- Real Estate
- Food & Drink
By Jodi Schwan
I was standing at the entryway of a Toys R Us store the first and only time I’ve ever been stung by a bee.
It was in the 1980s, and I was gazing up at an elaborate Teddy Ruxpin display when the stinger struck.
That’s about the only negative experience I can recall growing up with the nationwide toy chain, which this week filed for voluntary Chapter 11 bankruptcy. The hope is to restructure its debt and keep stores open.
You might say Toys R Us got stung in recent years in a lot of ways. Big-box competitors Walmart and Target stepped up their toy presence and undercut prices. Within Toys R Us, there were issues keeping shelves stocked. The in-store experience suffered.
Then along came Amazon, further broadening the price gap and adding the convenience of two-day delivery. Toys R Us had a 10-year agreement with Amazon in 2000 to be the exclusive toy provider on the site, but it led to a lawsuit and termination four years later when other toy vendors were allowed to sell on the site.
Analysts have pointed to Toys R Us’ subpar website as part of its issue with online competitiveness along with how much it has spent on stores considered too large for how people want to shop today.
None of this comes as a surprise to Shelly Gaddis, the owner of Elegant Mommy. She knows what it’s like to lose customers to mega-retailers, but she wanted to learn more about why.
So earlier this week, she posted a question on Facebook: “If you are one that would skip a specialty store in your area in favor of big box, tell me why?”
The response was fast and fascinating.
As the comments piled up, I almost wondered if those writing them had actually read the question. Because they weren’t talking about their decision to shop at Walmart or Target or Toys R Us. Almost all were talking about why they shop on Amazon.
“I tend to buy most stuff on Amazon,” one wrote. “I have very little tolerance and bandwidth for shopping in stores these days.”
Others echoed the thought. They like the convenience of dog food showing up at their door. They find – or at least perceive – that the cost is less. They don’t have to worry about watching kids while they shop.
“Let’s be honest about our cold climate,” one woman wrote. “Sometimes, kids are sick forever, or I just don’t have it in me to take them shopping — and they’re always with me — and that two-day Prime shopping is sooo convenient.”
The Amazon effect has become so profound, Gaddis told me, that she believes when people say they are buying something online, they just mean they’re buying from Amazon.
“Everybody has this mindset that Amazon is super quick and the price leader, but the reality is they have inched prices up and make people pay for two-day shipping,” she said.
She has stepped up her e-commerce operation, and generally “when we get an order in, most of the time it’s out within the hour. We walk it to Hy-Vee, and it’s out the same day.”
The challenge, though, is getting customers to know that. We talked about making the most of opportunities when the customer is in the store to sell the online experience. For instance, when you buy a pet at a store, the store can use that opportunity to talk about the convenience of ordering food online.
“Everybody talks about convenience, and in our world, it’s especially relevant because it’s new parents,” Gaddis said. “If you look at the big-box stores that aren’t still around, you look at Kmart and Sears and JCPenney and Toys R Us, there are tons that haven’t adapted well to who their new customer is, what they’re looking for or how to ship those products. And nobody liked walking in. It wasn’t welcoming or friendly.”
Elegant Mommy and other local stores like it have done a credible job creating community around the experience of doing business with them. That’s both in-person and online through social media.
Gaddis also strives to educate her employees about her products and to build customer relationships so that staff know people and kids by name and age.
“We’ve worked really hard to build that community of trust. We’re not going to tell you things we don’t believe in, and we’re not that there to sell you a product. We’re there to be your tribe.”
Some other responses to her initial question touched on an additional facet of the changing economy that needs to be acknowledged.
“I know it’s better to shop local, but I don’t always have the luxury of making that choice,” one woman said, noting that even saving a few dollars makes a difference. “We live paycheck to paycheck. Shopping local is a rare treat for us.”
This is the story I believe a lot of people could tell. Our widening income gap has been good for upscale retail, good for dollar stores and discounted chains and really tough for anyone in between. I would suggest Toys R Us falls in the middle, which couldn’t have helped.
Gaddis, though, told me she thinks most of her customers would be considered middle class. Many are willing to pay $100 more for a car seat from her than they could spend online, she said, because of the service and experience.
“I install it on the spot. Anytime you switch vehicles, I’ll be there. That’s why people shop local with us and aren’t buying it on Amazon for $350,” she said. “If they’re on a super strict budget and don’t value that I’m a car seat tech, that’s OK. That’s not my customer. I market to my customer, and they do value service.”
And I think that’s probably the key takeaway for retailers. The industry has become so nuanced and niched that it’s impossible to be all things to all people – not that most should have ever tried, anyway. Knowing who your customer is, how your product or service needs to fit their life, and then delivering on that relationship over and over once it’s created might be the only way to survive.
The good news, though, is that while it’s difficult it’s certainly not impossible. Gaddis has seen some of her retailer peers bemoan the rise of Amazon to the point they decide it’s not worth it to stay in business. She strongly disagrees.
“It’s easy to get caught up in the negative instead of looking at the situation and saying, ‘How can I serve my customer better?’ I don’t expect to get every dollar from everyone, but keep those local stores in your mind. It’s tough to make it. You’re in it because that’s where your heart is.”
Toys R Us is the latest retail chain to declare bankruptcy. But ask moms why they shop the way they do, and it becomes clear how much the consumer has changed.