World: Stuart Elliott in America
By Stuart Elliott, the advertising columnist at The New York Times, campaignlive.co.uk, Friday, 27 August 2004 12:00AM
Toys "R" Us without any toys? It just doesn't play.
But such an incongruous corporate divestiture seems inevitable after Toys "R" Us Inc recently shocked Wall Street, Main Street and Madison Avenue with the startling news that it's thinking of jettisoning its struggling retail toy operations, consisting of 1,260 stores domestically and abroad.
The decision, which made front pages across America, is a grim reminder that despite all the celebration of the power of branding, retailing is a funny animal - not funny like Geoffrey the Giraffe, the goofy Toys "R" Us mascot, but funny like confoundingly hard to predict.
Indeed, Toys "R" Us has been the beneficiary of some of the best that the advertising industry has to offer. In addition to the popular Geoffrey character, Toys "R" Us has had a catchy commercial jingle, "I Don't Want to Grow Up", which generations of shoppers can sing by heart, and campaigns from blue-chip agencies such as Leo Burnett, the Kaplan Thaler Group, J. Walter Thompson and Wells Rich Greene.
But all the ad business' best and brightest could not figure out a way to counteract the deleterious effects of years of below-par financial results, as Toys "R" Us stores battled competitors that are discount retailers first and toy merchants second.
Once the biggest purveyor of dolls, games and other playthings, Toys "R" Us fell behind the behemoth Wal-Mart Stores, which thanks to its growing clout in categories such as apparel and FMCGs can pile it higher and sell it cheaper than just about any other retailer. Toys "R" Us now even trails Target, a Wal-Mart wannabe that styles itself as the source for cheap chic.
"It's the ultimate corporate capitulation," Burt Flickinger III, a respected retail consultant, declared in The New York Times of the statement from Toys "R" Us that it might get out of the toy business in order to focus on a healthier division called Babies "R" Us. The corporate triage is the latest in a spate of cutbacks, coming after Toys "R" Us made plans to shut two other chains, Kids "R" Us, which sells clothing, and Imaginarium, a speciality toy retailer.
Some see the setback as payback, a kind of boomerang karma after Toys "R" Us down through the decades had squeezed a slew of smaller retail toy chains such as Kiddie City, K-B Toys and FAO Schwarz. Wal-Mart's only doing to Toys "R" Us what Toys "R" Us did to its rivals, the thinking goes.
That theory does nothing for the estimated 65,000 employees of Toys "R" Us, who face an uncertain future. It's also not worth very much to Young & Rubicam Brands, which was hired in May by Toys "R" Us to take over its account from Burnett. The selection of the Y&R agencies - including Brand Buzz, Cohn & Wolfe, Wunderman and Y&R Advertising - made Toys "R" Us the first major client for Y&R since Ann Fudge arrived as the chief executive in spring 2003.
Already, Toys "R" Us is relinquishing $30 million in airtime bought on its behalf ahead of the fall 2003-04 TV season, Advertising Age reports, and Warren Kornblum, the chief marketing officer, has left the company.
Sad to say, it's only a matter of time before the writing is on the wall for Toys "R" Us - and it won't be written with Crayolas.
This article was first published on campaignlive.co.uk
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