Do you remember the Magic 8 Ball
The Toys R Us leadership team could certainly use one, as the once dominant toy retailer appears to be on shaky ground with no clear path to relevancy. A planned IPO was recently withdrawn; the chain’s long time CEO Gerald Storch has stepped down, with no new successor named. Sales slid 3.5% over 2012, and investors are looking at the company’s not-insubstantial debt.
Factors contributing toward Toys R Us slide certainly include competition from Wal-Mart and Amazon. Wal-Mart wins on price, while Amazon’s got both depth of selection and (for their Prime customers) the ability to put any child’s desired toy in their hands within a day. Given this, how can the once great chain expect to compete?
What Makes Customers Choose You First?
Before we can chart a profitable course into the future, it helps to have an understanding of the past. Let’s travel back in time to the late 1970’s and 1980’s, Toys R Us’s glory days. At this time, the toy market wasn’t as crowded as it is now. Toys R Us was, for many locations, the only game in town. Geoffrey the Giraffe was a well-known and loved mascot. Children everywhere knew and sang the “I want to be a Toys R Us kid” jingle, which had an explicit call out to the desire to never grow up. The joys of childhood could go on forever, if you knew where to shop. It wasn’t exactly Ponce de Leon’s fabled Fountain of Youth, but for the American shopper, it was more than close enough.
Dominant retail brands achieve their position because they provide their shoppers with a compelling emotional experience that is so complete and satisfying that no other store could match it. Toys R Us was hitting many of the same emotional notes that have made Disney so successful. For the kids, that meant wonder, a sense of magic and delight. For the parents, Toys R Us provided something more: an easy-to-navigate route to making at least some of their children’s dreams come true.
It’s important to understand that these emotional triggers are as powerful and compelling as they ever were. The magic still matters! However, somewhere along the way, Toys R Us lost their ability to hit the target. The experience isn’t what it once was, and absent that, parents no longer have a reason to choose them first. Amazon is always available. No one cruises the toy aisle at Wal-Mart because it is a magical experience.
How do you get the magic back? It’s going to take some serious math. Coupling a statistical analysis of Toys R Us’ best customers’ purchasing behaviors over the course of time with a comprehensive examination of the unconscious psychological factors that drive shoppers decision making will reveal what it takes to fill today’s customers with that sense of wonder, delight, and excitement once again. Provide that, and Wal-Mart won’t matter. Amazon won’t matter. Give them the magic, and they will come.