hand, Toys “R” Us hired only one or two employees in each store which does not give the children the same feeling of enjoyment and welcoming they experienced at Lego.

Coping with the new generations and their different preferences

Toys “R” Us refused to cope with the changing tastes or preferences of the new generations. They stick to their traditional toys and they didn’t carry any exclusive product lines. They thought that nostalgia could save them. Unfortunately, It did not and they lost a huge portion of the new generation consumers.