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Background Instructions :
• All learning outcomes will be assessed. This summative assessment represents 50% of total module marks.
• Carefully read the case study and the assignment questions before answering the questions. You need to undertake additional environmental and academic research beyond this case study.
• The report should be submitted on the Student Portal along with a Turnitin Report
A case of Toys “R” Us, Inc. looking to international Market [1]
Toys “R” Us, Inc. was founded in 1948 and is based in Wayne, New Jersey.
Toys “R” Us, Inc., together with its subsidiaries, operates as a retailer of toys and baby products. It operates through two segments, Domestic and International. The company offers products for newborns and children up to four years of age. It also provides educational electronics and developmental toys consisting of Imaginarium products in the United States and World of Imagination products internationally; and construction toys, games, creative activities, and pre-school merchandise. In addition, the company offers seasonal products, including toys and other products for holidays and summer activities, as well as bikes, sporting goods, play sets, and other outdoor products.
Sales and Marketing
The toy retailer utilizes a variety of marketing and advertising channels to reach its target audiences. Its mass marketing programs include email marketing, national television and radio spots, direct mail, targeted magazine advertisements, catalogues and ads in national or local newspapers. Other strategies include targeted door-to-door distribution, direct mailings to loyalty program members, and in-store marketing.
“What differentiates Toys”R”Us as a specialty toy retailer is the memorable shopping experience we provide for our customers,” said Andre Javes, managing director, – Greater China and Southeast Asia. He added. “This includes a combination of the widest assortment of toys and baby products, including exclusive items not available anywhere else in the market, fun store layouts, interactive in-store experiences, product displays and demonstrations, activities and more.”
As of January 30, 2016, it operated a total of 1871 stores; 361 traditional toy stores, 224 baby stores, 213 SBS stores, and 68 Permanent Express stores, as well as Temporary Express locations in the United States; and 756 operated and 252 licensed stores in 38 countries and jurisdictions worldwide. It generated 62% of its total sales from its US stores during FY2016, another 10% from Europe, and 10% from Japan. The company’s other major markets are in Canada (7% of sales), the UK (6%), China and Southeast Asia (3%), and Australia (2%).
The retailer’s revenue tumbled 5% to $11.8 billion in fiscal 2016 (ended January 30, 2016), mostly because of unfavourable foreign exchange rates tied to the stronger US dollar. Excluding foreign currency impacts, however, net sales increased slightly thanks to new International store openings and comparable International store sales growth of 3.2%, driven by higher baby gear/apparel and construction toy sales.
Toys “R” Us has experienced declining sales despite its being the only truly global toy store chain and a strong brand name. It has suffered from declining demand in most mature markets as population ages and birth rate fall. Furthermore, new competition has arisen with pure players and grocery retailers expanding their range of toys and baby products. The company had faced huge competition from specialist toys stores and retail superstores like Tesco, Walmart (Asda) etc in its major international operations.
Strategy
To turn around its situation and set the company up for long-term profitability, the retailer in 2016 reiterated its customer convenience-oriented strategy to integrate both its online and brick-and-mortar offerings by utilizing its “In-Store Pick Up,” “Ship from Store,” and “Ship to Store” fulfilment channels.
Since then company has introduced its ‘TRU Transformation’ strategy. A new service model will also be introduced into Babies R Us stores to help first-time parents have a better shopping experience, along with expanded parenting classes. In addition, mobile devices will be rolled out to store associates, in recognition of the growing importance of this channel. Toys R Us is putting more emphasis on becoming a customer-centric company, giving the retailer a competitive advantage over big-box discounters such as Walmart, Tesco, Target and Amazon. Toys R Us will take customer insight into consideration to make the in-store and online services an exceptional experience for multichannel shoppers.
Future International Strategic focus
The toy retailer also continues to expand its stores globally as the US market continues to mature, opening its 100th store in China in January 2016.In terms of international growth, Emerging markets, Southeast Asia and China remain the key areas of focus. “International growth remains an important area of investment for the company and we continue to see significant opportunities for expansion, said Antonio Urcelay, Chairman of the Board and CEO, Toys”R”Us, Inc.
Expansion into international markets is crucial for Toys”R”Us, However, the questions are how and where? The company is exploring its options to expand into ONE of four major markets, namely India, Sri Lanka, Nigeria and Russia.
Sources used :
[1] https://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapId=190358
[1] https://www.vault.com/company-profiles/retail/toys-r-us,-inc/company-overview.aspx
[1] https://www.retail-week.com/topics/international/international-news-analysis-toys-r-us-unveils-turnaround-strategy/5073429.article
Word Limit: 2,500 (excludes appendices) words (Plus or minus 10%)
Learning outcomes assessed:
1. Identify the principal managerial issues and policies necessary for success in international marketing.
2. Examine and evaluate methods of identifying and qualifying market potential in different parts of the world.
3. Illustrate the nature of overseas distribution systems (including agents and joint- ventures) and demonstrate the marketing implications of differences in culture in consumer behaviour.