By Brent Colescott
I’m a Toys R Us kid which is why I read with a heavy heart the sad news of its demise.
As I contemplated this loss of yet another retail legend, I thought of my favorite quote from U.S. General Eric Shinseki, “If you dislike change, you’re going to dislike irrelevance even more.”
Before I get into a discussion of how that relates to the decline of this great store in this age of digital transformation, let me tell you my Toys R Us story.
Chapter One: I’m a Toys R Us kid.
When I was much, much younger, my family lived overseas. Every summer we would come back to the States for three months of visiting family and friends. As the visit drew closer to the end, my mother would take my sister and me to Toys R Us where we had the run of the store and an allowance to buy whatever toy(s) we wanted. Since this was the 70’s, my taste skewed toward Star Wars toys and figures. I vividly recall one summer picking out an X-Wing Fighter; it was glorious. The stores appeared huge to me and were the first “big box” type stores. I have nothing but fond memories of my time there.
Chapter Two: I’m a Toys R Us employee.
Fast forward to my teen/college years. It was one winter break that I needed a short-term gig to fund an upcoming ski vacation, and since it was the holiday season, Toys R Us seemed to fit the bill. The interview was pretty much a mirror test (fogging one) – I was in – a representative of Geoffrey. The few memories I have of those two weeks are not pleasant ones; I recall my legs hurting from 8 to 10-hour shifts walking on the concrete floors. I can also remember being confused that somehow, I was the go-to guy for customers who called the store. I was paged, wondering who was calling me, only to be sent on some wild goose chase trying to find if we had a particular toy in stock. This was not the Toys R Us experience I had so enjoyed as a kid; “peeking behind the curtain” for those two weeks left me disenchanted with both the idea of retail and Toys R Us.
Chapter Three: I’m a Toys R Us shopper.
As an adult, I see Toys R Us through a different, and now final, lens. At first, as a new father, I became a Babies R Us customer and was exposed to a whole new product line. I recall thinking it was clever of Toys R Us to diversify; there will always be babies and therefore a demand for baby products. Furthermore, many of these shoppers are buying from registries and do not give much thought to getting the best deal. As my kids grew, there was less need to shop at Toys R Us; the store was a bit of a drive, and quite frankly they were quite happy with the toy aisle at our local Target.
Chapter Four: I’m a Toys R Us analyst?
The news of the store closures across the country saddened me. How could a retail legend like Toys R Us become irrelevant? Part of the problem was nothing had really changed about the store, except for adding a division for babies. They had provided no real desire for kids to “have to go” to Toys R Us. They didn’t find a way make the thought of going to Target for toys ridiculous; instead, they continued on the same path from the 70’s without paying attention to the world changing around them.
Was Toys R Us fated to go this way? Can any toy company survive today?
Yes. And here’s just one example. Lego.
Lego was destined to a similar fate as Toys R Us before they made a massive course correction. In 2004 Jørgen Vig Knudstorp took up the reins at Lego and made significant changes, cutting failing product lines and taking creative gambles and risks by hiring new innovators. And of course, then there was the Lego movie – hugely popular and essentially free advertising for their products. Their CEO sums up the success of their turnaround with this thought: “it’s not just a toy, it’s a tool for creation and imagination and getting LEGO bricks into the hands of kids is the only aim of everything we do.”
Conclusion: “I don’t want to grow up.”
I hope the lessons of Toys R Us are not lost on other brands in similar situations. We are entering the Fourth Industrial Revolution where the lines are blurred between the physical, digital and biological. Companies and individuals need to be playing three-dimensional chess if they wish to succeed. Consumers expect to be “wowed” with an experience that hooks them and keeps them returning. To survive, retailers must respond to these greater expectations and must offer online access, instant gratification and be entertaining. Competition can pop-up overnight thanks to the digital transformation of logistics, buying power and the ability to create a store-front online in the blink of an eye. Companies, both current and future, will need to have a skunk works division dedicated to innovation and thinking in that third dimension.
It is also crucial that everyone in the company is aware of just how radically business is transforming thanks to digital transformation. This will likely mean an investment in digital transformation training. How can a company compete in this new era if employees at all levels, and not just those in IT, do not possess the necessary skills and knowledge to leverage digital technology to drive productivity, increase efficiency and spur innovation?
Ironic as it may seem now, Toys R Us didn’t grow up, or change, and in today’s world that means no one will ever get to be a Toys R Us kid again.
Brent Colescott is Sr. Director, Business Strategy & Transformation for SumTotal Systems, a Skillsoft company.