Week 4

Target market:

Toys For Different Ages

Toys R US carries a number of different products to suit the play needs of children.

Babies (0-12 months) :
Rattles, squeaky toys, ball, chimes and bells.

Toddlers (1-3 years) :
Pull along toys, soft toys, dolls, finger paints and large crayons.

Pre-school (3-5 years) :
Hand puppets, construction kits, train sets and puzzles.

5 years onwards :
As well as all the toys listed above, bat and ball games, pencil sets, colouring kits, craft and hobby kits and musical instruments.

ALL Ages: Will benefit from appropriate leaning and developmental toys but do remember they also need to just have fun! Action figures, play-sets, games and collectibles as well as radio controlled and out-door toys.

We have observed that the current trend is towards electronic toys and computer assisted learning with many of these highly developed to attract children.

Therefore, sales of traditional toys and games have been relatively static over the last ten years in real terms.

However, we feel that the popularity of toys will never fade as toys also follows film and TV trends with Licenses launching spin-off merchandise. With a growing cable and satellite television markets, we expect the popularity of toys to remain high and the target market to increase as demonstrated by the success of many top selling toys.

While very few children buy their own larger toys, we feel that today’s affluent pre-teens would be able to influence their parents to buy the toys they like, and if a product doesn’t deliver they simply won’t be interested.

We think that as children are becoming richer and more sophisticated they may grow out of toys – or at least see them as childish - more quickly than they did some years ago. To accommodate this phenomenon, toys should be reworked to track pre-teen fashions trends and adult interests especially sport and technology.

From our observations, we feel that the industry is much more consumer-orientated towards children even though parents were once viewed as the customers in the toy market.

However, with the significant rise in the number of working mothers, and a similar growth in the average age of women having their first child. These factors indicate that parents are, on the whole, more financially able to provide for their children and also see educational progress as very important. The elderly population is also expected to continue rising, and as many are in a higher socio-economic bracket, this could cause an increase in gift purchases for grandchildren.

Retail format:

* Kids "Я" Us - A store chain no longer operating independently, Kids "R" Us deals in children clothing. Kids "R" Us stores now are co-branded with some Toys "R" Us stores, located inside most Toys "R" Us locations. Kids "R" Us is also the brand name label of kids' clothing found at the Geoffrey Stores. One of the Kids "R" Us locations was found at the Mall of America in Bloomington, Minnesota.

* Babies "Я" Us - Superstores specializing in clothing, furniture, toys and other accessories for babies.

* Bikes "Я" Us - Bike store inside Toys "R" Us (UK only)

* Geoffrey's Toys "R" Us/Geoffrey - Retailtainment stores named for Toys "R" Us' mascot Geoffrey the Giraffe, offering toys, juvenile merchandise, and children apparel all in one location. Other features include a "Studio G" activity center. Mostly found in the American Midwest, but are also found in Texas, Mississippi, and North Carolina. The first store under the "Geoffrey" banner opened in Fond du Lac, Wisconsin, but eventually closed because of poor sales figures. Two other remaining Geoffrey's Toys "R" Us stores in Wisconsin still exist in nearby markets, such as the Northeast Wisconsin market. Other locations include Louisville, Kentucky, San Antonio and Austin, Texas. Each location had a playground at the front of the store. These stores are currently in the process of being reverted back to regular Toys "R" Us stores as of spring 2008, although the name still remains.

* Toys "R" Us Toy Box (introduced in 2003) - This version of Toys "R" Us is found in Albertsons, Giant, Jewel-Osco supermarkets, and stores in Hong Kong, Philippines and Singapore.

* Toys "R" Us KidsWorld - A toy superstore format introduced in 1996. Stores were built in Elizabeth, New Jersey(which was remodeled into a Toys "R" US/Babies "R" Us Superstore), and Fairfax, Virginia (which was remodeled in 2006 into a standard Toys "R" Us).

* Toys "R" Us/Kids "R" Us - co-branded stores found in markets not served by the Geoffrey Stores.

* Toys "R" Us Express - mini store version of Toys "R" Us, found inside Asian stores. (Hong Kong, Macau, Malaysia, Taiwan (Republic of China), and other)

* Imaginarium - An independent chain of kids toy stores with a focus on learning toys, located mostly in malls was bought by Toys "R" Us in 1999. Its mascots were Cosmo (a purple puppy) and Professor Fun. When most of the Toys "R" Us stores were remodeled, their layouts were redesigned to included an Imaginarium department.

* Studio Alice- Found inside Toys "R" Us in Japan.

KidsWorld megastore- at 95,000 square feet located off the New Jersey Turnpike.

The second Kids World store, an 85,000-sq.-ft. unit, opened on Nov. 23 in Fairfax, Va., and a third store is slated to open next year inn Nyack, N.Y., in a mall now under construction.

We think that this new store format is part of Toys "R" Us' revival efforts in the wake of mounting competition from discount department store operators, particularly Wal-Mart.

The new Kidsworld store is a one-stop-shopping emporium combining Toys "R" Us, Babies "R" Us and Kids "R" Us. The store is expected to produce $30 million in sales per unit, compared to $10 million to $12 million for a traditional 45,000-square feet Toy R US store. The floor space is divided this way: 44% TRU, 19% BRU, 17% Kids "R" Us, 10% leased space and 10% common areas such as aisles and restrooms.

The store features an impressive array of toys, apparel and juvenile products in a cavernous building with a ceiling that soars more than 30 ft. high. Music, at times playing too loudly, sets an upbeat mood for the well lit store. Sculptures of children enjoying activities such as climbing a castle and Geoffrey in an airplane set the stage for the fun-filled environment.

The feeling in the store is one of spaciousness and abundance. The merchandise is organized into 25 departments, such as girls' and boys' clothing, preschool toys, infant care, baby furniture, cars and trucks and a learning center. The color scheme in the store is in child-friendly primary colors. The ceiling is open and painted white; the racetrack is in yellow and blue tiles, and the carpeted areas in apparel and baby furniture are in blue. The store's merchandise aisles feature white tile with blue and green accents.

KidsWorld also features special service areas including Cartoon Cuts, a hair salon for children 12 and under; where kids can watch videos while getting their hair cut; Focus Pocus, a kid-oriented photography studio targeted to mothers with children 6 years old and under; Fuzziwig's Candy Factory, a self-serve, bulk candy store with sweets priced at $6.99 per pound; and Jeepers!Jr. a themed indoor family restaurant and entertainment area featuring Pizza Hut pizza and other menu items. The entertainment portion of Jeeper!Jr includes a soft play area, rides, costumed characters and birthday party opportunities, and Kids Foot Locker. There is also a carousel for children to ride.

Special features of the store include:

* An information center is located in the middle of the store with at least one bilingual associate on premises at all times.

* Eight information stations with phones, video screens and store directory to help direct customers are on hand.

* A computerized baby and gift registry that soon will be integrated throughout the Toys "R" Us organization.

* Four-color lifestyle photos dress the walls.

* Aisles are named and outfitted with appropriate lighted icons. In Babies, for example, the icon is a three dimensional baby bottle with a car seat. The action figure aisle is identified by two superheroes.

* In the Big Barbie area, some dolls run as high as $500. The area includes a 15-ft. Barbie collector section under glass. The area also features other dolls in try-me glass cases to highlight their features. In boys' toys, a spinning Hot Wheels endcap displays the full range of available cars.

* Decals of toys and licensed properties, such as Cabbage Patch, Hot Wheels and Sky Dancers, adorn the floor.

* A bike shop presentation features 15 major manufacturers and a see-through bike assembly area.

* Electronics is divided by system, making it easier on shoppers to find their way. Software is positioned adjacent to the accompanying hardware.

* The play set area features a soft foam floor so children can test the equipment without risk of injury from a fall.

* A Warner Bros. shop is featured at the front of the store.


Sustainable competitive advantage:

Definition of Sustainable Competitive Advantage (SCA)

If a company makes a profit in excess of its Cost of Capital, it is probably able to do so because it has achieved a Competitive Position that offers some kind of an 'edge' over its current or potential rivals. To achieve such a temporary competitive edge is hard to do, and typically takes the successful formulation and execution of a business strategy. The 3 factors that can provide such a Competitive Advantage were famously described by Porter:
- Cost Leadership
- Differentiation, and
- Focus.

But to develop a competitive advantage into a sustainable competitive advantage is even harder to do, because this means that the company must possess value creating things or capabilities that cannot be duplicated or imitated by other firms (Competitive Defend ability), nor can they be made redundant by developments in the environment (Environmental Consonance).

Toys"R"Us’s sustainable competitive advantages

Toys"R"Us is positioned as "the worldwide authority on kids, families and fun". It is the largest child-related product specialty chain store in the world. And Toys"R"Us believes in providing a happy shopping experience to customers with the biggest selection of toys and baby products priced to offer best value for money.

Therefore, Toys"R"Us’s sustainable competitive advantage can be defined as the prolonged benefit of formulating and implementing the unique value-creating strategy not simultaneously being implemented by any current or potential competitors along with the inability to duplicate or imitate the benefits of this strategy and the absence of threatening market developments.