Bringing Playtime Back: The SE Strategy of Toys “R” Us Canada

By Harrison Byrne, Hugo McDonald, Ryan O’Neill, Adam Reynolds and Jake Turley 1
EXECUTIVE SUMMARY
Toys "R" Us Canada, established in 1984, thrived as the second-largest toy chain in Canada, differentiating itself from its American
counterpart by adapting to digital pressures and maintaining a strong market presence with CA$1 billion in revenue. Despite
Situation challenges, including the necessity to navigate the fallout from the US branch's bankruptcy, Toys "R" Us Canada capitalized on its
position to rebrand and innovate, aiming to stay relevant by enhancing digital operations and offering experiential in-store designs

Online Competition Changing Consumer Preferences Digital Innovation

Toys "R" Us Canada faced significant challenges from
Complication ecommerce giants like Amazon and eBay, which
disrupted the toy market by offering lower prices
and convenient shopping experiences. Toys “R” Us
struggle to compete on price and convenience.
Preferences have shifted towards retailers that
offer engaging and interactive shopping
experiences, both online and in physical stores.
Toys “R” Us traditional focus on large physical
retail spaces made it difficult to meet these
evolving expectations
Toys “R” Us lag in digital innovation, with attempts
to establish an online presence and mobile
applications falling short of creating a competitive
edge. The company's partnership with Amazon and
subsequent efforts to catch up were also
insufficient to capitalize on the growing trend

How can Toys 'R' Us Canada effectively integrate its in-store and online experiences to meet the evolving demands of the
Question digital marketplace, enhance customer engagement through experiential retail, and navigate the challenges of growing
online competition and changing consumer behaviour, thereby securing its market position and avoiding a similar fate
experienced by its North American parent company?

The Toys “R’ Us Special Edition (SE) Strategy

Answer
Strengthen
Overhaul the current website with a modern, responsive
design that reflects the company’s ethos and include AR
visualization to see products in a home setting.
Additionally, develop a user-friendly mobile application to
facilitate shopping, engagement, and gamification
Experience
Revitalize Toys “R” Us retail strategy by introducing
experiential in-store events designed to engage children
and their parents more deeply whilst creating memorable
shopping and foster a community-centric atmosphere

2
INTRODUCTION ANALYSIS ISSUES RECOMMENDATIONS CONCLUSION
ANALYSIS

3
Value Chain – Inbound Logistics
 Canadian company Fairfax Financial Holdings Limited acquired the 82 Toys “R” Us (Canada) stores for
around $300 million following the liquidation of the American counterparts.
 The acquisition was completed on June 1, 2018, making it an independent and 100 per cent Canadian-
owned business with over 4,000 employees.

 Suppliers consist of leading toy makers such as Mattel, Inc. and Hasbro, Inc. etc. who manufacture these
products that are subsequently sold in bulk to the company. Canada retailer will have to regain confidence
of suppliers following period of bankruptcy.

INTRODUCTION ANALYSIS ISSUES RECOMMENDATIONS CONCLUSION

4
Operations
 Founded in 1984 as part of its American parent company’s
international expansion, Toys “R” Us was the second-largest
toy chain in Canada with 25 per cent of the market.
 sold products in categories that ranged from baby and toys to
entertainment and learning, and operated stores under both
Toys “R” Us and Babies “R” Us brands.
 The Canadian side of operations, although it had faced digital
pressures in recent years, had continued to thrive amid the
American parent company’s demise.

INTRODUCTION ANALYSIS ISSUES RECOMMENDATIONS CONCLUSION

5
 Outbound Logistics
 The sale of a plethora of toy brands such as Barbie, Disney, Lego,
Marvel etc. to kids in Canada in one of their 82 stores across the
country and online.
 With the use of the traditional stores sale of toys to children dying it
following the growing online threat, President Melanie Teed-Murch
aimed to create a more involved customer experience that makes it
worthwhile for customers to visit physical locations.
 Toys “R” Us holds its position as the main distributors of Canadian
“We really need to eventise parents and grandparents
toys, largely through retailers’ efforts to couple ordinary shopping
bringing those children in, shopping for convenience
trips with meaningful experiences for children and families. when they want to online and picking it up curbside.” –
Melanie Teed-Murch, President of Toys “R” Us

INTRODUCTION ANALYSIS ISSUES RECOMMENDATIONS CONCLUSION

6
Marketing & Sales
 Despite the demise of the American stores, Toys “R” Us have
marketed themselves as one of the most iconic toy sellers in North
America dating back to the 1950s.
 From the famous Toys “R” Us logo to the fanfare and stardom
created by the company’s ever popular mascot Geoffrey the Giraffe
being introduced in the 60s and starring in television commercials
alongside hundreds of children.
 Teed-Murch has looked to test out the strategies of “experiential
retail” through pilot programmes to determine whether there
would be traction with the consumer base.
 This type of marketing and selling is instrumental in the Canadian
toy stores’ pursuit to success and growth in the new age of the toy
industry.

INTRODUCTION ANALYSIS ISSUES RECOMMENDATIONS CONCLUSION

7
Service
 The service Toys “R” Us provide is the unforgettable experience involved
with buying from one of the stores that Teed-Murch aimed to create for
all customers.
 The company had already committed over $10 million to renovate its
stores by the end of 2018. These changes involve updates to the dated
store format, including a new layout that included interactive play areas
and seating for parents.
 Teed-Murch also had ideas for the future including a food service partner
and various in-store events such as birthday parties and a series of
workshops, to add to the in-store experience.
 Toys “R” Us has also seen success with a new loyalty program it had
introduced, with half a million customers signed up in the 2017 holiday
season.

INTRODUCTION ANALYSIS ISSUES RECOMMENDATIONS CONCLUSION

8
Firm Infrastructure
• As mentioned previously, Toronto-based holding company Fairfax Financial offered $300 million to acquire
the 82 Canadian stores, following the bankruptcy of the American operation and scepticism from customers
and suppliers alike.
• The company is now 100 per cent Canadian owned as of June 2018 following the acquisition of the Canadian
operation.
• Toys “R” Us (Canada) struggled majorly with company growth due to its continued subsidization of its US
parent. With this burden lifted, President Teed-Murch indicated that many upgrades were slated for stores
across the country.
• With CA$1 billion in revenue and over $100 million in EBITDA, the Canadian operation had experienced
markedly different results from its US counterpart south of the border.

INTRODUCTION ANALYSIS ISSUES RECOMMENDATIONS CONCLUSION

9
Human Resources Management
• In 2018, Toys "R" Us underwent a shift in ownership, becoming entirely Canadian-owned, and boasted a
workforce of more than 4,000 employees across 82 stores.
• The company invests in training programs to ensure that its employees are well-equipped with the
knowledge and skills needed to perform their roles effectively. This includes onboarding for new hires,
ongoing training for existing staff, and leadership development programs for managerial positions.
• After severing ties with their American parent company, Teed Murch had plans for the future including a
food service partner and in store events such as birthday parties and a series of workshops.
• Toy’s "R" Us advanced training and development programs will prepare employees for the company's future
initiatives and plans.

INTRODUCTION ANALYSIS ISSUES RECOMMENDATIONS CONCLUSION

10
Procurement
• Despite encountering financial difficulties, Toys "R" Us retained its position as a significant player in the toy
industry, maintaining strong relationships with its suppliers.
• The company's biggest suppliers are both Hasbro Inc. and Mattel Inc., who have been supplying Toys “R” Us
with products since they opened their doors in 1984.
• As aforementioned, the company has committed over $10 million to renovating its stores by 2018. This will
include lowered shelving and a new layout that includes interactive play areas and seating for parents.

INTRODUCTION ANALYSIS ISSUES RECOMMENDATIONS CONCLUSION

11
Technology Development
• As the Canadian division shared a debt facility with the US parent company, it was an uncertain time for Toys
“R” Us Canada.
• However, Teed-Murch expressed that the company is here to stay and embarked on a two-month coast to
coast tour to broadcast the company's plans under its new ownership.
• The new plans have a strong emphasis on tech development with all stores expected to introduce mobile
pay options that would be coupled with an optimized checkout area to improve the efficiency of payment
processing and online pickups.
• The company also plans to re-open and improve its online stores, as the future of the company heavily
depends on catching up with the current digital world.

INTRODUCTION ANALYSIS ISSUES RECOMMENDATIONS CONCLUSION

12
Resources & Capabilities
Resources
Store Infrastructure
Toys “R” Us have a network of 82 stores across Canada
Human Capital
With Melanie Teed Murch as president and a network of
over 4,000 dedicated employees, Toys “R” Us are
equipped with a diverse, skilled and experienced to take
on market challenges
Supplier Relations
Established relationships with suppliers Hasbro and
Mattel
Market Presence & Brand Recognition
Toys “R” Us hold a 25% share in the Canadian toy market as
well as strong customer loyalty and recognition built since
Canadian operations began in 1987
Capabilities
Renovation and Technology Investment
$10 million commitment towards renovating and improving
stores as well as technological advancement in mobile pay
options and payment processing
Financial Performance
Toys “R” Us have generated a sales revenue of $1 billion
and an EBITDA of $100 million despite the difficult
circumstances of its former parent company
Product Offerings
30% of the company’s offerings are exclusive to Toys “R”
Us, ensuring consistently unique products being offered to
customers
Customer Loyalty
A 2017 customer loyalty programme successfully signed up
over 500,000 customers

INTRODUCTION ANALYSIS ISSUES RECOMMENDATIONS CONCLUSION

13
 Product Exclusivity
Value
• Offering products exclusive to Toys “R” Us attract customers seeking unique and original items,
differentiating them from the competition.
• This can in turn, increase customer loyalty as customers return to toys r us stores for items
unavailable from other retailers
• Offering a significant amount of exclusive goods can allow for premium pricing, leading to higher
margins as customers are likely to pay more for unique items that are more challenging to find

Rarity
• Exclusive products are not widely available, making them by definition rare in the market. Such
rare offerings can often add to a products appeal as unique and in high demand
• Having 30% of its offerings as exclusive helps Toys "R" Us carve a niche in the toy market, setting
the company apart from mainstream competitors.

INTRODUCTION ANALYSIS ISSUES RECOMMENDATIONS CONCLUSION

14
 Product Exclusivity
Inimitability
• Building and maintaining exclusive arrangements with suppliers or manufacturers is challenging
and often requires long-term relationships and negotiations. While it is not entirely inimitable, it
is difficult to imitate quickly.
• Exclusive products become associated with the Toys "R" Us brand. Over time, this association
becomes ingrained in consumer perception, making it difficult for competitors to replicate the
company's market position.

Organisational Support
• Toys "R" Us are organised effectively to create, market and distribute their exclusive product
offerings. Integrating unique products into their overall strategy, the company can develop a
competitive edge over other retailers, providing a sustained competitive advantage in the long
term.

INTRODUCTION ANALYSIS ISSUES RECOMMENDATIONS CONCLUSION

15
 VRIO Framework
Valuable? Rare? Inimitable? Org Support?

Renovation and Tech Investment Yes No No Yes Cmpetitive Parity

Financial Performance Yes No No Yes Competitive Parity
Customer Loyalty Yes No No Yes Competitive Parity
Product Offerings Yes Yes Yes Yes Temporary competitive
Advantage

INTRODUCTION ANALYSIS ISSUES RECOMMENDATIONS CONCLUSION

16
 Porters Generic Strategies
• Toys “R” Us Canada work to distinguish themselves through exclusive products, enhanced customer experiences, and targeted marketing
efforts. While they faced cost pressures from other ‘big-box’ retailers, their approach didn’t primarily revolve around cost leadership.
Instead, they focused on leveraging their brand and unique position in Canada to maintain a competitive advantage. This is why Toys “R”
Us strategic approach aligns most clearly with the Differentiation strategy.

• The specific aspects of Toys “R” Us operations and market position which have led us to this conclusion include:

 Brand Reputation and History - Despite the closure of its American counterpart, Toys “R” Us Canada has maintained a strong reputation
and a nostalgic connection with its customers. This emotional connection and brand loyalty are powerful and meaningful differentiators
where many products can be commoditized.

 Exclusive Product Offerings - Toys "R" Us Canada had about 30% of its offerings exclusive to their stores. This exclusivity is a classic
hallmark of differentiation, as it provides products that competitors do not offer. Exclusive products can draw customers who are seeking
unique or specific items that they can't find elsewhere

 Enhanced Customer Experience - The company invested in renovating stores with interactive play areas, seating for parents, and mobile
pay options. These features enhance the shopping experience, making it more enjoyable and convenient, which is a key aspect of
differentiation

INTRODUCTION ANALYSIS ISSUES RECOMMENDATIONS CONCLUSION

17
 Porters Generic Strategies
 Focus on Customer Loyalty - The emphasis on creating events to enhance the shopping experience for families and their loyalty program
indicates a strategy aimed at deepening customer relationships and enhancing the value proposition beyond just products

 Digital and Physical Store Integration - Toys "R" Us Canada recognized the importance of digital integration. By creating a tether between
the bricks-and-mortar experience and the online experience, the company sought to provide a seamless customer journey. This
integration is particularly important in a retail landscape increasingly dominated by online shopping.

• Overall, Toys "R" Us Canada's strong differentiated market presence with a focused approach on Customer Loyalty, Enhanced Product
Offerings and Digital and Physical Store Integration, has been central to its strategy. This approach has allowed the company to maintain a
competitive edge and navigate the challenges in the dynamic retail industry

INTRODUCTION ANALYSIS ISSUES RECOMMENDATIONS CONCLUSION

18
Porters Five Forces
Industry – “Toys R Us Canada” are competing in the toy and baby
products retail industry. This is a highly competitive industry with the
retail sales of toys in Canada amounting to $2.39 billion in 2022.

Competitors

INTRODUCTION ANALYSIS ISSUES RECOMMENDATIONS CONCLUSION

19
Porters Five Forces

1. Threat of New Entrants

2. Bargaining Power of Suppliers

3. Bargaining Power of Buyers

4. Threat of Substitute Products or Services

5. Rivalry Among Existing Competitors

INTRODUCTION ANALYSIS ISSUES RECOMMENDATIONS CONCLUSION

20
Threat of New Entrants

Low - Moderate

The retail toy market has high barriers to entry due to the need for significant capital investment, established supply chains,
and brand recognition. However, online retail platforms lower these barriers for new entrants, increasing competition. Toys "R"
Us's established brand and wide product range help mitigate this threat, but new online competitors can still emerge.

1. Economies of Scale
2. Network Effects
3. Customers Switching Costs
4. Capital Requirements
5. Incumbent Advantages (Independent of Size)
6. Unequal Access to Distribution Channels
7. Restrictive Government Policy

INTRODUCTION ANALYSIS ISSUES RECOMMENDATIONS CONCLUSION

21
 Threat of New Entrants
1. Economies of Scale - Toys "R" Us benefits from economies of scale, which can deter new entrants. Large purchase volumes allow it to
negotiate better prices with suppliers, spreading costs over a wide range of products and reducing per-unit costs. New entrants may
struggle to match these price points or the breadth of inventory without substantial initial volume.
2. Network Effects - While more relevant in digital and platform markets, network effects can also play a role in retail through brand
recognition and customer loyalty programs. Toys "R" Us established brand and customer base provide it with advantages that are hard
for new entrants to overcome quickly.
3. Customer Switching Costs - While not as significant in retail, customer loyalty and familiarity with Toys "R" Us product range, store
layout, and shopping experience can act as a switching cost. However, in the age of online shopping, these costs are lower, reducing the
barrier they pose.
4. Capital Requirements - Opening a retail business in the toy and baby products sector requires significant capital investment in
inventory, store setup, logistics, and marketing. These high upfront costs can be a substantial barrier for new entrants without
significant financial backing.
5. Incumbent Advantages - Toys "R" Us has established relationships with suppliers, a well-known brand, and a loyal customer base. These
advantages, along with proprietary knowledge of retail operations and market trends, give it a competitive edge that is independent of
its size and difficult for new entrants to replicate immediately.
6. Unequal Access to Distribution Channels - Established retailers like Toys "R" Us have preferential access to prime retail locations and
online marketplace prominence. New entrants may find it challenging to secure favourable physical retail spaces or visibility on major
online platforms, impacting their ability to reach customers effectively.
7. Restricted Government Policy - In Canada, an example of a restrictive government policy that can act as a barrier to entry in the toy
and baby products sector is the Canada Consumer Product Safety Act (CCPSA). This act is designed to protect the public by addressing
or preventing dangers to health or safety that are posed by consumer products in Canada, including toys and baby products.

22
INTRODUCTION ANALYSIS ISSUES RECOMMENDATIONS CONCLUSION
Bargaining Power of Suppliers
Moderate
Toy manufacturers range from large, well-known brands to smaller, independent producers. Larger
suppliers may have more negotiating power due to their brand appeal, which can influence inventory
selection and pricing. However, Toys "R" Us Canada's size and purchasing power allow it to negotiate
favourable terms with many suppliers, balancing this force.
1.Mattel: A leading global toy company and the manufacturer of
well-known brands such as Barbie, Hot Wheels, and Fisher-Price.
Mattel has been a longstanding supplier to many Toys "R" Us
stores worldwide.
2.Hasbro: Another global leader in the toy and entertainment
industry, Hasbro produces popular brands like Transformers, My
Little Pony, Nerf, and Monopoly. Hasbro's diverse range of
products makes it a key supplier for toy retailers, including Toys
"R" Us.
3.LEGO Group: Renowned for its iconic LEGO bricks and building
sets, the LEGO Group is a critical supplier to Toys "R" Us, appealing
to a wide age range of consumers from young children to adults.

23
INTRODUCTION ANALYSIS ISSUES RECOMMENDATIONS CONCLUSION
Bargaining Power of Buyers
Strong

Consumers have a wide array of choices when it comes to purchasing toys and baby products, including
from competitors like Walmart, Amazon, and specialty stores. Price sensitivity, product variety, and
shopping convenience significantly influence buyer decisions. Online shopping has further increased the
bargaining power of buyers by making it easier to compare prices and products.

Toys "R" Us Canada holds a significant but challenged

position in the market. Its specialization in toys and
baby products, along with the experiential shopping it
offers in physical stores, differentiates it from general
retailers and online platforms. However, the
convenience and pricing power of online marketplaces,
along with the broad product offerings of general
retailers, mean that Toys "R" Us Canada must
continuously innovate and leverage its unique selling
propositions to maintain and grow its market share.

INTRODUCTION ANALYSIS ISSUES RECOMMENDATIONS CONCLUSION

24
Threat of Substitute

Intense
In the context of toys and games, substitutes could include digital entertainment options like video games,
streaming services, and mobile apps. The increasing attractiveness of these alternatives, especially among
older children and teenagers, poses a threat. However, for baby products and educational toys, the threat
of substitutes is lower.

According to a report by Common Sense Media, as of

2019, over half of American children had their own
smartphone by the age of 11, and by the age of 8, 19%
of children had their own tablets. This early adoption
facilitates increased engagement with digital games and
apps designed for entertainment and education,
thereby impacting the traditional toy industry.

INTRODUCTION ANALYSIS ISSUES RECOMMENDATIONS CONCLUSION

25
Rivalry Among Existing Competitors

Intense

The toy and baby products market in Canada is highly competitive, with several major players (Walmart,
Amazon, Mastermind Toys , and specialty stores) competing for market share. Price competition, product
differentiation, and marketing strategies are intensely deployed to attract customers. Toys "R" Us Canada
faces stiff competition, requiring continuous innovation and service excellence to maintain its position.
Overall Competitive Landscape for Toys "R" Us Canada:
Toys "R" Us Canada operates in a challenging
environment characterized by intense competition, high
bargaining power of buyers, and threats from digital
substitutes and new online entrants. To remain
competitive, the company needs to focus on
differentiating its product offerings, enhancing the
customer experience both in-store and online,
leveraging its brand reputation, and efficiently
managing its supply chain relationships.

INTRODUCTION ANALYSIS ISSUES RECOMMENDATIONS CONCLUSION

26
Force Impact Key Points
• High capital and scale barriers.
New Entrants Low - Moderate • Brand loyalty deters entry.
• Online retail increases competition.

• Large manufacturers wield power.

Suppliers Moderate • Toys "R" Us has negotiation leverage.
• Diverse suppliers reduce dependency.

• Wide availability aids price comparison.

• Online shopping boosts switching ease.
Buyers Strong
• Loyalty programs offer some
mitigation.

• Digital entertainment competes for

attention.
Substitutes Intense • Alternatives like apps offer learning.
• Physical toys hold unique value for
young children.

• Fierce competition from online/offline

retailers.
Competitors Intense
• Price wars common
• Differentiation is key.

INTRODUCTION ANALYSIS ISSUES RECOMMENDATIONS CONCLUSION

27
ISSUES

28
What are Toys “R” Us reasons for acting now?
Growing Online
Competition
The rise of e-commerce giants like
Amazon and eBay has significantly
disrupted the toy market. These
platforms offer competitive pricing, a
wide range of products, and the
convenience of home delivery
High Dependance
on Physical Stores
The company’s model has been heavily
reliant on physical stores. Diversifying the
sales channels and reducing dependency on
any single channel can mitigate risks and
open new revenue streams
INTRODUCTION ANALYSIS
Changing Consumer
Behavior
There’s a clear shift in consumer shopping
habits towards online purchasing. Toys “R” Us
needs to adapt to this change by enhancing its
digital presence and online shopping
experience to meet the new customer
demands
Threat from ‘Big-
Box Retailors
Retailers like Walmart and Target are
expanding their toy sections, often offering
lower prices due to their broader
merchandise mix and economies of scale.
ISSUES
Need for Digital and
Physical Integration
Toys “R” Us customers who shop both
online and in physical stores are more
loyal to the brand and spend more. Thus,
integrating digital and physical retail
experiences is crucial for customer
retention and revenue growth
Debt and Financial
Management
The downfall of the American counterpart was
heavily influenced by its significant debt burden.
Proactive financial management and avoiding
over-leveraging are essential to maintain
financial health and invest in growth areas
RECOMMENDATIONS CONCLUSION
29
4
Threats to be Prevented and Opportunities' to be Seized

Threats Opportunities
Growing Online 1. Differentiation
Competition through Exclusivity
3
Changing Consumer
Preferences 2. Expanding Digital/

Urgency
1
Physical Integration 4
High Market
Competitors
3. Experiential Retail 2
Falling Behind in
Digital Innovation
4. App Development

5. Market Growth
Potential Importance
INTRODUCTION ANALYSIS ISSUES RECOMMENDATIONS CONCLUSION
30
Problem Statement

How can Toys 'R' Us Canada effectively integrate its in-store

and online experiences to meet the evolving demands of
the digital marketplace, enhance customer engagement
through experiential retail, and navigate the challenges of
growing online competition and changing consumer
behaviour, thereby securing its market position and
avoiding a similar fate experienced by its North American
parent company?
PROBLEM STATEMENT

INTRODUCTION ANALYSIS ISSUES RECOMMENDATIONS CONCLUSION

31
RECOMMENDATIONS

32
 Recommendation 1
What?
Website Redesign for Modern
Needs:
Overhaul the current website
with a modern, responsive
design that reflects the
company's mission and include
AR visualization to see products
in a home setting
E-Commerce Platform
Revitalization:
Introduce advanced filtering and
search capabilities and
personalized product
recommendations using AI
What?
Mobile Application
Launch:
Develop a user-friendly
s
mobile application to
facilitate shopping,
engagement, and
gamification.
New feature in Toys “R” Us
app which enables users to
earn rewards such as
Strengthen discounts for playing fun
gamed and watching
educational videos
= Toy Point
33
Why should Toys “R” Us Revitalise its E-commerce Platform and Launch an App?
What are the reasons for acting now?

Why? E-commerce Platform Revitalisation Why? Mobile Application Launch

- To address the challenging retail landscape, meet - To enhance customer engagement, collect data and
personalise experiences and allow for competitive
customer demands for a digital shopping experience and
differentiation across Canada
capitalise on its unique product offerings
- Gamification will increase customer retention, loyalty
- To utilise new technologies such as AR visualisation and
and bridge online and in-store experiences
UI/UX design practises
Competing with Retail Giants
• Walmart and Amazon dominate the online retail Supporting Experiential Retail
space with their extensive digital capabilities • Aim is to provide an experiential retail
environment. An app can enhance this
• Improving the website and launching a unique by offering interactive and immersive
app allows Toys "R" Us to offer something these experiences.
giants cannot – a gamified, educational
experience that rewards shopping
Leveraging Exclusive Product
Building Brand Loyalty
Offerings
• Toys "R" Us has historically had a strong market • A loyalty program incentivizes repeat business and can increase customer
share when it is the first to launch a product​​ lifetime value. Gamification adds an element of fun that can attract and
retain customers, particularly younger demographics.
• An improved website can better showcase these
According to the RTE Survey, Over 25% of six-year-olds
exclusive offerings, potentially driving more sales
now have smartphones
online
34
INTRODUCTION ANALYSIS ISSUES RECOMMENDATIONS CONCLUSION
How Will This Recommendation be Implemented?
How will Toys “R” Us make an impact in the digital space?
How? 1. A complete revamp of
what was once an outdated
company website
Key Features:
Click-and-collect service
as well as direct order
to homes
Digital wallet and store
locator for convenience
INTRODUCTION ANALYSIS
New Website Features
Implement personalization
features that tailor content
based on user preferences,
purchase history, or
location.
Provide a live chat feature
with AI-powered
assistance to answer
customer queries in real-
time, enhancing customer
support.
Highlight user-generated
content, such as reviews,
testimonials, or creative
uses of products, to build
trust and authenticity.
ISSUES
Use storytelling techniques
through multimedia
content, narratives, or case
studies to create an
emotional connection with
visitors.
Showcase the company's
commitment to
environmental and social
responsibility through a
dedicated section,
sharing initiatives and
impact.
Incorporate dynamic and
subtle animations to
enhance visual appeal and
guide users through the
website in a more
engaging manner.
35
RECOMMENDATIONS CONCLUSION
How Will This Recommendation be Implemented?
How will Toys “R” Us make an impact in the digital space?

How? App Integration Testing Marketing

2. Develop a mobile application as a hub for
Overall $10,000 $20,000 P/M Money In
Toys “R” Us customers and as a tool to $10,000
enhance customer engagement and brand Budget
Game Setup Maintenance SEO Charge
loyalty $500,000
$50,000 $500 P/M $500-$2K P/M

Mobile Application Toy Points

Features - Used against
Implement loyalty Use a barcode spends on app
programme, scanner to get
allowing users to instant product
- 12 months to
earn points and information, use
receive rewards for reviews, and
their purchases. pricing.
Gamification
Receive Create and manage
notifications about wish lists for 1 Daily Limit
special offers upcoming birthdays 1 game=1 TP
available and other special
exclusively occasions. 1 TP=€0.10
through the app. 30 Day Bonus:
Enable users to
Include interactive make purchases 10 GP
games or directly within app
educational with secure and
Education Video 10
content related to user-friendly seconds
featured toys checkout process.
36
INTRODUCTION ANALYSIS ISSUES RECOMMENDATIONS CONCLUSION
The Launch of the Toys “R” Us App
Marketing Campaign of App and Loyalty Programme

Launch Day
How will Toys ”R” Us Launch Event
effectively market the
launch of its new
digital app to ensure Email Marketing
pre-launch excitement Influencer
Teaser Partnerships
and post-launch
Campaign
engagement

Social Media Blitz

Gamification and
Loyalty and
Rewards Launch

Post-Launch Customer
User Generated Content Continuous Feedback Experience
Campaign Engagement Loop
37
INTRODUCTION ANALYSIS ISSUES RECOMMENDATIONS CONCLUSION
Competitor Comparison
How will this recommendation allow Toys “R” Us Canada to remain a big player in the Canadian toy market?
How? Mobile Application:
• The launch of the Toys “R” Us mobile app positions the
company to compete with Canadian market leader
Mastermind Toys, known for its focus on educational games.
• The app introduces gamification, allowing kids to play
educational games, earn points, and receive store credit and
discounts.
• Given the increasing use of mobile phones by children, the app
taps into the lucrative digital gaming market, enhancing its
appeal with the "toy point" incentive.
• Strengthening Toys "R" Us' e-commerce and online presence
in the Canadian toy market can lead to increased
competitiveness against rivals like Mastermind Toys and
Walmart Canada.
• A revamped website and a new mobile app with gamification
features are likely to attract a broader customer base.
INTRODUCTION ANALYSIS
How? New Website:
• Revamping the outdated Toys “R” Us website positions the
Canadian toy giant to compete with Walmart Canada and
Amazon.
• Previously, their online presence struggled, but with the
removal of financial burdens from their American
counterpart, Toys “R” Us can now invest in a sleek, user-
friendly website.
• The established brand name and exclusive product
offerings are expected to draw customers, differentiating
them from competitors in the digital marketplace.
• Sustained investment in the experiential retail stores can
solidify Toys "R" Us as a prominent player.
• leveraging its established brand name and exclusive
product offerings to maintain a strong presence and
capture a significant share of the growing Canadian toy
market. Løci Beyond Meat
38
ISSUES RECOMMENDATIONS CONCLUSION
Toys “R” Us x Pokémon Go
What the Future of the Toys “R” Us App Will Look Like

Why Collaborate Now? Illustrative structure of the Collaboration

Enhanced In-Store Experiences
Pokémon GO, known for its AR technology, could bring
an interactive dimension to the in-store experience at
Toys "R" Us. Stores could become hotspots for exclusive
captures and battles, driving foot traffic

Brand Synergy
Both brands represent strong, playful, and family-friendly
brands. A collaboration could create marketing campaigns
that resonate with families looking for entertaining
shopping experiences
Toys “R” US
Targeted Demographic Reach x Pokémon
Pokémon GO has a wide and diverse user base that
spans various age groups, including both children and
Go.
adults. A collaboration could introduce new players who
might not regularly visit toy stores In-App Features of the Collaboration

Cross-Promotional Opportunities Create scavenger hunts Offer special rewards, Use the app to Incorporate an
A collaboration offers ample cross-promotional within Toys “R” Us discounts, or in-game promote in-store interactive map
opportunities, such as themed merchandise, exclusive stores, leading items for Pokémon Pokémon-themed feature in the app,
in-game items linked to in-store purchases, or special customers through GO players who check events, tournaments, guiding users through
events hosted at Toys "R" Us locations different departments in at a Toys "R" Us or meet-ups, enhancing the store to specific
and showcasing new store through the app the community aspect Pokémon-themed
products of both brands areas or displays

39
INTRODUCTION ANALYSIS ISSUES RECOMMENDATIONS CONCLUSION
Financial Breakdown
Overview of Financial Implications and Potential profits of Recommendation

Profit Sales Revenue

• The app will generate revenue through product sales, in-app 300,000,000

purchases, advertising, and data monetization. Improving 250,000,000

the website will also boost sales by enhancing customer 200,000,000

engagement.
150,000,000
• Initially, profits may be modest as the app launches, but with
effective advertising and full release, a significant sales 100,000,000

increase is projected—up to $90 million over four years. 50,000,000

0
2018 2019 2020 2021 2022

Cost
Cost
• We believe that an accurate budget for the implementation of a
120,000
new application and the improvement of the old website is
100,000
approximately $600K.
80,000
• The Application and game set up will be approximately $60k
60,000 • Testing and marketing is estimated at $30k
40,000 • The maintenance of the app will cost $500 per month, will work
20,000 out at $6,000 a year.
0 • The SEO Charge will be between $500-$2,000 per/month
P g g p ce ge e
AP s tin
ke
tin se
tu
nan
Ch
ar eb
sit • Finally, the full improvement of the website is set to cost $100k.
Te ar e te w
M am in O
g m
a SE

40
INTRODUCTION ANALYSIS ISSUES RECOMMENDATIONS CONCLUSION
 What?
Recommendation What?

In-Store Events 2
Our aims is to revitalize Toys • Interactive Play Areas.
“R” Us retail strategy by
introducing experiential in- • Educational Workshops and

E
store events designed to Events.
engage children and their
• Pilot Programme and Roll
parents more deeply
Out of Instore Events.

Community Fostering
Creating memorable
shopping experiences that
blend retail with
entertainment and fostering Experience
a community-centric
atmosphere

41
Why Are We Implementing This?
What are the reasons for acting now?

Why?
In-Store Experiential Retail
• Enhance Customer Engagement and Satisfaction
• In-store Experiences will increase foot traffic and drive sales
Reasons For Experiential Retail
Boosts In-Store Traffic: Retail experiences that engage and entertain customers have
been shown to increase foot traffic. For instance, the Global Retail Trends 2019 report by
Forbes highlights that experiential retail drives more visitors to physical stores.

• Distinguish Toys R Us in a competitive market offering unique Enhances Customer Loyalty: Experiences create emotional connections with brands. A
study by EventTrack found that 74% of consumers are more likely to buy products after
experiences that can't be replicated online.
engaging in brand experiences.

Increased Sales Investing in a quality customer experience has a direct impact on sales.
The Harvard Business Review highlights that customers with positive retail experiences
are inclined to spend significantly more - up to 140% more than those who encounter
negative ones. This data underscores the economic benefit of enhancing the in-store
experience, suggesting a direct correlation between experiential retail strategies and
increased consumer spending, offering a compelling financial rationale for Toys "R" Us
Canada to adopt such an approach.

Competitive Differentiation: According to PwC's Global Consumer Insights Survey, 73%

of all people point to customer experience as an important factor in their purchasing
decisions, suggesting that unique in-store experiences can significantly differentiate a
brand in a crowded marketplace.

42
INTRODUCTION ANALYSIS ISSUES RECOMMENDATIONS CONCLUSION
How Will This Recommendation be Implemented?
How will Toys “R” Us enhance customer engagement through experiential retail?

Play Zones
- Creation of vibrant, energetic sections of each brick-and-
How?
Interactive Play Areas mortar location equipped with demo toys and video
games children can play with, and comfortable seating for
parents
Activity Categories
Engagement
Remote Control - Activities will reflect popular toy categories offered by
race day with a
track for remote Doll customization “Toys R Us”, ensuring customers can interact with a product
control vehicles. stations for before purchasing.
American Girl,
Barbie, Bratz and Staff Input
Outdoor adventure Monster Hugh
with basketball product lines. - Staff responsible for play zones will be trained to introduce
hoops and scooter new products, demonstrate and provide guidance on how
tracks when space Puzzles and board
allows. games with various to play, and ensure a safe environment for all children
difficulty levels for involved
different age
groups
LEGO building Scheduling
stations for Various video - During busy periods like weekends and holidays, a time
different age game zones where
groups. kids can compete slot system will be implemented where kids can sign up to
or play together
on different
play in specific slots throughout the day, ensuring they all
consoles. gets a turn.
43
INTRODUCTION ANALYSIS ISSUES RECOMMENDATIONS CONCLUSION
How Will This Recommendation be Implemented?
How will Toys “R” Us enhance customer engagement through experiential retail?
How? Educational Workshops & Events
- Workshops that focus on STEM education, arts and crafts and
storytelling.
- Aligns with parental interest and contributes to a child’s
development.
- Offers value beyond a toy purchase and fosters a community of
loyal customers.
Staff Training & Partnerships
• Staff will be trained to carry out workshops
effectively, ensuring every participant enjoys safely.
• Partnerships with local teachers, artists and
experts who specialise in DIY, jewelery design,
science, coding, storytelling and many more
exciting themes will be developed.
INTRODUCTION ANALYSIS
Event Calendar
• Tap into seasonal holiday excitement with
events planned around major holidays like
Christmas, Halloween and Easter.
• Activity content will alternate each month to
ensure it is constantly fresh and original,
encouraging repeat visits.
Special Features
• Transforming playtime into a learning experience,
participants will receive take home kits at the end of
a workshop with additional items and projects based
on the theme of the workshop.
• Customisation of the kits will increase engagement
and the likelihood of a follow up purchase.
• Each take home kit will include a guide for parents,
explaining the educational value of the kit and
activity
• Users will be encouraged to share their projects,
accomplishments, tips and ask questions on all
socials and online to keep them active and engaged
44
ISSUES RECOMMENDATIONS CONCLUSION
Pilot Programme and Roll Out
How will Toys “R” Us ensure the in-store experiences are a success

•A pilot programme will allow for risk mitigation in the wider rollout, feedback collection and
Why? developing a deeper relationship with a smaller customer base.
•KPIs will be monitored to evaluate progress and make adjustments where necessary.

Pilot Programme Roll Out KPIs

• 3-5 diverse locations will be chosen for a 3-month pilot Pilot programme evaluation will be executed to
phase to gather customer response and operational assess customer feedback, sales figures and
online engagement.
feasibility.
• Locations will be chosen based on geographic location, • Adjust and improve event features based on
store size and additional customer demographics. the pilot review to ensure the main roll out
• Comprehensive staff training will take place on managing has less room for error.
workshops, engaging with children and parents and any Participation levels in play zones
necessary child safety information. and workshops
• Weekly workshops and events tailored to different
profiles and age groups will commence. Take home kit sales conversion
• Develop and promote take home kits related to the
workshop in question and encourage participants to share Online engagement levels (activity,
their experiences online. • Focusing on areas with high customer
engagement and sales potential, a phased posts, shares, likes)
rollout of experiential retail will begin.
Customer satisfaction and
feedback
45
INTRODUCTION ANALYSIS ISSUES RECOMMENDATIONS CONCLUSION
 The Launch of the Toys “R” Us Experiential Retail
Marketing Campaign and Roll out of Instore Events

Integrated
Marketing
Campaign
How will Toys ”R” Us
effectively market and
roll out the launch of
its new experiential Staff Training
retail, in-store events Pilot Phase and
Market
Research
Targeted
Promotion
Launch Day
Launch Event

Feedback
Collection and
Adjustments

Post-Launch Ongoing Customer

Innovation
Broad Roll Out Nation Costumer
Engagement and
Experience
Wide
Promotion
46
INTRODUCTION ANALYSIS ISSUES RECOMMENDATIONS CONCLUSION
Looking to the Future
How will this recommendation benefit Toys “R” Us in the short and long-term?
How? Interactive Play Areas:
Short Term:
• •
Boost in Foot Traffic: Immediately attracts families looking for a
shopping experience that entertains their children, potentially
increasing store visits and immediate sales.
• •
Enhanced In-Store Experience: Creates a positive and memorable
shopping environment, encouraging longer stays and increasing the
likelihood of impulse purchases.
• •
Competitive Edge: Differentiates Toys "R" Us from competitors by
offering a unique, engaging in-store experience not available
elsewhere, drawing customers away from online and traditional
retailers.
Long Term:
• •
Interactive play areas not only immediately boost foot traffic and
enhance the in-store experience, potentially increasing sales by up
to 30% in the short term, but they also foster brand loyalty and
provide valuable market insights, solidifying Toys "R" Us as a
community hub and driving long-term revenue growth.
• It is an opportunity to collect data on customer behaviour and
preferences which inform product selection and marketing
strategies
INTRODUCTION ANALYSIS ISSUES
How? Educational Workshops and Events:
Short Term:
Increased Brand Awareness: Hosting educational workshops and
events can quickly raise awareness of the Toys "R" Us brand as a
leader in not only retail but also child development and learning.
Direct Revenue from Event Participation: Charging a small fee for
participation in workshops or special events can generate direct
revenue, contributing to overall sales in the short term.
Enhanced Customer Satisfaction: By providing valuable learning
experiences, these events can significantly enhance customer
satisfaction, leading to positive reviews and recommendations that
can boost store reputation rapidly.
Long Term:
Long-term benefits of educational workshops and events
include establishing Toys "R" Us as an educational leader
in the community, fostering ongoing customer loyalty
with a 25% increase in repeat visits, and enhancing long-
term brand value through continuous engagement and
positive word-of-mouth.
Løci Beyond Meat
47
RECOMMENDATIONS CONCLUSION
Financial Breakdown
Overview of Financial Implications and Potential profits of Recommendation

Profit
• The introduction of interactive play areas and educational Profit Forecast
workshops/events is expected to significantly enhance in-store
engagement, driving both direct and ancillary revenue streams. 100
• Initial returns may be modest as these experiential offerings gain 80
traction, targeted marketing and the unique value proposition are 60
40
projected to catalyze substantial sales growth, potentially
20
contributing up to $80 million to the bottom line over four years as 0
customer visits and spending increase.

3.5
Cost
Cost Breakdown • We believe that an accurate budget for the implementation of interactive
3 play areas within stores and educational workshops and events will estimate
2.5
to $ 780,000
• Design, set up and initial marketing will cost $180,000
2 • Annual staffing costs will increase by at least $175,000 with an additional
1.5 $25,000 being used for staff training
• Each educational event will incur $300,000 in planning, talent fees, and
1 venue setup.
0.5 • Miscellaneous Annual Expenses, including insurance and permits, could
range from $40,000 to $100,000.
0
Set Up and Staffing Event Planning Additional
Marketing Expenses

48
INTRODUCTION ANALYSIS ISSUES RECOMMENDATIONS CONCLUSION
How long will it take to fully rollout this strategy?
Implementation Timeline

0 months 3 months 6 months 12 months 15 months 18 months 21 Months

Customer Social Media App Launch Gamification Loyalty and Continuous App Collaborations
Profiling Blitz Day Rewards programme Feedback Development (Pokémon Go)
Strengthen
Complete Redesign of Webpage. Live Chat-bot with AI powered Implementation of AR visuals to see
User –friendly interface assistance toys in home setting

Team Assembly Continuous Improvement

Design and Development Pilot Events and Feedback
and Training and Expansion
Experience
Vision and Nationwide Launch
Targeted Marketing Campaign
Strategy

Influencer
Involvement
45% Conversion Rate
from customers who use
Outreach
the app or website to and Negotiation
make a purchase or
create an account
KPI’S
Securing Investment
60% Retention Rate
of customers to return
to the app or website
within 6 months of
initial purchase
25% Increase in Foot Traffic
Looking for a major increase
in store visits as a result of
our experiential retail
practices
15% New Customer Growth
Increase in first time
customers visiting due
to experiential
initiatives

INTRODUCTION ANALYSIS ISSUES RECOMMENDATIONS

49
CONCLUSION
Risks to be Considered and Keys to Mitigate These Risks
Likelihood and Impact Graph of Risks faced by toys “R” Us

5
Ris Mitigatio
k n
Differentiation through unique in store experiences and
Dependance on
differentiation of itself and potential collaboration opportunities.
1
4
1 its product base from
competitors

Rapid changes in Regularly update and upgrade e-commerce technology,

3 2 3 technology making current staying informed about industry trends, adapting to
2 e-commerce platforms emerging technologies to stay competitive.
Impact

obsolete

Stay attuned to market trends, gather customer

2 4 Rapid shifts in consumer
feedback regularly, and maintain flexibility in the
3 preferences may render certain
experiences outdated.
design to allow for updates and changes.

Prioritize sustainable practices in the design and

1 Negative environmental impact due
4 to technology usage or resource-
intensive designs.
operation of experiential elements, use eco-
friendly materials, and communicate the
company's commitment to sustainability

0 1 2 3 4 5
Likelihoo
d

50
INTRODUCTION ANALYSIS ISSUES RECOMMENDATIONS CONCLUSION
EXECUTIVE SUMMARY
Toys "R" Us Canada, established in 1984, thrived as the second-largest toy chain in Canada, differentiating itself from its American
counterpart by adapting to digital pressures and maintaining a strong market presence with CA$1 billion in revenue. Despite
Situation challenges, including the necessity to navigate the fallout from the US branch's bankruptcy, Toys "R" Us Canada capitalized on its
position to rebrand and innovate, aiming to stay relevant by enhancing digital operations and offering experiential in-store designs

Online Competition Changing Consumer Preferences Digital Innovation

Toys "R" Us Canada faced significant challenges from
Complication ecommerce giants like Amazon and eBay, which
disrupted the toy market by offering lower prices
and convenient shopping experiences. Toys “R” Us
struggle to compete on price and convenience.
Preferences have shifted towards retailers that
offer engaging and interactive shopping
experiences, both online and in physical stores.
Toys “R” Us traditional focus on large physical
retail spaces made it difficult to meet these
evolving expectations
Toys “R” Us lag in digital innovation, with attempts
to establish an online presence and mobile
applications falling short of creating a competitive
edge. The company's partnership with Amazon and
subsequent efforts to catch up were also
insufficient to capitalize on the growing trend

How can Toys 'R' Us Canada effectively integrate its in-store and online experiences to meet the evolving demands of the
Question digital marketplace, enhance customer engagement through experiential retail, and navigate the challenges of growing
online competition and changing consumer behaviour, thereby securing its market position and avoiding a similar fate
experienced by its North American parent company?

The Toys “R’ Us Special Edition (SE) Strategy

Answer
Strengthen
Overhaul the current website with a modern, responsive
design that reflects the company’s ethos and include AR
visualization to see products in a home setting.
Additionally, develop a user-friendly mobile application to
facilitate shopping, engagement, and gamification
Experience
Revitalize Toys “R” Us retail strategy by introducing
experiential in-store events designed to engage children
and their parents more deeply whilst creating memorable
shopping and foster a community-centric atmosphere

INTRODUCTION ANALYSIS ISSUES RECOMMENDATIONS CONCLUSION