Tips of the Month - January 2021 This edition of our "Tips of the Month"…
Stop toying about and get innovating
Gasps were heard by a whole generation of 30 and 40-somethings on both sides of the Atlantic this morning with news that Toys R Us had filed for bankruptcy in the US and Canada.
In the age of e-commerce, Toys R Us is another example of a company being stuck in its old ways. Lord Alan Sugar wrote on Twitter that the toy giant was “another company ruined by Amazon.” One of his followers quickly followed up with the reply that it wasn’t Amazon who was to blame, it was Toys R Us itself.
And they were right. The retailer’s biggest crime isn’t necessarily its financial mismanagement that has run up debts of around $5bn in North America. It’s biggest crime is its failure to innovate.
Most of us have got magical childhood memories of visiting Toys R Us and running through aisles from toy to toy. But the company has been living off these nostalgic moments for years. It has made the biggest mistake no business can afford to make: it has stood still whilst others have over taken.
Consumers are now more likely to avoid those aisle of screaming kids (parents will know what I mean) and use their smart phone to get the next must-have toy. There’s no more queuing up in the wind and rain at 7am to get a Tamagotchi with Amazon around.
Of course, Toys R Us has got its own online store, but it isn’t as evolved as their competitors’. The retailer still focuses on these large ‘brick and mortar’ stores when they should’ve been evolving the brand into profitable online sales. More importantly, parents still associate the retailer with those big stores where children can run wild, and not a place to purchase toys online. The attraction which worked so well for decades is now its biggest downfall.
The bankruptcy filing in the US and Canada will not affect operations in the UK just yet. The company was keen to let customers know that with Christmas less than 100 days away it’s very much still open for business.
If it is to stay open, it needs to innovate and find new ways of winning customers back from online competitors. Kids will always want toys. The market will always be there, but Toys R Us can’t continue to stand still.
It’s a lesson for any small business – whether it’s struggling to compete or has ambitions to grow. Innovation is always a key component and one that prevents an organisation from being left behind. It’s not child’s play.