The Rise and Fall of Toys “R” Us

Toys ‘R’ Us was one of the biggest toy and baby clothing retail companies in the United States. I remember visiting this store quite a lot when I was a kid, and I always remember it fondly. Unfortunately, on June 29, 2018, Toys ‘R’ Us permanently closed all of its stores after 70 years of operation. In this article, I will be going through the history of Toys ‘R’ Us and discussing the reasons why such a successful company needed to close its doors.

The Beginnings and Growth of Toys ‘R’ Us

In 1948, cryptographer Charles Lazarus, returning from World War II, came up with a business idea. Based on conversations with his friends, Lazarus knew that there would be a large “baby boom” during this generation and thus created a business to match the needs of these people. Initially, the company started to sell the essential items that babies would need: strollers, cribs, and high chairs. However, as time passed, Lazarus realized that he was not to sell as much because people never came back a second time for a new stroller or crib. Therefore, to solve this issue, Lazarus decided it would be smart to sell toys.

Over time, the toys sold by Lazarus grew increasingly popular. As they gained popularity, Lazarus decided to fully commit to the idea; he renamed his company Toys ‘R’ Us and began to open more stores. Toys ‘R’ Us was significantly larger than the typical small, family-run toy stores. Many people were drawn to this beautiful child-like fantasy wonderland because of the many years of depression caused by the war. By 1978 the company went public.

Toys ‘R’ Us grew a lot from the 1950s to the 1980s. In 1969, Toys ‘R’ Us made a profit of $11 million on the $589 million in sales. By 1981, sales increased to $750 million. Two years later, Toys ‘R’ Us hit the $1 billion milestone. The growth of the company was incredible: In 1950, the company was valued at $500 million; by 1990, it was worth about $12 billion. Over the years, Toys ‘R’ Us sold over 18,000 different toys and opened about 1,450 locations all around the world.

The Fall of Toys ‘R’ Us

Many factors contributed to the fall of Toys ‘R’ Us. According to Mark Cohen, a former retail executive who is director of retail studies at Columbia University’s Graduate School of Business, Toys ‘R’ Us was unable to adapt to changes in the market. The company was too stuck in its own ways, so it tried to improve the shopping experience for the customer. Over time, many began to feel that the store was too big, the inventory was poorly merchandised, and customer service was low-quality.

Another large reason for the failure of Toys ‘R’ Us was the rise of Amazon. According to Barbara Kahn, a Wharton School of Business marketing professor, “Amazon changed customers’ expectations about convenience, particularly millennial parents who were the prime segment for Toys ‘R’ Us,” The convenience offered by Amazon made most parents disinterested in Toys ‘R’ Us, even if the overall experience was better in the eyes of some children.  

In addition to the two factors mentioned above, Toys ‘R’ Us was also heavily impacted by the fact that, as time went on, time became less popular amongst children thanks to technology. Video games, movies, and shows seem to interest kids more nowadays. The toy industry started to rely more on holiday sales, as this period was the only time people bought toys. According to Cohen, “independent toy stores have been closing for years.”

Despite the great success Toys ‘R’ Us enjoyed, it eventually fell due to its failure to adapt and the boom in technology.