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In the past decade, Toys “R” Us experienced a substantial decline in market share with the increasing competition of retail giants such as Wal-Mart and Target. Today Wal-Mart has 25% of the toy market.

The major challenge facing Toys “R” Us was the low frequency of customer visits to its stores. While Wal-Mart and Target see customers coming back every week, Toys “R” Us has a much longer return cycle of over 6 months.

Toys “R” Us has successfully implemented a strategy to increase store traffic by placing its toy stores side-by-side to stores of its growing chain – Babies “R” Us – which receives more frequent customer visits, on average once a month. The plan going forward is to convert all its 600 US stores into this new format.

Toys “R” Us reported positive same store sales in 2007 after years of decline. Closing under performing stores and investing in the new format are the bets to reshape the future of the toy chain. 

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