Toys R Us Corporate

No more amazon:

On May 21, 2004, we, Toysrus.com, LLC, our Internet subsidiary, and two other affiliated companies, filed

a lawsuit against Amazon.com and its affiliated companies related to our strategic alliance with Amazon.com.

The lawsuit was filed to protect our exclusivity rights in the toy, game, and baby products categories for the

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online e-commerce site on the Amazon.com platform. The complaint seeks injunctive and declaratory relief,

monetary damages and contract rescission against Amazon.com. The suit was filed in the Superior Court of New

Jersey, Chancery Division, Passaic County. On June 25, 2004, Amazon.com filed a counterclaim against us and

our affiliated companies alleging breach of contract relating to inventory and selection requirements. This

counterclaim seeks monetary damages and invokes contract termination rights. We believe the counterclaim is

without merit, and at this time, we do not anticipate that this lawsuit, or the subject matter thereof, will disrupt

our ability to continue to offer products and services on our e-commerce sites, affect our guests and suppliers, or

have any material adverse effect on our financial condition or results of operations.

Generic Strategies

Differentiation: appeal to customers with a special sensitivity for a particular product attribute with the goal of building customer loyalty

- Requires: strong coordination among functions in r and d, product development and marketing

- subjective measurement and incentives

The generic strategy employed by Toys R Us is differentiation. Toys R Us has formed exclusive arrangements with popular toy manufacturers to assure their position as the sole provider of these products. Such well known toys include, Barbie, GI Joe, Lego's, Hot Wheels, Transformers, My Little Pony, and more. The exclusive availability of these wildly popular toys from our childhood at Toys R Us elicits a trust and familiarity in consumers. The Toys R Us brand reminds people of the joys of childhood and breeds customer loyalty through the notion that the best toys will only be available in the best toy store.

If one were to use the value disciplines to evaluate the strategy of our business, customer intimacy would accurately describe some of the tactics used to gain competitive advantage. Customer intimacy involves the combination of detailed customer knowledge with operational flexibility. The Babies R' Us baby registry allows mothers to create personalized accounts that describe their bundle of joy and allow others to view their account in order to see what baby products they already have and what they still need. This feature facilitates the process of gift giving and creates a fondness for the Babies R' Us brand name and in turn, Toys R' Us.

Grand Strategies

Market Development

Toys R' Us is actively engaged in market development in order to increase sales. Currently the most profitable divisions of the Toys R' Us enterprise are overseas. This year, the U.S. division of the company suffered from a 10.9% decrease in net sales, or $149 million, as compared to last year. These figures resulted from the closures of 10 domestic stores due to hurricanes and lack of profitability. Comparatively, this year the international