Toys “R” Us Is Not Loved By the Industry and That Has to Change

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It is more than time for Toys "R" Us to move past the adversarial nature of its supplier relationships and towards a more transparent and nurturing business culture.

Many of those who do business with Toys "R" Us do not love it. Talk to them and you will find that out.

Yes, they care for and about the people who work there but not the institution. Toys "R" Us is a company that demands more of its suppliers than it asks and punishes more than it rewards. Too many costly penalties, too many requests for markdowns and too many threats to cancel suppliers for lack of compliance have ended with a bankruptcy that sticks those same suppliers with the bill.

Now that word is out via the Wall Street Journal that Toys "R" Us is planning to close another 200 stores we are finding a chain that will be half the size it was a year ago. More stores may be on the block as well which means that Toys "R" Us has moved from being the 800 lb. gorilla in the ring to a middle weight just trying to stay in the ring.  Toys "R" Us needs love and it needs loyalty and, to the most part,  it is simply not there. 

It is more than time for Toys "R" Us to move past the adversarial nature of its supplier relationships and towards a more transparent and nurturing business culture of supplier engagement. Its not going to be easy for a company that has always swaggered but it is going to be essential to size down its ego to match its current status.

A change in business culture will not be easy to create much less apply and it may be too late to create friends with an industry that is already moving on. Change, however, it must. Yes, Toys "R" Us has major economic challenges but long-term survival may ultimately depend upon the good will of the toy industry.
 

3 thoughts

  1. There have been hundreds of people involved at TRU who had brilliant ideas on how to re-invent the company, all focused on experience and dealing with some of the obvious flaws of the business model.
    The challenge is quite simply that the sponsorship groups have never had the desire to make the investments required to actually execute this. Retail is capital, and that was never the goal of the owners.
    The massive debt combined with the nature of the LBO makes fixing TRU nearly impossible. While they have always been challenging for vendors (back to the halcyon days when they were #1), the market corrected that over time.

  2. Its been a few years for me but I always had a great relationship with TRU. Yes, they asked for a lot, and yes it didn’t always make sense in terms of what they could deliver. But they also could do more than other retailers to support both the small guys and big brands. The biggest problems I had with them almost always were borne of the flaws in their model – too much product, too little foot fall.
    I would argue that if TRU can find a contemporary model, it will create the alignment they need with partners.

  3. Let’s hope the independents inherent the earth — Ma and Pa get to expand locations and capture more market share with TRU gone in the near future.

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