As kids, we all used to get fascinated with toys and could end up for hours in a toy store. So let me rewind your lives and take you back to those carefree days when we could spend hours playing with toys.
Since toys used to be the closest to us, we would remember all the toy stores in our cities. So if I ask you to name one toy store you remember, what would it be? I am sure you’re thinking about Toys R Us.
Toys R Us was one of the greatest toy stores in the entire US. Kids used to pull their parents to their stores. However, as years passed, Toys R Us began to suffer financially and later closed down for a brief time.
Recently, Toys R Us has reopened and joined the market again to spread smiles on children’s faces. In today’s article, we will carry out Toys R Us SWOT Analysis to know what internal and external factors will affect the brand’s operations.
However, before we proceed further, we must know the history of Toys R Us so we know how the brand was established and what happened that led the brand to closure.
The roots of the toy brand can be traced back to 1948 when a man named Charles Lazarus opened a shop that used to offer baby furniture. After selling baby furniture for almost a decade, Charles decided to sell toys.
In 1957, Charles revamped its operations and named his stores “Toys R Us.” The brand became famous among children due to its variety and quality of toys. In 1978, the brand decided to go public and got listed on the New York Stock Exchange.
As the brand saw it had gained recognition and made a solid customer base, the toy outlet decided to increase its operations by entering the children’s clothing industry. In 1983, the toy brand diversified its products by offering children’s clothing under the name of “Kids R Us.”
After more than a decade, the company decided to target the market of babies. That’s when the brand established a “Babies R Us” store. This store had all the baby products. Two years later, Toys R Us was named the top US toy seller brand.
In 2005, the company decided that it should close all its Kids R Us stores because they weren’t adding much to the business. However, in 2009, the brand purchased the website for Toys R Us to expand its operations online.
In the coming years, Toys R Us experienced a decline in growth and started closing its stores in the US. Nevertheless, the brand managed to survive for a few years. Unfortunately, Toys R Us declared bankruptcy in 2018 and indicated to close its stores from 182 locations.
In March 2018, the brand told its employees that the company is about to liquidate and close all its US stores. However, in 2022, Toys R Us restarted its operations and started operating in 9 locations in the US under Macy’s.
Toys R Us is looking forward to increasing its market share by spreading its operations slowly. The toy brand has stated that soon it will be opening more stores in the US. Looking at the history of Toys R Us and the news of its reopening excited us, so we decided to conduct a Toys R Us SWOT Analysis.
However, before proceeding to the SWOT analysis, you need to know what SWOT analysis is. A SWOT analysis is used to highlight a business’s strengths, weaknesses, opportunities, and threats.
A SWOT template highlights the internal and external factors impacting a business’s operations. So, now that you know the SWOT analysis technique let’s proceed further and carry out the Toys R Us SWOT analysis.
Strengths of Toys R Us
Strengths are the positive things that provide a competitive advantage to an organization. It provides an edge for a business to compete well in the market. Every organization has some strengths and looks forward to possessing more in the future. In this section, we will look at the strengths of Toys R Us.
1. Renowned Brand
Brands often try to gain recognition so that their brand is recognized by the people. This will stop the brand from spending a lot of money on marketing since people would already be aware of the brand.
Toys R Us is a brand that is widely recognized by people. Although it discontinued its operations previously, that didn’t erase anything from the people’s memory. Toys R Us was once named the number one toy-selling brand in the US. Having such a renowned name will help the brand establish itself again.
2. Operating Under Macy’s
When brands begin their operations, they always look for stores to rent in the ideal locations where more people can see and visit the store. However, Toys R Us doesn’t have to worry about choosing the location while setting up.
After Toys R Us decided to enter the market again, it joined hands with one of the largest retail stores in the US, Macy’s. This partnership will significantly help the toy brand since Macy’s already has a vast customer base. People visiting Macy’s will also visit Toys R Us, resulting in an increased customer base for Toys R Us.
3. Online Presence
Since technological growth has taken place, brands now rely on online platforms and social media for marketing and sales. For example, toys R Us has an organized online presence which helps the brand to target more customers.
Toys R Us has a website through which people can order its products. Moreover, the toy brand is also present on Macy’s website, where people can buy its products. Such a significant online presence allows Toys R US to increase its customer base.
Weaknesses of Toys R Us
Weaknesses are the drawbacks of any company that hinders its growth. Along with the strengths, every organization possesses some weaknesses. In this section, we will look at some of the weaknesses possessed by Toys R US.
1. No Personal Retailing Store
Brands start a business by opening a customized private store to sell their products. By doing so, they attract customers and sell their products. For example, Toys R Us once had several stores spread across the US. However, after it declared bankruptcy, the toy brand closed all its stores.
Currently, Toys R Us doesn’t have a single self-owned store. It is present online on Macy’s and its own website. However, that doesn’t make up for having a physical store.
2. Lack of Marketing
In the current era, every brand spends vast sums of money on marketing because that’s what brings customers. For example, Toys R Us has recently started its operations again after a break. Yet, no marketing is being done to advertise the brand’s operations.
Toys R Us needs to spend some money on marketing. By doing so, people will get to know that Toys R Us is operating once again, and the sales of the brand will increase.
3. Limited Product Line
Brands tend to diversify their operations and product line to grasp more customers. In addition, since trends and consumer preferences change daily, brands launch new products to meet the customers’ demands.
However, Toys R Us still had the same product line decades ago. The brand returned from the break, and instead of developing a unique selling point, the toy brand is still offering kids’ clothing and toys.
Opportunities Present For Toys R Us
Opportunities are the chances that are available to any organization to achieve big. Businesses that grab opportunities at the right time tend to succeed. In this section, we will analyze the opportunities present for Toys R Us to make it big.
1. Open Stores Across The US
Any brand that wants to achieve growth first spreads its operations across the country. By doing so, the brand can increase its revenue and customer base. Since Toys R Us is taking a fresh start, it needs to open its stores one by one and then spread a network of stores across the US.
Suppose Toys R Us avails of this opportunity and succeeds in spreading its operations across the country. In that case, it will generate vast sums of revenue since this will help the business increase its revenue.
2. Grow Internationally
Brands look for opportunities to expand internationally since doing so will help the brand increase its customer base. For example, toys R Us currently has an opportunity to expand its operations internationally.
If Toys R Us avails of this opportunity and expands its operations internationally, the revenue of the brand will increase. Besides that, Toys R Us can explore new markets, decreasing the brand’s dependence on local markets.
3. Mergers and Acquisitions
The purpose of every business is to maximize its profit. To do that, businesses have found different ways. However, one of the most famous ways to expand operations and penetrate markets is by forming mergers and acquiring pre-existing brands.
Since Toys R Us is taking a fresh start, it needs to avail itself early of opportunities to form mergers with big brands or acquire small ones with a customer base. By doing so, Toys R Us will increase its customer base and consolidate its position in the market.
Threats Faced By Toys R Us
Threats are the dangers faced by businesses from the external environment. These factors are the external factors that negatively impact an organization’s operations. In the last section of this SWOT analysis, we will look at the threats faced by Toys R Us.
1. High Competition
Businesses always avoid tough competition since competition lowers the profit earned by businesses. Toys R Us has entered the retail industry by taking a fresh start. However, the newly started business is threatened by the high competition in the toy and clothing industry.
Toys R Us would have to compete with established brands such as Play smart and Tiny Love. Therefore, Toys R Us has to innovate and stay ahead of these brands to establish its position in the market.
2. Global Recession
Businesses always fear recessions because they lower the purchasing power of people, which in turn decreases the sales of businesses. After the pandemic and the conflict between Russia and Ukraine, economists predicted the world would experience a recession.
The recession news acts as a threat for Toys R Us because the brand is returning from a break and doesn’t have a very strong financial position. It is possible that some businesses would be able to continue during a recession, but it would be really difficult for Toys R Us to continue in a recession.
3. Increasing Inflation
As oil prices have hiked up due to various social and geopolitical reasons, the world is experiencing a wave of high inflation. Due to high inflation, businesses’ operational costs are increasing, and the price of raw materials is increasing.
This poses a threat for Toys R Us since the price of inputs will increase due to high inflation, causing the brand’s profit margins to shrink.
Toys R Us SWOT Analysis: Final Word
Toys R Us is a brand that mainly targets kids. The products offered by the brand are toys and children’s clothing. The brand’s roots can be traced decades back since the brand has a rich history.
In this article, we discussed the history of Toys R Us and discussed how a brand that had such a huge customer base reached bankruptcy. After that, we discussed how Toys R Us is taking a fresh start to consolidate its position in the market.
After discussing that, we decided to conduct a Toys R Us SWOT analysis to identify the toy brand’s strengths, weaknesses, opportunities, and threats. One way of representing the findings of this SWOT analysis is through the use of the SWOT Matrix and a SWOT table.
This article was to make you aware of the internal and external factors that affect the operations of Toys R Us. Besides that, it also made you aware of how to conduct a SWOT analysis. If you still have some questions, have a look at some examples of SWOT analysis.