Is it true that Wal-Mart and Target are beating specialty retailers at their own game? Toys R Us may sell its core retail business and they are blaming Wal-Mart and Target for it. Naturally, the reporter of this story follows that line of thought.
"They're proving that discounters won that battle" for toy customers, said Ken Harris, a consultant with Cannondale Associates. "It may have ramifications greater than just the toy industry," he added, noting that specialty retailers had managed to compete with Wal-Mart by offering greater selection or expertise in a particular category.
"All of the sudden a company like Wal-Mart that sells more than just toys beats them at their own game. That's a fairly resounding wake-up call for most retailers."
What I'm not reading is that Toys R Us was a poorly managed entity that sat on its laurels while its stores fell below even K-Mart standards for cleanliness and its surly employees virtually chased out customers. There was a Toys R Us in North Little Rock, AR, that was an example of how nasty a store can get. There was always merchandise strewn about the dingy tile. In the Chicago area, there was an equally depressing store in Aurora near Fox Valley Mall where we only shopped when we had to.
A good friend of mine was a store manager for Toys R Us in Colorado and he abruptly quit one day after having too much of the corporate management. I spoke to him today and he told me he wasn't surprised at all. In fact, he said they had many upper-management problems leading, to the demise of the Toys R Us store. He confirmed my suspicion that Toys R Us suffered the same kind of management crisis that K-Mart did.
This is as much of a critique of the reporting as it is the failure of Toys R Us management. When a company fails, the real blame lies with the management, not the competition. I suspect that Toys R Us sent out a press release specifically naming Target and Wal-Mart. Then Reuters and the AP create a template story that's copied on paper and on TV. The end result is that Toys R Us has positioned itself as a victim to competition when, in fact, they did it to themselves.
When an institution as old as Toys R Us fails, it's time for some real business reporting. I can think of some topics to research. How about their twenty-year-old ad campaign with the giraffe; wasn't that long in the tooth? How about the way the stores stocked items? From what I understand, Toys R Us didn't take advantage of some newer planogram technologies, resulting in hard planograms that left large gaps on the shelves for weeks when items ran out. What about management's decisions to compete directly with FAO Schwartz, who failed themselves?
I'll keep checking the news, but I bet the failure of Toys R Us is just another story to most of the press, resulting in superficial coverage. When that happens, nobody learns from past mistakes.
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