SWOT Analysis of Toys “R” Us

A SWOT analysis of Toys “R” Us can be used to curve a clear, sustainable niche in the target market of this company. SWOT analysis can be defined as a useful technique that enables managers and policymakers to understand the strengths as well as weaknesses of an organization while identifying the available opportunities and threats that the organization is facing. Toys “R” Us can perform a SWOT analysis and use it to uncover opportunities that this organization is capable of exploiting. Additionally, this analysis can be used to identify and understand the weaknesses that the organization is facing as well as in managing and eliminating threats that may otherwise catch it unawares.

A clear SWOT analysis of Toys “R” Us

Toys “R” Us is a retail company that was founded in 1957 by Charles Lazarus in Rockville, Maryland, U.S. Currently, this firm is headquartered in Wayne, New Jersey. It has different outlets in Canada, Finland, Africa, Europe, Asia and Oceana.

Its SWOT analysis is as follows:

Strengths

• Toys “R” Us offers a wide array of baby amusement items and toys.
• Its chain comprises of 840 stores in the U.S only, with operations in 34 countries and 716 stores.
• The franchises chain and licenses of this company have also made it very popular.
• It is the second-largest retailer in the United States.
• Its toys brand is popular globally.
• It has a properly developed e-commerce website that facilitates online purchases by customers. It has numerous e-commerce sites including eToys.com and babyuniverse.com that are not only well managed but also attractive.
• It has created jobs for 70,000 people across the world.

Weaknesses

• Toys “R” Us lacks a competitive advantage because it is a sole source brand. Its only competitor is Wal-Mart which is offering attractive offers.
• It does not offer unique toys because you can find similar items in better packages with different brands.
• Its sales are season-dependents because the range of the products that it offers is not attractive during other seasons apart from Christmas. This is why its sales keep declining despite being the sole global toy chain store and having a strong brand.

Opportunities

• After Express locations gave this company positive response, it decided to open more with about 600 stores.
• The company has been able to excel after forming an alliance with Amazon, its competitor. This alliance encouraged the buying power of the company but it came with physical stacking risk.
• Through charitable giving, the company can enhance its popularity through several side by side campaigns.
• The company’s revenue can be enhanced by diversifying locations if introduced in countries like India and China which are the emerging economies.
• Affiliated chains like Kids “R” Us, Bike “R” Us, Scoops “R” Us and KB Toys are also presenting opportunities to the emerging markets and this company too.

Threats

• Strong competition particularly from Wal-Mart and other retailers.
• Low cost toys such as those from Chinese manufacturers are a threat to the manufacturers who spend on high costs’ raw materials.
• Many brands to choose from mean that the company must offer attractive packages to customers.
• By closing chains suddenly including its 87 stores, the firm indicated that the label was unreliable because it fired several employees.
• The company’s payment disputes over the last two years gave the brand a negative image because the media highlighted it.

What makes SWOT analysis of Toys “R” Us important

Toys “R” Us can use a SWOT analysis in two ways. The management can use it as an icebreaker that helps the management to start the process of formulating strategies or as a strategy tool. Using this analysis, the management of Toys “R” Us company can understand the competitors of this company better and gain vital insights that will enable them to formulate strategies that will enhance its competitiveness.

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Sources

https://www.mindtools.com/pages/article/newTMC_05.htm

http://www.toysrusinc.com/about-us/

http://www.toysrus.com/shop/index.jsp?categoryId=2255956

http://www.euromonitor.com/toys-r-us-inc-in-retailing/report