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Trying to Beat Boutiques and Big-Box Chains

Toys R Us Fights to Stay in Toy Business By Combining Low Prices and Good Service

By Michael Barbaro
Washington Post Staff Writer
Friday, November 26, 2004; Page E01

Eight-year-old Angie Rojas pressed her face against a showcase in the Rockville Toys R Us and cupped her hands for a closer look. "Wow," she said, endorsing the toy set up inside, a $60 Bratz doll Chillout Ski Lounge, complete with a hot tub and leather couch.

"I've never seen the inside of this one before," said Rojas, a self-described Bratz doll fanatic.


At the Clinton Toys R Us, Darlene Sumter puts out chairs for kids near toy train sets. Toys R Us stores have an average 30,000 square feet of toys. (Michael Williamson -- The Washington Post)

Snapshot

Toys R Us Inc.

Revenue: $11.6 billion

Profit: $88 million

Number of stores: 1,500

Employees: 113,000

Source: Toys R Us. Includes results from Toys R Us, Babies R Us, Kids R Us and Geoffrey stores. All data is for 2003.

_____Related News_____
Region to Add Thousands Of Seasonal Employees (The Washington Post, Nov 26, 2004)
D.C.'s 2nd Sales Tax Holiday Starts Today (The Washington Post, Nov 26, 2004)
Angling for Sales, Retailers Set Their Bait (The Washington Post, Nov 25, 2004)

Before this holiday season, neither had any other shoppers browsing a Toys R Us store. In 2003, the Bratz line of play sets sat on a shelf too high for most kids to see. So this year, the chain rolled out dozens of kids'-eye-level display cases at every store.

It's a small change, with a big goal. Despite the dominance of discounters like Wal-Mart and Target, Toys R Us Inc. is betting its survival on the proposition that not all consumers are happy fending for themselves amid a glut of stuff and that when it comes to toys, even diehard bargain hunters want the right item, not just the cheapest one.

Drawing on that theory, and some hard-nosed retail tactics, Toys R Us has spent the past year systematically changing just about everything it does. The company is coaching employees to spend more time with customers, making toys easier to find with bigger displays and color-coded store maps, and even pressing manufacturers for exclusive rights to hot items such as the Barbie Fantasy Tales collection -- which it got.

"To succeed, we have to bring more to the party than low prices," said Toys R Us vice president of in-store marketing Greg Ahearn.

When Toys R Us opens its 685 U.S. stores this morning, on one of the biggest shopping days of the year, the experiment will be closely watched for clues about the future of American retailing. This may represent the last chance to get it right for Toys R Us, and if the company succeeds, it could provide a model for other retailers trying to compete with Wal-Mart's buying power and high-tech efficiency.

Toys R Us revolutionized the industry more than four decades ago with its big-box, low-price stores but in 1998 was dethroned by Wal-Mart as the country's No. 1 toy retailer. Toys R Us already plans to split off a separate Babies R Us furniture and clothing chain in 2005 and says it may get out of the toy business altogether after this holiday shopping season. In the past year, two other industry mainstays, KB Toys Inc. and FAO Schwartz owner FAO Inc., have filed for bankruptcy protection, blaming intense competition from discounters and online sites.

The Toys R Us strategy, company executives said, is to combine the service and product display techniques of high-end boutiques with the competitive prices of discounters.

"We have to do the things Wal-Mart and Target won't do, or can't do," Ahearn said.


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