Toys ‘R’ Us Still Had Competitive Advantage – Why wasn’t it taken?

You can best describe my reaction to Toys ‘R’ Us closing in the last weeks as “disconcerned”. Although the retail giant was a large part of my childhood, it seemed like it was just inevitable fate that Toys ‘R’ Us would follow FAO Schwarz, KB Toys and other childhood favorites of mine into bankruptcy. I had no real opinion to share, so I let the news be.

However, within a week, I found myself incredibly sad about the news from more than just a nostalgic perspective. Reading stories of parents who DID have an opinion really pulled at my heart-strings and I started feeling like I had something to say to the remarks that were being made about why Toys ‘R’ Us failed.

First and foremost – at age 29 with no real kids of my own, I have stepped foot in a Toys ‘R’Us twice in the past year, frankly because after walking around the toy aisles at Target and Walmart, I was uninspired. I knew the offerings were limited and with so many toys crammed into just a few aisles of the store, I felt almost claustrophic instead of attracted and inspired. The aisles were crowded and the toys were out of place from kids throwing everything everywhere (not like Toys ‘R’ Us was any cleaner, but at least in a bigger space, it’s less noticeable.)

I knew Toys ‘R’ Us would offer me a great selection and allow me to personally pick out the gifts I was getting for my best friends’ two children. So that I did. Remembering the experience, I also headed back to Toys R Us, instead of wasting time on Walmart or Target, to grab a child’s gift for a Toys-4-Tots drive.

I started remembering how there are instances in my life, where shopping online and digging through gift idea lists were just overwhelming and un-personal. Like most Americans, I also spend my weekdays in front of a mobile device or computer screen. For as easy as it is for me to shop online and find something I need, there are just as many times where shopping online is last resort for me. It’s often TOO quick, TOO easy and takes the fun and experience out of shopping. The only real benefit is driving down price (which I will revisit in a bit).

The biggest pro-Toys ‘R’ Us fight I saw was built around the experience of being in a “toy store” and picking out a toy. Of walking up and down the aisles waiting for something to “speak” to you. Of walking through the aisles of Barbie dolls, knowing that one certain Barbie was going to attract you more than others. Or, of remembering you earned that “toy” because you helped your Dad pull some weeds in the front of the house or your Grandpa simply just wanted to spoil you rotten and buy you a new toy. Those are the trips you remember from your childhood – walking up and down the aisles with your parents or other family members, looking for that new Gameboy game or seeing what kind of crafting kits Crayola had. Something I was incredibly sad to remember – I may not be able to ever show my own kids.

I started feeling the most upset about the loss of Toys ‘R’ Us when I realized that my children would never get that same experience from a Target or a Walmart. My children will never get that same experience from a tablet or computer. While Toys ‘R’ Us couldn’t compete on price or selection to retailers like Walmart, Target and Amazon – it could trump all three in overall experience. Stores had the real-estate and the space to completely re-brand and re-organize their entire presence around the experience that Toys ‘R’ Us offered that other retail brands could not.

A few months ago when Toys ‘R’ Us filed for Chapter 11, one of my favorite social media moguls Gary Vaynerchuk put out a video explaining Toys ‘R’ Us just didn’t innovate – and briefly mentioned failure to create something like the “American Girl” experience was one of the reasons Toys ‘R’ Us inevitably failed.

It wasn’t until the news had spread that Toys ‘R’ Us had officially gone under, that not just marketing savvy experts (like I like to think I am) but PARENTS, the CORE CONSUMER of Toys ‘R’ Us, backed this claim in overwhelming complaints about missing the experience of the store.

I quickly checked out Toys ‘R’ Us’s YouTube channel – and again, zero of it’s marketing efforts were built around the experience of the store. The videos were not unique to the Toys ‘R’ Us brand – simply opting to focus on what you can “do” with toys, but not in a way that played off the unique experience of picking that out at a Toys ‘R’ Us store. They were creating ads for the toys to be purchased and coveted supporting other retailers.

Toys ‘R’ Us had the opportunity to make their stores into interactive experiences – where kids could PLAY the hot new video games before buying them, test out the brand new Barbie dream house, customize or personalize their new box of Crayola crayons. These are things Target, Walmart and Amazon simply cannot offer that Toys ‘R’ Us had the real estate to in each store. If Toys ‘R’Us could successfully do this at it’s Times Square location (which I have had the luxury to enjoy working across the street from the toy giant for a few years) why couldn’t it scale this concept down for it’s other retail stores?

Furthermore, this would justify the one major complaint about Toys ‘R’ Us – their inability to compete with online giants and retail giants on price.

Let me paint a clear picture for you.

I went to Disneyland about a month ago when my parents came to visit. We paid $5 for a churro. We paid $11 for a bucket of popcorn. We paid $24 for a souvenir tee shirt. Let alone the $125 we paid to get in. What’s Disney’s margin on a churro? Really? Why do people pay the insane prices when they know they are insane? It’s for the experience. I paid $10 for a Minnie licensed tee-shirt from Target, but knowing Target had cheaper pricing for tees did not stop me from wanting to purchase a tee shirt for more than double the price, simply because it was from Disneyland.

Another more relevant example? What about Legoland? Or the brand new Lego stores? You can find Legos at Walmart, Target and even Amazon. In fact, you can even likely find most of the sets you see at a Legoland gift store for even cheaper than the marked up price you will pay at Legoland. But Lego has rebranded themselves to be about the experience.  Lego stores offer children the ability to play and build with Legos, test out Lego robots and marvel at the outstanding things you can create with Lego’s. Despite higher-than-average prices for Lego sets, Lego’s brand strategy has allowed it to expand to over 132 retail stores globally and surpass Mattel for being the largest toy company by Gross Revenue in 2015. Let’s let that sink for a minute – Lego offers 1 toy, Mattel offers several and yet their one toy has helped Lego surpass Mattel.

Or, one last example – have you ever been to the Crayola Factory? While not as widely distributed as Lego stores, the Crayola Factory, located in Easton, PA boasts an entire “park” of Crayola driven activities – so much so that you can spend and entire day at their facilities. Though the crayons retail higher at the Factory Store, there is no indication that consumers don’t wish to pay the premium price for crayons as it relates to the overall day and experience at the Crayola Factory.

Why could Toys ‘R’ Us not become an integrated toy experience? As a marketer for big brands, I would have jumped at the opportunity to create an in-store experience to help sell my product through retail. Especially when you consider that traditional toys and toy brand such as Crayola are also competing for lost attention created by digital revolution. These brands had the opportunity to innovate together – and that missed opportunity caused the loss of a brand who is sure to be missed.

Toys ‘R’ Us had solutions – why didn’t they take them? The only thing we can hope for is an investment large enough for Toys ‘R’ Us to rise from the dead much like FAO Schwarz was able to do in 2017.