Today’s post is written by Ivy Ray, Account Manager at SafeSourcing Inc.
Toys R Us is closing their doors following a disastrous Christmas season. Amazon, Walmart and Target all ratcheted up toy discounts during the holidays. Toys R Us typically does well against the competition between Thanksgiving and Christmas, because of significant inventory offerings and a strategy of selling late at high margins after competitors sell out of ‘hot’ inventory and attracting last-minute shoppers who fear that online deliveries will not be made in time. This year, however, was different. As a result of a general decline in toy sales, competitors had full product offerings through the end of the holiday season and same-day and two-day delivery guarantees eased customer fears regarding online shopping.
Toys R Us was once king of the toy castle. In the 1990s, it was the biggest toy seller in the US, expanding rapidly as it pushed out smaller chains. But by 1998, things had changed, and Walmart began selling more toys than Toys R Us in the US.
A winner of the Nobel Prize in Economics, Paul Krugman wrote in 1998, “The growth of the Internet will slow drastically, as the flaw in ‘Metcalfe’s law’…the Internet’s impact on the economy has been no greater than the fax machine’s.” This seems silly now. The Internet has had a major impact on our economy, and the shift has had an effect on everything in the marketplace, from home goods, to auto purchases, and to entertainment.
Most brick and mortar stores have had to recreate themselves to stay in business with the internet competition. Even print media is fighting to stay alive in our internet culture. Change is good, if you’re on the right side of it, or if you know when to get ahead of it.
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