Where Does Santa Buy Gifts From?
You better
not shout, you better not cry, you better not pout, I'm telling you why! Santa
Claus is coming to town. And when
Santa comes, he brings gifts along!
Have you
ever wondered where these gifts are from? The car model gift you received on
Christmas when you were 6 or the cute Winnie the Pooh stuffed toy when you were
9! It all came from Toys R Us. Read on further to find more about the same as
we crack down the company's business model all for you under this new section!
BY SIRJAN KAUR KOHLI | 7 Mins Read
Toys R Us is a leading international toy, clothing and kids
product brand owned by Tru Kids, Inc.
The company was founded in New Jersey in 1948 by Charles Lazarus. The
brand now has a huge network of chains across the globe and is considered as
one of the top options for baby playing products.
The
Beginning
Charles Lazarus, a former army man, started as a baby
furniture retailer with his brand Children's Supermart, in Washington D.C. in the
post war period of 1948. Subsequently upon seeing the demand, the business
diversified into toys for babies followed by varieties for older children. The
process of this expansion was very gradual and organic, based on the market
demands that prevailed during the time. In 1957, the first of the many Toys R
Us showroom was opened. This new line was exclusively for toys with little or
no emphasis on the original furniture products.
The logo
The Toys R Us logo is extremely catchy and attractive
especially to kids. It's been designed in a manner that makes it seem like a
kid has written it, hence making it appeal to the target customers.
Divisions
In 1983, the company opened another division under the name
Kids R Us, however it ceased to exist in 2004 as a need to focus more on the
primary division was arising.
Another division called, Babies R Us was formed in 1996 that
held merchandise and products exclusively for younger children, hence making a
specialized store for toddlers. With this, the brand was divided into stores on
the basis of the products they kept catering to different age groups of
children.
Ownership
Toys R Us taken over by Interstate Department Stores in
1966, the owner of several other retail
chains, including Children’s Bargain Town USA, a sister company to Toys R Us in
the American Midwest. The Company ruled the US toy retail market for quite some
time, however, it has lost much of its market share in recent years to
extensive competition in the market.
Despite all of that, Toys R Us remains a leading toy
retailer, with operations across North America, Asia Pacific, Europe, the
Middle East and Africa. Formerly a publicly-owned company, it returned to
private hands in 2005 after a leveraged buyout by KKR and Company LP, Bain
Capital, and Vornado Realty Trust.
Value
offered to customers
1. The company has thrived on quality and made its way up as
one of the largest toy retailers in the world.
2. The company offers a diverse range of products catering
to different age groups with specialization in the products.
3. The company holds a large consumer base and has its
presence spread well across the world.
4. The brand has made a distinctive identity with popping up
as one of the first options in the toy retail market.
Distribution
The brand has a very efficient and effective distribution
network. They have suppliers as a
part of their network that resell the products to different chain objects. The retail partners act as managers at the
ground level operations and deal with customers directly. Community partners take care of the social requirements and duties
of the brand and look after the same. Alliance
Partners that help in the marketing and branding projects of the company.
Therefore, the brand has an extensive network in different aspects leading to a
better functioning of the brand.
Cost
The cost requirements of the company are in respect of
products, merchandise, customer relations, advertising and other
responsibilities that could be social or corporate. In 2015 Toys R Us recorded
total cost of sales in the amount of 7.58 billion, and selling, general, and
administrative costs – including advertising costs, professional fees, and occupancy
expense – in the amount of $3,59 billion.
Revenue
The sources of revenue are primarily the receivables from
their retail business. Due to increase in demand for toys across all age
groups, the revenue earned by Toys R Us was humongous. So much so that it was
listed at the 22nd position on the Forbes America's Largest Private Companies
in 2017.
According to
a report by CNBC, "The season for making money is even tighter for, Toys R
Us, which gets 42 percent of its revenue from its holiday quarter due to
increased sales on Thanksgiving and Christmas."
The company's sales and revenue grow substantially during
this period because of the tradition of giving gifts to children during the
time.
Featured
Brands
The company features numerous brands in its wide range of
offerings. These include Nintendo, Lego, Nerf, Top Model and many more.
The slowdown
In the summer of 2018, the brand closed almost all 800 of
its stores. This came after the company was drowning in debt and filed for
bankruptcy in 2017.
As part of the liquidation of assets, it had plans to
auction off its intellectual property, including the company’s name, website,
and its brand mascot, Geoffrey the Giraffe. The investors saddled Toys R Us
with massive and increasing amounts of debt. This affected the brand's ability
to make a digital switch and catch up with the competition offered by Amazon
and others. The brand was strangled with the burden to pay off debt and
interest leading to its downfall.
However later on the
company retained its name and branding instead of selling it off, reigniting
hopes of a revamp of the iconic company.
The Comeback
After closing all its U.S. stores, Toys “R” Us is returning
with a “playground environment,” a tech-driven partner and a consignment-like
business model. The brand is revamping to stand up again after the fall down
from the bankruptcy episode. New stores will be opened as joint ventures with
B8ta creating a playful in store experience. The new stores will focus more on Interaction
with events and activities.
Toys will be displayed out of the box to allow for testing
before purchase and the showroom will feature an open play area. They also will
have the opportunity to design custom experiences and branded shops. With B8ta's
experiential retail and its expertise in tech platform, which enables brands to
actively manage their in-store experiences and measure how offline experiences
translate into online sales. With this new comeback, Toys R Us will try to get
back as the leading retail store in the market once again.
The new stores will hopefully open in time for Christmas and
this year, Santa shall be able to buy
gifts from them again after a halt last year. So, make your wishes and get your
list ready, because Santa is ready to shop from Toys R Us for your Christmas
presents this year.
For further understanding of the bankruptcy, these articles
can be followed.