Strengths and Weaknesses of Toys ’R’ Us

Since its establishment in 1948, Toys “R” Us has been the leading global retailer of baby products. The company’s strong brand name has enabled it to maintain a competitive edge over other companies. In September 2017, Toys ”R” Us filed for bankruptcy protection (Corkery, 2017). Hitherto, it has been struggling to survive against fierce competition in the market. A financial plight has exacerbated the company’s tale of woe. For many years, Toys ”R” Us has been heavily in debt (Lachapelle, 2018). This study analyses the Strengths, Weaknesses, Opportunities, and Threats of the company.

Table 1:

SWOT Analysis

Strengths

Weaknesses

A strong, recognizable brand

Efficient distribution channels

A good reputation

A diverse range of products

Expansion of online sales

Adequate sources of working capital

Seasonality of sales – heavy dependency on Christmas sales

Fluctuations of consumer preferences and tastes – consumption patterns change with trends and seasons

Lack of differentiated and unique products

Overdependence on one brand

Opportunities

Threats

Ability to form strategic alliances

Penetration into foreign markets

Geographical diversification – the company has outlet stores in many foreign markets. It has an estimated 716 stores in 34 countries.

Links with affiliates such as Babies ”R” Us, KB Toys, and Kids ”R” Us.

Better economic conditions

Digital strategy – going online has the potential to enhance the consumer experience

Fierce competition in the retail industry – other competitors include Wal-Mart and Amazon.com

A decline in the rate of births – this has resulted in a decline in the demand for toys

Technology – it has offered many alternatives to traditional toys

Financial plight – the company is heavily in debt, which has plunged it into a protracted period of pay disputes.

References

Corkery, M. (2017). Toys ‘R’ Us Files for Bankruptcy, Crippled by Competition and Debt. The New York Times. Retrieved on September 11, 2018, from https://www.nytimes.com/2017/09/19/business/dealbook/toys-r-us-bankruptcy.html

Lachapelle, T. (2018). Lessons Learned From the Downfall of Toys ’R’ Us. Bloomberg.

Retrieved on September 11, 2018, from https://www.bloomberg.com/news/articles/2018-03-09/toys-r-us-downfall-is-ominous-reminder-about-debt-laden-deals