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Sunday Soundbite

Toys R Us discovers the downside of being a category leader

Chris Field
Chris Field

Mirror, mirror on the wall, who is the fairest of them all? Toys R Us has now discovered that it wasn’t, as they had believed for many years, them. I don’t want to add to the many yards of smug editorial from people who claim to have known all along what was wrong with Toys R Us. After all, anyone can be a critic. Remember how Woolworths UK had to put up with the slings and arrows of outrageous opinion from professional and amateur alike? Being a hater after the event is not very helpful unless you are offering valuable lessons to others who may be in the same boat.

Category leaders are in a vulnerable position

My view is that you should beware if you are the only player in your niche. It seems to work for Google, Facebook and Amazon, but in general retail, it doesn’t, because it can lull you into a very false sense of security.

First of all, if you are the category leader and have no followers, then you are in a vulnerable position because you see only your reflection in the water, rather than your competitors.

Here’s seven things category leader retailers tend to do:

They change too slowly because there is no compulsion to get on with it.

They make supplier brands the star rather than making their’s pre-eminent.

They stop learning because they think they wrote the rule book. In the case of Toys R Us, Lego knows that it has two customers – kids and their parents, so you have to make stores work for both of them.

Don’t try and walk the line between fun and dull because you end up becoming invisible. Pick one and do it well.

Respond to the trends because you know that it is not you that is setting them. Specifically, toy buyers and toy buying has changed. Toys R Us missed that.

Price when price counts. Some toys are simply commodities so you want to be the guaranteed lowest price seller.

Get out of out of town. Who still wants to buy toys from a shed on an industrial estate?

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