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Toy Sob-Story


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I was reading an article this morning about FAO Schwartz bankruptcy and it cross referenced another article about Toys R Us. The cross story was an interview with the CEO of TRU ( who also used to run FAO ) .

 

This interview ..... seems to indicate that toy stores in general might be facing extinction. Now I know as CEO of TRU, he has to have a positive statement about the situation, but what is pointed out by the interviewer. and even he mentions, is that discount stores like Target and WalMart have hurt a lot of speciality stores by carrying the same products. And even if the prices are the same instead of being discounted, a lot of consumers will go to a store they can get most of what they need all in one stop, before going to a store they can only get a few things at, and then having to go to another store for the rest of their list.

 

He says that they have introduced " Exclusive TRU products " such as G I Joe's and Barbie, but is that going to be enough to compete with the Super WalMarts ?

 

When I was a kid, we had a little 5 & Dime toy store that carried only toys, and it was something special to be taken there to buy something. I mean .... it was a kids store that carried things only for kids. It was kind of... I don't know, magic ? We did not get dragged around to the fitting room to wait while mom tried on gazillions of clothes, or to the tool department while dad looked for the newest handy-man can't live without thing-a-ma-bob. It was for US !!!

 

I have seen stores in TX as well as where I grew up, and now in RI severely hit in the economic pocketbook by WalMart. And as much as I hate to support a business that is running every one else out of town, it is hard to resist the convience and prices they offer. I did stop buying my music there because I don't care for their censor policy on CD's. But then again, I don't remember the last time I bought a CD so that is not a big money loss for them.

 

It kind of reminds me of Demolition Man where Stallone wakes up and finds that everything is owned by Taco Bell. :shock:

 

Could we be soon living in a WallyWorld World ?

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Wal-Mart, Target and other "big box" stores are also offering similar lines of products of major toy manufacturers, like Hot Wheels and Leap Frog, under their own labels, further undercutting sales of those toys at other locations. Still, while we may lament the bankruptcies of these stores, we don't change our spending habits. I'm sure that in every community where they protested the new Wal-Mart or Sam's Club moving in, they flocked inside afterwards. It's damn convenient and usually much cheaper. I find, however, that Wal-Mart's videogame prices are way out of whack. While brand-new games are usually discounted by $1.17 (which I can easily beat at the Best Buy next door), games just don't get marked down over their shelf-life (at least at my local store). If you should want, for some inexplicable reason, James Cameron's Dark Angel or Chase:Hollywood Stunt Driver, you're still paying $50 for them.

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games just don't get marked down over their shelf-life

 

I've found this to be pretty decent at my local Wal-Mart, actually. It's Zellers here where things are totally out of whack. The prices NEVER drop. Sometimes good for a deal when a game first gets released though. The EB's here are just gougers, which basically leaves FutureShop as the best place to find things at realistic prices. I tend to get most of my games at FS and Wal-Mart.

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Well you see, here's the problem with our failure to change our spending habits:

 

Competition is good for the consumer. When Wal-Mart runs every other competitor out of business, then what? They end up doing whatever they damn well please and charging whatever they want. Yeah, it's a little unrealistic to think there will ever be a COMPLETE monopoly by Wal-Mart, but I wouldn't be surprised if it comes back to bite us in the ass just a little bit.

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Yeah, in SF there are no WalMarts, one Best Buy, one CostCo (Sam's), one TrU. But then again, none of these stores can touch KidRobot for toys! The SF store has been so successful they opened one in NY about a month ago. There is hope for independent toy stores, but it lies in differentiating yourself, and carrying unique stuff instead of marketing the same crap that everyone else does. Although, KidRobot isn't truly for young kids.

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carrying unique stuff instead of marketing the same crap that everyone else does.

 

This is a key point right here. Toy stores should carry at least some niche merchandise that appeals to a select group of buyers. I know the local comics shop I frequent has a large amount of specialized action figures and such that you'll never find at a Toys 'R Us here.

 

So when I go out to buy my Clerks Inaction Figures (gotta catch 'em all), I can't get them at Wal-Mart OR Toys 'R Us so I turn to the alternative source.

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Before you start crying for TRU as the last of the real toys stores you might want to consider some retail history. TRU isn't necessarily the nostalgic good guy either. They systematically and deliberately removed their competition in much the same way Walmart is vilified for doing. Off the top of my head I can think of three major toy chains that were put to pasture by TRU's aggressive tactics and buying power: Child World (Children's Palace), Lionel Toys, & Toy Chest. If anything, TRU is more responsible for the extinction of Toy Stores than Walmart.

 

It would not be far fetched at all to say Walmart studied TRU's business practices, refined them for a more general market, and went to town with it. If TRU was the first "category killer" retail store then Walmart was the first general retailer to take the "category killer" approach.

 

I put in 12 years at TRU and can honestly say it was a big hit to our pride when, in 1996, Walmart became the world's #1 toy retailer. Ever since then TRU hasn't been the same company. John Eyler has made a ton of very smart (and much needed) changes but the simple fact is nothing he's done has consistently brought more customers in the doors.

 

On a positive note, I don't think TRU is going anywhere. They have a well planned poison pill in the event of a hostile take over attempt and their newer prototype "Geoffrey" stores are phenomenal. Smaller than a typical TRU the Geoffrey stores are a mix of retail toy space and activities. TRU is also smartly pursuing getting their product inside of foreign retailers.

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Don't get me wrong Camp. I am not crying for TRU in the least. I 100% agree with you that the large chain market stores have driven the little hometown toy stores out of business.

And it is not just the toy stores. In TX it was Winn's, here in RI, it was Ames, and Ann & Hope, in IL it was Ben Franklin 5&10. In your state it was called something else, but for all general purposes the case is the same. The smaller stores could not afford to buy in the gazillion unit bulks that the newer super stores could, and by incorporating other area's of merchandising into the mix, they could sometimes buy more from different suppliers that are owned by the same parent company.

 

The smaller stores could not compete with that kind of economic blow. I felt a kind of poetic justice when I read about KMart having to close a lot of their stores. Yeah, it was sad people were losing their jobs, that really sucked, but the corporation over extended itself in areas it apparently could not recover from.

 

I don't have any real business knowledge other than from a consumer point of view, but I am wondering if any business courses have covered this, and what they think it means ?

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