Toys R Us is a leading retailer of toys and games for children, aiming to make an exhaustive range of toy products available to customers around the world at reasonable prices.
Toys R Us traces its roots back to 1948 and Charles P. Lazarus’s foundation of Children’s Supermart, a baby furniture retailer and the Company’s earliest predecessor company. With its first store in Washington DC, the Company sought to capitalise on the post-war baby boom. After receiving request for baby toys and other items, the Company diversified its product portfolio to include a greater range of toys, ultimately leading the Company to re-brand as Toys R Us in 1957.
Toys R Us was acquired in 1966 by Interstate Department Stores, which owned several other retail chains, including Children’s Bargain Town USA, a sister company to Toys R Us in the American Midwest. While the Company dominated the US toy retail market for some time, it has lost much of its market share in recent years to large general merchandisers such as Walmart.
Toys R Us remains a leading specialist toy retailer, with operations across North America, Asia Pacific, Europe, the Middle East and Africa. The Company is ranked 240th on the Fortune 500 list. Toys R Us was formerly a publicly-owned company, but was returned to private hands in 2005 following a leveraged buyout by KKR and Company LP, Bain Capital, and Vornado Realty Trust.
Business model of Toys “R” Us
Toys R Us serves a large customer base. Its products are targeted principally at children of all varying ages, with its customers principally comprising parents and young families. The Company also operates a Babies R Us brand that provides products for specifically for babies and toddlers, principally targeting parents of young children.
Toys R Us is among the largest toy retailers in the US, its most significant market. The Company also operates more than 750 Toys R Us, Babies R Us and Side-by-Side stores in international markets across the Americas, Asia Pacific, Europe, the Middle East, and Africa, including in Canada, China, France, Germany, Japan, Spain and the UK, among others.
Additionally, the Company also has more than 245 licensed Toys R Us stores in other locations through agreements with various retail partners around the world.
Toys R Us provides value to its customers in the following ways:
- Its industry standing and reputation, with the Company established as one of the largest and most well-regarded toy retailers in the world, having a track record for providing quality goods and services to its customers;
- Its broad portfolio of products, with the Company offering an extensive range of products, including games, toys, action figures, and sports equipment, catering to children of all ages and interests;
- Its international reach, with the Company serving a large domestic customer base in the US, as well as operating a number of retail locations across Asia Pacific, Africa, Europe, and the Middle East;
- Its accessibility, with the Company operating a broad network of retail outlets, as well as online retail channels, allowing the Company to easily reach its customers across all of its active markets; and
- Its brand strength, with the Company having one of the most recognisable and well-known brand identifies in the toy retail sector around the world.
Toys R Us operates a corporate website at www.toysrusinc.com, through which it provides information on its corporate operations, operating markets, and general activities. The Company also operates a consumer-facing website at www.toysrus.com, which provides more information on the Company’s products and outlet locations, and serves as an online retail channel, allowing customers to make purchases and arrange deliveries online. The Company also operates a number of country-specific website, which provide similar functionality and a mobile app. It also operates an online sales channel for its Babies R Us division.
Toys R Us principally serves its customers through its extensive network of physical retail outlets, which spans North America, Asia Pacific, Europe, Africa, and the Middle East, including a substantial presence in the US, Japan, China, and the UK. The Company employs in-store teams of sales and service staff who are able to serve the customers directly.
Toys R Us offers a large proportion of its products to customers on a self-service basis, with its online retail channels enabling customers to browse products, make purchases, arrange deliveries, and manage accounts without interacting directly with members of the Company’s sales and support teams.
Toys R Us serves its customers in person through its teams of in-store sales and service personnel, who are available to respond directly to customer queries and enquiries, assist customers with product information, and handle complaints and returns. Additionally, the Company operates a dedicated customer service organisation, which customers can contact over the phone or online in order to receive personalised assistance with queries and enquiries.
Alternatively, Toys R Us offers a range of online support resources, including guides for making orders, shipping information, and tore finder tools, as well as FAQs and product instructions. The Company also operates a number of social media accounts – including with Facebook, Twitter, Google+, and YouTube – through which it can provide company updates and interact with customers directly.
Toys R Us is a toy and children’s products retailer. Together with its subsidiaries, the Company operates as a retailer of toys and baby products, with its business organised into two segments, Domestic and International.
The Company offers a broad range of products targeted at newborns, through its Babies R Us brand, and older children, including baby gear, commodities, infant care products, apparels, furniture, bedding, and room décors, as well as toys, such as action figures, dolls and doll accessories, role play toys, and vehicles, video game software, portable electronics, and other related products.
Toys R Us additionally provides educational electronics and developmental toys consisting domestically and internationally. The Company operates an extensive network of retail outlets across north America, Asia Pacific, Europe, the Middle East, and Africa.
Toys R Us works closely with a range of companies and organisations around the world in order to provide an effective and efficient service. These partners can be organised broadly into the following categories:
- Supplier and Vendor Partners, comprising suppliers of toy products and merchandise that is resold across the Company’s retail outlets, as well as suppliers of services, technologies, and equipment that are utilised across the enterprise more broadly;
- Retail Partners, comprising various retail operators that operate and manage stores on the Company’s behalf around the world, particularly in jurisdictions where the Company is not well-represented;
- Charitable and Community Partners, comprising various non-profits and charitable organisations with which the Company collaborates on various social and community projects at home and internationally; and
- Strategic and Alliance Partners, comprising various market-leading companies across multiple industries, particularly in the retail space, with which the Company works on various marketing, branding and other projects.
Toys R Us has launched a number of partnerships in recent years. This includes a retail tie-up with Moose Toys, a strategic global partnership with Claire’s Inc, and a charitable partnership with Save the Children.
Toys R Us’s key resources are its brands and intellectual properties, its product catalogues and supply chain, its online stores, its IT and communications infrastructure, its partners, and its personnel.
Toys R Us owns a number of intellectual properties that are key to its operations, including a number of patents and trademarks that are utilised in many of its products and brands. Despite the Company owning a portfolio of intellectual properties, searches of records published by the US Patent and Trademark Office identified no patent applications filed in the Company’s name.
Toys R Us also owns and or leases a large number of properties around the world that are key to its operations. This includes its network of 1,622 retail outlets, of which 353 are owned, and its network of 1,640 distribution centres, of which 365 are owned.
Toys R Us incurs costs in relation to the development of its intellectual properties, the procurement of products and merchandise, the procurement of other services, the development of its online portals, the maintenance of its IT and communications infrastructure, the implementation of marketing and advertising campaigns, and the retention of its personnel.
In 2015 Toys R Us recorded total cost of sales in the amount of 7.58 billion, and selling, general, and administrative costs – including advertising costs, professional fees, and occupancy expense – in the amount of $3,59 billion.
Toys R Us generates revenue through the sale of various toy products and related merchandise via its various physical outlets around the world and its online retail channels. The Company principally derives its revenue in the form of general sales fees, as well as a small amount of revenue in the form of licensing fees.
In 2015 Toys R Us generated net sales for the year in the amount of $11.80 billion, down slightly on the $12.36 billion recorded by the Company in 2014. The bulk of the Company’s revenue was derived from its domestic operations, which alone recorded net sales of $7.36 billion.