Interesting article in The New York Times about Toys ‘R’ Us battling to reinvent itself as it struggles with management defections, a decline in same-store sales and relentless competition from Walmart and Amazon.
Two key observations in the article: being physically big has become a problematic business model for many retailers, and traditional video games are being hurt by more nimble game manufacturers focusing on smart phones and tablets.
These observations are summed up in a couple of paragraphs taken from the article.
“Toys ‘R’ Us is part of a group of big, lumbering retailers trying to reinvent their businesses for a new era. Sears is trying to turn around sales declines through customized offers to customers, in-store technology and an online push. Best Buy is adding small stores to balance its big-box ones. J. C. Penney is creating stores-within-a-store to give shoppers more variety.”
“A major challenge has been a sharp reversal in video game sales. Once an area of growth, thanks to Nintendo Wii and other consoles, they have fallen as children move to iPhone games and apps for iPads. Last year, about 8 percent of Toys ‘R’ Us’s business was in video game sales, down from 11 percent in 2009.”