Storch Revives Toys”R”Us
Lesson 22 - How to Succeed in an Economic Downturn
I remember when “Toys”R”us” was new. It had a bold vision, to bring into a single location any and all toys that your kids might want. And it turned out to be a great destination location model — for a while. Unfortunately, most of the toys were not big sellers, and Walmart started to beat Toys”R”Us in price on a regular basis. So Walmart was good enough for kids, and better for parents. Toys”R”Us looked like it was headed for the dust bin of retailing history.
But along came Gerald Storch as CEO and Storch has managed to turn Toys”R”Us around. How? First, he has found a way to stop competing with Walmart on price (a battle that Toys”R”Us could not win). Instead, he found and exploited niches where Walmart is at a competitive disadvantage. Like anticipating the next great “must have” toy for Christmas and buying it out. Like occupying all of the various toy niches (including the most expensive ones like at F.A.O Schwartz in Manhattan, where Walmart dares not venture).
This quote from Storch caught my eye
“Now our competitors are left competing purely by making price claims,” Mr. Storch said, adding that he would not reinforce “a rush to the cheap.” He pointed out that his competitors could not cut prices on toys they did not have. (emphasis added)
And this quote
While it would be easy to get into a very defensive hunker-down mode during these economic times,” he said, “history has shown that the future rewards companies which are aggressive during economic downturns. (emphasis added
Great job Gerald! Here is a link to the NYT profile of Storch at Toys”R”Us.