What Pet Stores Can Learn from the Demise of Toys R Us


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Pet specialty retailers received a critical lesson when Toys “R” Us went code blue earlier this week, and those who fail to learn from the spiraling health of the country’s premier toy store chain just might end up sharing a similar fate.

Fully understanding how Toys “R” Us reached the precipice of its own demise may not be as simple as it seems, though. While it would be easy to point to increasing competitive pressure from mass merchandisers and online outlets as the source, the fact is it still holds a significant share of the toy market and its prognosis could be much better had some key moves been handled differently. 

So, what ultimately did Toys “R” Us in?

First and foremost, many retail experts note that Toys “R” Us started down a dangerous path when three large investment firms used a leveraged buyout to take the company private in 2005. This strategy ended up saddling the chain with incredible debt, which in turn hampered its ability to invest in its operations at a time when such investment was critical for adapting to a changing marketplace.

The lesson here is obvious—even in the current borrowing environment, where relatively low interest rates might seem attractive to growth-minded retailers, tying your hands with debt could seriously reduce the nimbleness that has proven to be an important competitive advantage for pet specialty stores.

Although debt had a clear role in the declining health of Toys “R” Us, I think another big—and probably somewhat related—problem that the toy chain had was that it never did a very good job differentiating itself from its mass retail and ecommerce competitors. As successful brick-and-mortar pet retailers know, today’s shoppers need more compelling reasons to come into your store than just good prices and a broad selection of products. Strong merchandising, well-curated departments, valuable services and attention-grabbing events are all vital if you’re going to stay ahead of the competition. Toys “R” Us didn’t do any of these things particularly well, and its health suffered as a result.

That brings us to the theme of next month’s edition of Pet Business—which we’ve dubbed, “The Healthcare Issue.” With pets increasingly being considered an important part of families across the country, a retailer’s ability to help care for the well being of our furry loved ones has become an important draw for consumers. But, as you will read in the April issue, positioning your store as a key healthcare provider means hitting all of the elements mentioned above—you must be able to reliably offer pet owners a well-curated lineup of key health and wellness products and present them in a merchandising scheme that makes it easy to identify the items that address a pet’s specific needs. And it’s even better if you can complement these retail offerings with great wellness-oriented services and events. 

Get this prescription right and you just might find the prognosis for your business is a healthy, successful future.

 

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