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Toys r us

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Muthu Rathna G
Muthu Rathna G

Toys "R" Us was founded in 1957 by Charles Lazarus and captured 20% of the US toy market by 1988. It faced major barriers entering Japan due to regulations protecting small retailers. It overcame this by establishing a joint venture in 1991, becoming the largest toy retailer in Japan within 20 years due to its large stores, direct buying from manufacturers, and adapting products for the Japanese market. Toys "R" Us now operates internationally with over 1,500 stores in 33 countries and revenues of $13.6 billion, pursuing strategies like eco-friendly toys and internet retailing to adapt to changing demographics.

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THE BEGINNING.. Toys “R” us – brainchild of charles lazarus in 1957 1988 – captured 20% of US toy market Features of toys “R” us - 10 to 20% discounts compared to small toy retailers` - year round advertising campaigns - very large self service outlets
STRENGTHS AND WEAKNESS Strengths: Huge number of superstores Huge distribution network due to advanced logistical system Strong bargaining position when it comes to buying from the manufacturers Diversified portfolio of products
Weakness: No single and sustainable competitive advantage other than the brand
BARRIERS TO ENTRY Japanese regulation of retailing and distribution proved to be major barrier Large Scale Retail Store Law (Daitenho) designed to protect politically potent shopkeepers Daitenho proved insurmountable for Toys “R” Us acting on its own
Laws against big stores and land is very expensive, cost of employment increased At the wholesale level , japanese toy industry was characterised by fragmentation and long standing relationships Following of the “Suggested price” by manufacturers
JOINT VENTURE Establishing a firm that is jointly owned by 2 or more independent firms. ADVANTAGES: Benefits from a local partner’s knowledge of the host country’s competitive conditions, culture, language, political systems and business systems. Risks are shared with the local partner In many countries, political considerations make joint ventures the only feasible entry mode.
DISADVANTAGES : 1. Risk of transferring the technology to the partner. 2. Does not give tight control over subsidiaries to protect from the global attacks. 3. Leads to conflicts and battles due to mismatch of goals and objectives.
SUCCESSFUL ENTRY INTO JAPAN TRU's first store in Japan opened on Dec. 20, 1991, in Arakawa-Oki, with unprecedented media coverage. What made the opening even more unusual was the fact that the crowd of 17,000 people included an estimated 8,000 curious Japanese retail industry representatives who visited the store that day to see what Toys "R" Us is all about.
REASONS FOR SUCCESS The overwhelming scale of its advancement. The usual Japanese toy shop was standard at 100 tsubo (one tsubo is 3.3m2), but Toys'R'Us is one digit different at 1,000 tsubo with 18,000 kinds of products
Contd.. Introduced direct buying, which does not go through a wholesaler. Nintendo agrees to supply to Toys “R” Us Japan, keeping in mind that Toys "R" Us USA accounted for 30% of its worldwide sales.Toys "R" Us established their own distribution center in Kawasaki, allowing them to act as a wholesaler and forcing manufacturers to deal with them
Japan Association of Toy Specialty Stores reported a 10-15% decline in members’ sales during the 1992 Christmas season By 1994, ratio of toy retailers adopting manufacturers’ suggested retail prices had dropped sharply over the previous five years from 70.1% to 29.4% Contd..
Japan’s largest toy retail chain 20 years after its entry, Toys “R” Us operates more than 160 stores in Japan. Enjoyed tremendous success throughout the 90’s and early 2000’s with $1.6 billion in revenues and $33.89 million in profits for 2002 Contd..
Toys'R'Us has begun to carry products that meet the Japanese market. Not only products that are carried on from the American mainland, but also adding in Japanese- style things. Eg: they have begun selling "Hina dolls" (dolls bought on March 3 rd for a japanese festival) made by Toys'R'Us. Contd..
Sells merchandise in more than 1,550 stores - 849 stores in the Unites states - 700 international stores in 33 countries - 170 stores in japan Revenue of about $13568 million 68000 employees Estimated business value: $11billion GLOBAL PRESENCE
Toys "R" Us, International is a separate division which operates the toy stores outside of the United States. Toys "R" Us, International opened its first stores in 1980 in Hong Kong. Today, Toys "R" Us International operates, licenses or franchises approximately 716 toy stores in 34 countries outside the United States. Australia, established 1993, 35 stores and 3 Babies "R" Us stores Austria, 14 stores Bahrain, 1 store
Brunei, established August 2000, 2 stores Canada, established 1984, 71 stores China, established December 2006, 14 stores: 11 Toys "R" Us Main stores and 2 Toys "R" Us Express stores plus 1 Toy Box Denmark, established 1995, 13 stores Egypt, 4 stores Finland, established 2006, 4 stores France, established 1987, 120 Stores Germany, established 1987, 57 Store
Hong Kong, established 1980, 9 Main stores and 2 Toys "R" Us Express stores Iceland, established October 2007, 26 stores Israel, established 1995, 27 stores Japan, established 1989, 150 stores and 20 Babies "R" Us stores Malaysia, 20 stores Norway, 8 stores Oman, 1 store
Philippines, established July 1, 2006, 32 stores: 4 Main stores and 3 Toys "R" Us Express stores plus 25 Toy Box Portugal, 8 stores Qatar, 1 store SaudiArabia, established 1996, 10 stores Singapore, established 1984, 6 stores SouthAfrica, 22 stores South Korea, established 2007
Spain, 45 stores Sweden, 14 stores Switzerland, 4 Stores Republic of China, Taiwan, 16 stores Thailand, established 2005, 9 stores UnitedArab Emirates, established 1995, 6 stores United Kingdom, established 1985, 77 stores
CSR Launching of eco friendly toys which includes natural wooden toys, natural cotton plush animals and organic cotton balls Donated $500000 to support children and families affected by Japan earthquake
CHANGING DEMOGRAPHICS Declining birth rate and aging population has been a problem for Japan - Birth rate has dropped by 13.33 % from 2000 to 2007 and is expected to drop further - The median age population of Japan is 45 The number of people in the age range of 5-9 years is expected to decrease by 16% by 2015
STRATEGIES FOR THE FUTURE Toys and games that appeal to older age groups Japans aging population still has lots to spend on luxury goods. The company should take this as an opportunity and introduce newer toys and games that can appeal to the older generations.
Internet retailing : - Japanese consumers more prefer buying online.The Toys "R" Us could develop an engaging online shopping store to attract consumers and grow sales. -Partner with internet retailers -Use innovative media communications that are more relevant to their customers and that offer customers more value
Work with the competition - Already opened distribution centre in Kawasaki as part of solution to establishing relationships with manufacturers. -Extend wholesaling to providing not just their own stores but smaller retailers as well and offer better terms than current wholesalers -Can now exert more influence on manufacturers by increasing size of distribution operations help preserve a part of Japanese culture
TOYS R US - INDIA The latest brand to come to India is the world’s leading toy retailer “Toys R Us” and its Mukesh Ambani owned Reliance Retail which made it possible. Reliance Retail tied up with “Toys R Us” only to add up brands in its existing Toy retail stores
Latest news The new Toysrus / Babies r Us will open its newest location on September 30 th in Tokyo.
 

More Related Content

Toys r us

  • 1.  
  • 2. THE BEGINNING.. Toys “R” us – brainchild of charles lazarus in 1957 1988 – captured 20% of US toy market Features of toys “R” us - 10 to 20% discounts compared to small toy retailers` - year round advertising campaigns - very large self service outlets
  • 3. STRENGTHS AND WEAKNESS Strengths: Huge number of superstores Huge distribution network due to advanced logistical system Strong bargaining position when it comes to buying from the manufacturers Diversified portfolio of products
  • 4. Weakness: No single and sustainable competitive advantage other than the brand
  • 5. BARRIERS TO ENTRY Japanese regulation of retailing and distribution proved to be major barrier Large Scale Retail Store Law (Daitenho) designed to protect politically potent shopkeepers Daitenho proved insurmountable for Toys “R” Us acting on its own
  • 6. Laws against big stores and land is very expensive, cost of employment increased At the wholesale level , japanese toy industry was characterised by fragmentation and long standing relationships Following of the “Suggested price” by manufacturers
  • 7. JOINT VENTURE Establishing a firm that is jointly owned by 2 or more independent firms. ADVANTAGES: Benefits from a local partner’s knowledge of the host country’s competitive conditions, culture, language, political systems and business systems. Risks are shared with the local partner In many countries, political considerations make joint ventures the only feasible entry mode.
  • 8. DISADVANTAGES : 1. Risk of transferring the technology to the partner. 2. Does not give tight control over subsidiaries to protect from the global attacks. 3. Leads to conflicts and battles due to mismatch of goals and objectives.
  • 9. SUCCESSFUL ENTRY INTO JAPAN TRU's first store in Japan opened on Dec. 20, 1991, in Arakawa-Oki, with unprecedented media coverage. What made the opening even more unusual was the fact that the crowd of 17,000 people included an estimated 8,000 curious Japanese retail industry representatives who visited the store that day to see what Toys "R" Us is all about.
  • 10. REASONS FOR SUCCESS The overwhelming scale of its advancement. The usual Japanese toy shop was standard at 100 tsubo (one tsubo is 3.3m2), but Toys'R'Us is one digit different at 1,000 tsubo with 18,000 kinds of products
  • 11. Contd.. Introduced direct buying, which does not go through a wholesaler. Nintendo agrees to supply to Toys “R” Us Japan, keeping in mind that Toys "R" Us USA accounted for 30% of its worldwide sales.Toys "R" Us established their own distribution center in Kawasaki, allowing them to act as a wholesaler and forcing manufacturers to deal with them
  • 12. Japan Association of Toy Specialty Stores reported a 10-15% decline in members’ sales during the 1992 Christmas season By 1994, ratio of toy retailers adopting manufacturers’ suggested retail prices had dropped sharply over the previous five years from 70.1% to 29.4% Contd..
  • 13. Japan’s largest toy retail chain 20 years after its entry, Toys “R” Us operates more than 160 stores in Japan. Enjoyed tremendous success throughout the 90’s and early 2000’s with $1.6 billion in revenues and $33.89 million in profits for 2002 Contd..
  • 14. Toys'R'Us has begun to carry products that meet the Japanese market. Not only products that are carried on from the American mainland, but also adding in Japanese- style things. Eg: they have begun selling "Hina dolls" (dolls bought on March 3 rd for a japanese festival) made by Toys'R'Us. Contd..
  • 15. Sells merchandise in more than 1,550 stores - 849 stores in the Unites states - 700 international stores in 33 countries - 170 stores in japan Revenue of about $13568 million 68000 employees Estimated business value: $11billion GLOBAL PRESENCE
  • 16. Toys "R" Us, International is a separate division which operates the toy stores outside of the United States. Toys "R" Us, International opened its first stores in 1980 in Hong Kong. Today, Toys "R" Us International operates, licenses or franchises approximately 716 toy stores in 34 countries outside the United States. Australia, established 1993, 35 stores and 3 Babies "R" Us stores Austria, 14 stores Bahrain, 1 store
  • 17. Brunei, established August 2000, 2 stores Canada, established 1984, 71 stores China, established December 2006, 14 stores: 11 Toys "R" Us Main stores and 2 Toys "R" Us Express stores plus 1 Toy Box Denmark, established 1995, 13 stores Egypt, 4 stores Finland, established 2006, 4 stores France, established 1987, 120 Stores Germany, established 1987, 57 Store
  • 18. Hong Kong, established 1980, 9 Main stores and 2 Toys "R" Us Express stores Iceland, established October 2007, 26 stores Israel, established 1995, 27 stores Japan, established 1989, 150 stores and 20 Babies "R" Us stores Malaysia, 20 stores Norway, 8 stores Oman, 1 store
  • 19. Philippines, established July 1, 2006, 32 stores: 4 Main stores and 3 Toys "R" Us Express stores plus 25 Toy Box Portugal, 8 stores Qatar, 1 store SaudiArabia, established 1996, 10 stores Singapore, established 1984, 6 stores SouthAfrica, 22 stores South Korea, established 2007
  • 20. Spain, 45 stores Sweden, 14 stores Switzerland, 4 Stores Republic of China, Taiwan, 16 stores Thailand, established 2005, 9 stores UnitedArab Emirates, established 1995, 6 stores United Kingdom, established 1985, 77 stores
  • 21. CSR Launching of eco friendly toys which includes natural wooden toys, natural cotton plush animals and organic cotton balls Donated $500000 to support children and families affected by Japan earthquake
  • 22. CHANGING DEMOGRAPHICS Declining birth rate and aging population has been a problem for Japan - Birth rate has dropped by 13.33 % from 2000 to 2007 and is expected to drop further - The median age population of Japan is 45 The number of people in the age range of 5-9 years is expected to decrease by 16% by 2015
  • 23. STRATEGIES FOR THE FUTURE Toys and games that appeal to older age groups Japans aging population still has lots to spend on luxury goods. The company should take this as an opportunity and introduce newer toys and games that can appeal to the older generations.
  • 24. Internet retailing : - Japanese consumers more prefer buying online.The Toys "R" Us could develop an engaging online shopping store to attract consumers and grow sales. -Partner with internet retailers -Use innovative media communications that are more relevant to their customers and that offer customers more value
  • 25. Work with the competition - Already opened distribution centre in Kawasaki as part of solution to establishing relationships with manufacturers. -Extend wholesaling to providing not just their own stores but smaller retailers as well and offer better terms than current wholesalers -Can now exert more influence on manufacturers by increasing size of distribution operations help preserve a part of Japanese culture
  • 26. TOYS R US - INDIA The latest brand to come to India is the world’s leading toy retailer “Toys R Us” and its Mukesh Ambani owned Reliance Retail which made it possible. Reliance Retail tied up with “Toys R Us” only to add up brands in its existing Toy retail stores
  • 27. Latest news The new Toysrus / Babies r Us will open its newest location on September 30 th in Tokyo.
  • 28.  

Editor's Notes

  1. Toys “R” Us Japan would not be able to get ample permission and space to build their large toy stores. Toys “R” Us has a policy that none of their stores can be less than 3,000 square feet. This is a problem when entering the Japanese market because they have laws against big stores and land is so expensive.
  2. The partnership with Amazon.com
  3. Although there are no explicit laws or regulations limiting foreign companies from competing, there remain impediments to doing business Adjustments made to Japan’s Anti-Monopoly Law dictate that any company found abusing a superior bargaining position must now pay a penalty of 1% of their revenue In 2010, officials from Japan’s Fair Trade Commission raided Toys “R” Us Japan on suspicion of monopolistic practices. This included pressuring manufacturers and suppliers to take back unsold product and providing them with a discount , and lessens opposition to their own stores by essentially partnering with mom and pop stores