Was Toys “R” Us the Ultimate Bad Date? Some Questions About Profitability

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Toys "R" Us was an expensive and at times exasperating date; taking your money and then asking for more; threatening not to see you again; not returning your phone calls and all the while  flirting with others and acting like it was a big favor just to go out with you.

Which raises the question: Just how good a date was Toys "R" Us?  Was it ultimately a profitable relationship for those who supplied it with toys.

There has been a great deal of discussion (some of it by me) about the lost Toys "R" Us revenue. One area that I have not seen discussed is: Just how profitable was Toys "R" Us for the toy companies that did business with them? 

Those who did business with Toys "R" Us knew that selling them was a risky venture. The calls for markdown money, the financial penalties for late shipments, the questionable returns, all  made it challenging to know, not just just what to charge but ultimately, how profitable any transaction would be. 

In the end, there were numerous suppliers left holding the bag for unpaid invoices. Some felt that promises were made regarding the security of late shipments that were not kept. And what about the time and aggravation cost of having to deal with Toys "R" Us' antiquated systems, both technological and human? 

Bottom line, will the industry actually be financially healthier without Toys "R" Us? What do you think?  Let us know your thoughts.

5 thoughts

  1. About twenty or so years ago I was in the Toy Building in New York during toy fair when a business friend related his experience of sharing a cab to the show with Michael Goldstein of Toys R Us, who was apoplectic about something I wrote in a trade press article. I wrote that a German trainee in my consultancy had worked in his university vacation at Toys R Us store in Regensburg. He resigned in frustration because the store manager stopped him repeatedly from helping customers who were seeking assistance .The reaction of Goldstein,- ‘Who is this jerk writing crap about us’ – was emblematic of the egregious arrogance of Toys R Us top management who considered themselves above criticism and were not prepared to take on board what people thought of them.

  2. For season merchandise TRU was always more of a curse than a blessing. They even held you responsible if you shipped on time but they forgot to send it to the stores from the warehouses. On other merchandise, the margins were so slim the only real benefit was to help amortize costs.
    One of the strangest things, IMHO, was how everyone was required to voluntarily give 2 cases of product as “photography samples” that were then given by TRU as donations to charity so they could receive the (full retail value) tax writeoff.

  3. I do believe TRU deserved to go out of business – nothing ever changed with each new CEO – it was an unbalanced situation. Shopping at TRU was hardly ever a good shopping experiene. Sometimes disruption comes at a cost.- Plenty of folks made millions on this – mind you not the non-exec employees or vendors. TRU -ran its course. Bringing products to consumers and families should be a joyful experience that has some component of a balanced partnership along the supply chain. This is my over arching feeling – not saying there was zero good but it was outweighed by old unchangeable ways. Richard I think each company that sold to TRU should definitely look at whether selling to TRU was actually profitable – both in the dollars and in the wasted time of valuable staff dealing with their completely inefficient operations. – that is my 2 cents 🙂

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