Toys R' Us Toys R' Us (Author Name(s), First M. Last, Omit Titles and Degrees) (Institutional Affiliation(s) )

TOYS ‘R’ US
Toys ‘R’ Us
[Author Name(s), First M. Last, Omit Titles and Degrees]
[Institutional Affiliation(s)]
TOYS ‘R’ US 1
Toys ‘R’ Us
Ernst & Young COO once said that today’s companies need to continually reorganize
themselves to keep up with the accelerating changes in pace. He then added that companies that
conduct their reorganizations effectively under current business environment conditions would
thrive (Heidari-Robinson & Heywood, 2016). This is the test that the toy retail giant Toys ‘R’ Us
failed that eventually led to their downfall. When Walmart became America’s dominant toy seller
in 1998 (Barbaro & White, 2005), and their market share continued increasing, that is when Toys
‘R’ Us should have reorganized their company structure.
The first reason for a reorganization was the evolving preference and nature of
new consumers. Technological advancements at the time had initiated a new kind of
entertainment in the form of electronic and computer games (Pereira et al., 2004). Kids now
preferred this form of entertainment. Hence the company should have opted to increase their
offerings by including electronic and computer games. Secondly, Toys ‘R’ Us also failed to
develop and invest in their customer support services. Failure in this department, coupled with an
improper after-sales service, contributed to the declining number of customers visiting their
stores.
The third reason for reorganization was the lack of proper investment in the right
advertising and marketing strategies. Toys ‘R’ Us was a massive brand in the United States;
therefore, a unique marketing position would have helped have placed them in a better position
to compete with Walmart. For example, they operated the Toyrus.com website, which would
have been a unique opportunity for them to explore since the use of the internet was growing at a
swift pace. The final reason why a reorganization of Toy ‘R’ Us was required early on is that
TOYS ‘R’ US 2
even after the buyout in 2005, the new owners did not reorganize the company, and it went on to
collapse in 2018, leading to the closure of its remaining 735 stores (Kavilanz, 2018).
If Toys ‘R’ Us had decided to restructure and remain a viable business, then the
following strategies would have helped them achieve their objectives. Toys ‘R’ Us management
could have opted to understand the trends in the toy industry by investing in research and
development. Such an undertaking would have revealed that consumer preference had changed
towards electronic and computer games, shifting away from traditional toys. An improvement in
inventory to satisfy the needs of their consumers by providing electronic and computer games
would have increased their chances of increasing profit margins.
Secondly, they would have discovered that there was an emerging phenomenon
on the internet as users increased. The company had established a website Toyrus.com, and
online shopping was an upcoming trend that they could have explored. With over 800 stores in
the United States dedicated to toys for kids as well as their other brands, Toys ‘R’ Us had a
unique opportunity to dominate online sales of traditional toys as well as the upcoming electronic
and computer games. The 800 stores guaranteed that the company would have a unique
competitive advantage over its competitors, such as Walmart and Target, by offering free home
deliveries.
TOYS ‘R’ US 3
References
Barbaro, M., & White, B. (2005, March 18). Toys R Somebody Else; Chain’s Sale Ignites
Speculation About Direction, Strategy. Wall Street Journal, 0.
Heidari-Robinson, S., & Heywood, S. (2016, November 1). Getting Reorgs Right. Harvard
Business Review, November 2016. https://hbr.org/2016/11/getting-reorgs-right
Kavilanz, C. I., Jackie Wattles, and Parija. (2018, March 14). Toys “R” Us will close or sell all
US stores. CNNMoney. https://money.cnn.com/2018/03/14/news/companies/toys-r-us-
closing-stores/index.html
Pereira, J., Tomsho, R., & Zimmerman, A. (2004, August 13). Toys “Were” Us? Wall Street
Journal, B.1.

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TOYS ‘R’ US

[Author Name(s), First M. Last, Omit Titles and Degrees]

‘R’ Us should have reorganized their company structure.

would have increased their chances of increasing profit margins.

Speculation About Direction, Strategy. Wall Street Journal, 0.

Business Review, November 2016. https://hbr.org/2016/11/getting-reorgs-right

US stores. CNNMoney. https://money.cnn.com/2018/03/14/news/companies/toys-r-us-

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