Toys R Us Consumer Behavior

Toys R Us, is a company with a long history of selling toys to children all over the world. In every child's mind, Toys R Us will always have a special place within their little hearts and minds. Even as years go by, the image of Toys R Us is still fresh in our minds. However, with the recent rise of video games, sales of toys have started to decline over the years. Older kids who once would be playing with toys have started to move towards video games which in turn are more interactive compared to traditional toys. At the same time, software companies are targeting younger children with educational software. With these new products for consumers to decide toy sales at Toys R Us are on the decline. To make matter worse, large retailers such as Walmart and Target are also selling toys that can be found within Toys R Us as well, further taking profits away from Toys R Us. To combat this problem Toys R Us has developed an in house tablet computer called the Tabeo in attempts to regain some of the lost profits.

However, since the launch of Tabeo, sales has never really picked up. Upon examining the external and internal factors of Toys R Us with SWOT analysis. Our recommendation for Toys R Us is to first put our more advertisement in order to market the Tabeo more, since as of now the market awareness is very low. Then create an in house educational software development team that will create premium educational apps for the Tabeo. After that Toys R Us will need to boost the hardware capabilities for the Tabeo. By implementing more resource in advertising the Tabeo will have short term gains for Toys R Us as a whole. For the long run the development of the software and hardware needs to be improved dramatically.

The current issue with Toys R Us, at the moment is the dwindling sales of the Tabeo since its launch on Oct 21st of this year. Toys R Us has developed the Tabeo in attempts to secure loss of profits due to external factors such as increase in video games sales, other direct competitor that is threatening the toy sales, and also toys sales from online shops. Though Toys R Us has high expectations for the Tabeo, however, as of now it has not delivered the results that they are hoping for.

Macro Trend

The article, "U.S. Outlook for 2012", points out the unemployment in the US is decreasing and the real output has an increasing trend (White, 2012). These evidence confirms that the US economy has started to recover, which means the average income would increase. At the same time people are more likely to spend their money on entertainment goods. At the same time the average consumer will be more willing to purchase a tablet in assisting their child in their performance in school.

Only a few brands exist in the children tablet market. The direct competitors for the Tabeo are leappad 2, Innotab, and Fuhu. These three competitors are also new in terms of serving this specific market segment; therefore, no market leader has yet to emerge. However, with the IPad as the market leader of the entire tablet industry it is something that Toys R Us cannot ignore. The IPad has already established a strong sense of customer loyalty and a successful brand image. This is something that will be difficult for Toys R US compete with. Tablet computers are generally very versatile products that can be easily adapt to different users accordingly using apps. In our case as long as an IPad is loaded with games and some educational apps it can serve as a tablet for children as well.

1. Established toys and baby amusement products giant

Toys R Us has a strong national and worldwide market presence with 840 stores in U.S., operating in 34 other countries with 716 stores; and established distribution channels because of its amazing chain of franchises and licenses. Toys R us is currently the largest toys retailer in United States.

2. Successful web market.

The company has a successful web market because of their collaboration with Amazon.com. In addition, Toys R Us has well developed e-commerce sites, which facilitates the customers to the full. These sites are very well managed and include Toysrus.com, Babiesrus.com, eToys.com, FAO.com, and babyuniverse.com.

3. Diverse range of high quality products

Toys R Us offers a wide range of high quality toys and baby amusement products since the 40s.The company is betting their understanding of their target customers "children" over decades of selling products for children and babies. Thus the first tablet product, Tabeo, has strong durability which stood up a number of drop tests on various surfaces, it is made from thicker and sturdier material. All of the durability attributes the Tabeo has is without a doubt conceived with all the knowledge the company possess in terms of manufacturing durable products tailored for children.

4. Pre-loaded with applications

Tabeo comes preloaded with over 50 popular games and education applications. Which saves parents and children time and money; in terms of having to download each individual app one at a time. Also another plus side to the pre-loaded apps is that children can jump right in and start using the Tabeo as soon as it comes out of the box; making the transition easier from other tablets to the Tabeo (Tabeo,2012).

1. Non-performing stores and lease inflexibility

Toys R Us leases 70% of its stores and is often tied into inflexible rental contracts.

2. Huge debt repayments limit expansion potential

Large debts, said to be in the region of US$6billion, mean that Toys R Us is required to make large debt repayments.

3. Lack competitive advantage

The company lack the competitive advantage as the brand has not repositioned its brand image in recent years. Wal-Mart in the meantime has taken up the position being its biggest competitor in terms of sales on toys, which it provides attractive offers to the customers.

According to Euromonitor International (2011), the phenomenon of private label within toys and clothing is growing. With consumers turning to private label in Western markets, opportunities across several products exist for retailers. Baby/infant clothing is expected to be a key growth area providing Toys R Us with higher margin. In addition, digital retailing is an option could be attractive