If you’ve paid attention to the retail news over the last few days, I’m sure you’ve seen the heartbreaking articles about Toys “R” Us and their impending bankruptcy filing. Maybe it was the fact that their revenue remained flat for 17 years, or maybe it was the fact that almost half of their revenue was driven from holiday sales. Or maybe it was because they lost sight of how their brand was built to be a playground for kids and families.
Today’s world of retail and ecommerce is scary. Companies are consistently challenging others to step up their game in a fight to acquire and retain as many customers as possible. We’ve already seen The Gap announce plans to close nearly 200 stores and Payless file Chapter 11 bankruptcy, with plans to close over 100 more stores.
The real reason Toys “R” Us went bankrupt is because they were unwilling to innovate, and cut prices to compete with the likes of Amazon, Walmart and Target.
But I believe Toys “R” Us can turn it around, and regain its spot on the list of iconic brands for kids. To understand how they’ll move forward, we first have to look at how they got here.
Toys “R” Us vs. Amazon
For the same exact product, Toys “R” Us is $70 more expensive than Amazon. With enough of these experiences, why wouldn’t the consumer simply stay on Amazon, buy everything they need, get next or same day shipping, and carry on with their lives? Afterall, an expectation of lower prices is one of the leading factors that drives consumers to Amazon.
How about context? How does the shopping experience on Amazon compare with Toys “R” Us ?
This image above is from Amazon. Toys “R” Us doesn’t have contextual pairing, they just have “related products”. When you think about a product like this, it makes perfect sense to bundle the toys that would be bought at the same time. Again, it’s making it a one stop shop for all your (baby) needs.
The consumer experience needs to change at Toys “R” Us . The brand that so many of us fell in love with as kids, needs to find a way to stay top of mind and create a digital-first strategy that not only retains existing customers, but cuts into the pool of Amazon, Target and other retailers to build a unique proposition that separates themselves from the competition.
What’s their strategy?
In 2012, they launched an initiative with key brands like Home Depot on “toys that couldn’t be found elsewhere” to offer things like a toy tools line. Bringing back exclusive products and lowering shipping costs are the first step.
But here’s what excites me most: “The company expects to invest $90 million to bolster its recently redesigned web presence, improve its digital customer loyalty program and integrate digital content into its stores. That plan includes the creation of augmented reality video games that customers can play on their smartphones while shopping at Toys ‘R’ Us.” — USA Today
Creating a customer-centric approach is exactly how Best Buy has been able to fend off Amazon for as long as they have. The feeling that kids get when they walk into a Toys “R” Us store, browse through a catalog or shop online, should be an experience that Toys “R” Us is always seeking to improve.
Could voice have helped?
Brands that target young parents, the target demographic for Toys “R” Us, have the most to benefit from voice. With their hands full all day, voice offers parents a way for them to get stuff done, quickly browse and add things to their cart — all while taking care of their kids, and their households.
Here are some interesting points to consider:
- Almost 50% of US households own a voice-enabled device
- Most parents say they use them for their children and for getting things done around the house
- Over 80% of searches about baby care come from mobile devices, 50% of which will be driven by voice by 2020
Retailers need to continue to push the boundaries of digital commerce in order to combat defeat. Whether that’s mobile, voice, or augmented reality, a forward thinking approach will keep retailers brands out of this situation.
I do believe that Toys “R” Us will turn this around, given their digital strategy and newly focused mindset of exciting and delighting their customers. They’re going to double down on their strengths, and experiment with new ways of continuing to build a loyal customer base — and in return, a brand that lasts a lifetime.
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