For Toys R Us, the future lies not in high-tech product offerings or flashy new omnichannel efforts, but in going back to basics. Research, collaboration and improving the in-store experience are among the retailer's highest priorities following a disappointing year.
Toys R Us lost approximately $1 billion for the year ended Feb. 1, its first loss since 2008. Comparable store sales declined 5 percent in the U.S. and 3.3 percent internationally.
To get back on track, the retailer is focusing on making stores easier to shop, adjusting inventory levels to improve in-stocks, improve the online shopping experience and better leverage its loyalty program, said CEO Antonio Urcelay, during a media event in New York. It was Urcelay's first such event since the 17-year Toys R Us veteran stepped into the top post in late 2013, following the retirement of Gerald Storch in February.
The retailer has been meeting with suppliers and listening to shoppers to come up with what Urcelay calls the "Tru Transformation." Stores will be remodeled, speed of checkout addressed, in-store services improved and the pricing policy simplified.
Toys R Us also plans to unveil a new prototype later this year.
But the retailer is suffering from a number of wounds, some self-inflicted and some the result of outside influences.
Toy industry sales are flat overall and much has shifted to online retailers such as Amazon, while Walmart continues to dominate the category in the omnichannel space. The lackluster video game category has also hurt the retailer.
Additionally, the birthrate, which has been in decline since 2008 as millennials wait until later to have children for a variety of economic reasons, and shift from traditional toys to consumer electronics haven't done Toys R Us any favors.
Can Toys R Us survive? According to Urcelay, the process will be slow. "We are conservative on our assumption," he told MarketWatch. "We don't want to over-promise. We are trying to do few things and be realistic. We aren't planning for tremendous results."
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