Toys “r” Us Files Bankruptcy: Market Analysis

Toys “R” Us, Inc. Files Bankruptcy:

Toy Retail Industry Market Analysis

ECO 607 Managerial Economics

March 16, 2018

Toys “R” Us Files Bankruptcy: Market Analysis

        Specialized brick-and-mortar businesses have experienced major downfall in the advancement of e-commerce and technology which enabled customers to conveniently shop without leaving their homes or offices with fast and free shipping or pick-up options.  The toy industry has a $27 billion U.S. market size and has a reported 1% increase in 2016-2017 annual sales (The Toy Association, 2018).  Toys “R” Us, Inc has been in oligopoly market with 4663 HHI points as U.S. Department of Justice describes to be highly concentrated marketplace (1)(2).  It has been competing with Walmart, Inc., Amazon.com, Inc., and Target Corp.  All with immense revenue differences when compared to Toy’s “R” Us reflected in their respective October 2017 income statements (3).  The specialized retail industry is vastly challenged because retailers must know how to satisfy the new trend of customer’s desire for convenience, wide product variety, quick customer service, and fast-free delivery or same day pick-up options in which the retail industry giants continually improve.  Whether buying online or in-store, pricing competition of toys continues to be an important factor in attracting customers, especially on holidays.  However, brand loyalty, in this case, the store’s name in relation to customer buying experience and satisfaction, can become the key in customer’s preference to purchase toys in a long run especially with the availability of customer reviews and recommendations.  Availability to purchase toys from a well-known retailer both online and in-store such as Walmart and Target, which offers everything can entice customers to buy not just toys and makes Toy’s “R” Us a lesser choice to buy toys.

Reference

Keat, G. K., Young, Phillip K. Y., & Erfle, S. E. (2013). Managerial Economics: Economics Tools for Today’s Decision Makers 7th Edition. New Jersey: Pearson Education, Inc.

The Toy Association, Inc. (n.d.) Annual U.S. Sales Data. Retrieved from the Toy Association website: http://www.toyassociation.org/ta/research/data/u-s-sales-data/toys/research-and-data/data/us-sales-data.aspx