Helpful Employees at Toys R Us (and similar oxymorons)
By Rick Moss
If anyone has an understanding of what has made Target successful, it’s probably Gerald Storch, who joined the retail company in 1993 as senior vice president of strategic planning. His 12-year tenure there was regarded highly enough that many saw him as the likely next CEO, but his path led, instead, to the helm of Toys R Us beginning in February of this year.
TRU, having been acquired from shareholders in July 2005 by a private investor group, was looking for fresh leadership, specifically someone who understood the challenges of competing with Wal-Mart, the only retailer selling more toys than nation’s largest discount toy chain.
However, according to an Associated Press article, which includes his first interview since taking over, it’s not so much a “Target-ed” approach that Mr. Storch will pursue. Rather, as his new plans for change are revealed, it appears that working on fundamentals, such as improved store cleanliness, a better edited product mix, and enhanced customer service, will be the focus. (Yes…you read that correctly. We said customer service.)
“When a customer comes in our store, our people can tell them what’s a great toy for a 10-year-old boy for their birthday, because all we do is toys. When you go to a large, multiproduct discount chain, you’ll be lucky to find someone who can point you to the toy department, or will even take you there, much less answer specific questions,” said Storch.
If nothing else, Storch seems to be running straight at what have historically been TRU’s biggest problems in the eyes of customers. For example, by trimming lowest-selling items, in what may amount to a 20 percent reduction in overall inventory, and eliminating displays from the selling floor, Storch hopes to make product selection much easier.
“It actually looks like there’s more in the store when we unclutter it, even though there’s a little less,” Storch said. “You can see the dominance. When it’s so cluttered, you can’t even see two feet in front of you.”
Moderator’s Comment: Is Gerald Storch focusing on the right things in order to turn around Toy R Us? Can the chain successfully make the transformation
from its discount roots to become a customer-driven specialty retailer?
The third item on Mr. Storch’s agenda for remaking TRU is a concentration on catering to younger children. And (perhaps because he’s also the company’s
largest personal investor), he says he’s taking a personal interest in keeping up with trends by reading People magazine and other mass media pubs so he knows the “hot
stars” and “hot TV shows” that influence consumer attitudes.
But, overall, perhaps the biggest transformation that Storch could bring to the company is a mindset of a consumer-focused, specialty retailer. Toys R Us
has enjoyed the top spot among toy retailers for 27 years, but at no point did its “pile it high; move it out” approach endear it with consumers.
As a young parent, I remember the dread of making the periodic trip there to stock up on diapers. As a loss leader item, the merchandisers would position
the product at the far end of a labyrinthine floorplan, subjecting you to a virtual trial by fire of screaming kids, tumbling merchandise and parents one provocation away from
physical violence.
If Mr. Storch can transform the in-store experience so that parents WANT to go there, he’ll have taken one giant step in the direction of a brighter future
for the company. – Rick Moss – Moderator
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13 Comments on "Helpful Employees at Toys R Us (and similar oxymorons)"
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Yes, the stores are cleaner and less cluttered and easier to shop — HOWEVER, they also have a lot less product and the only reason I would I would go out of the way to shop there was because they carried a deeper selection. The current selection is no better than Target’s, so why bother?
The operative phrase is “WANT to go there.” Over the last 10 years, the overwhelming thing I hear about TRU is, “I hate to shop in those stores.” Mr. Storch appears to be the first executive at Toys R Us who “gets it.” I think he is right on the money.
One more area of focus that Mr. Storch might add to his list is buyer training and vendor relations. Would TRU be surprised to learn how many vendors inflate their prices in anticipation of erroneous and punitive back-end charges, inconsistent vendor support, private label cram-downs, surprise packaging changes, and overall adversarial tactics (all of which of course effect profitability and diminish competitiveness)?
Why does everyone want to go head to head with Wal-Mart? Mr. Storch is right on. Don’t compete on price, compete on the experience. Target and Best Buy have done a good job of doing just that. Both introduced private label products aimed at THEIR target customers, providing value (which is not necessarily low price) and selections that bested Wal-Mart. Why couldn’t TRU do that too? It is not too late to save TRU and there are two leaders from Target and BBY that I think can do it. (see June 29, 2006 press release from TRU, Ron Boire, former EVP, Merchandising, BBY joins TRU as President).
At one time, Toys R Us was THE retailer to know. I knew them as both a consumer with small children and as a vendor selling computer software. If Toys R Us didn’t carry a manufacturer’s product, that product died. Toys R Us out-maneuvered, out-merchandised and out-sold all their competition. It was a fun place to bring the children and brought back childhood memories for the parents. It WAS a good shopping experience. Employees were helpful. Product was easy to find. In short, Toys R Us WAS an excellent retailer. Then something funny happened. They stopped offering service; it appeared as if they stopped listening or caring about the customer. If Mr. Storch is going to transform Toys R Us, then after cleaning up the clutter, he must start to listen to the customer and improve the customer experience. Then and only then will Toys R Us regain the luster it once had.
Yes, operating the stores better will help. Better assortment planning will help. But the big profit increase would come from gross margin increases propelled by exclusives, private label or not. Toys R Us hasn’t just got the Wal-Mart problem, it has the electronics problem. As more and more playtime is computer-driven, retail markup percentages get reduced.
I think Mr. Zahn may be expecting a bit too much from the employees at the retailers he visited. Good customer service costs money. You need smart, motivated employees and, unfortunately, they are not on sale at a low price like the products being sold in those stores. TRU is no different. If they want good customer service, they will not find it hiring $10 per hour types (or $15 per hour union stores).
I did visit Home Depot this past weekend. They have done something to turn up the customer service a notch; almost to the point of it being annoying. It was similar to the Publix approach but with the tactfulness/desperation of a used car dealership.
Focusing on operations–the experience in-store–should be first and foremost. Inventory reduction, fewer SKUs, a focus on electronics, new signage, new lighting, etc. Heck, start with making sure the “R” in Toys “R” Us is lit up. Get rid of Geoffrey.
It all adds up to a return to fundamentals of making the shopping experience better. The stores are looking more and more like old Kmarts–the ones that have been shuttered….
To be noted, all new CEO’s need to create a culture that will distinguish it from the past run down business/corpporation.
No difference here.
Add to this the need to create a consumer marketing effort, such as is done at Target, and you should be able to resurrect the business. Parents must be enticed to shop at the new Toys R Us, and Babies R Us, too. The latter maybe the sleeper.
It’s the magic of Walt Disney that is needed!
Hard work, but done before. Hmmmmmmmmmmm