November 8th 2006
Toys “R” Us standard business model is one in which the company strives for value, quality and selection on a global level to meet the demand for children’s toys. Toy’s “R” Us is one of the most recognized brands amongst several world markets. The toy company sells its products to retail customers in self-service, supermarket like stores. Toys “R” Us has several comparative advantages. One, Toys “R” Us uses its retail chains to buy directly from the manufacturer, essentially eliminating any need for a wholesaler or “middleman.” By cutting out the middleman Toy’s “R” Us can acquire products at a much lower price compared to purchasing from the wholesaler. Two, Toy’s “R” Us has an advantage in economies of scale due to its sheer size. In 1991, the company operated 451 U.S. retail locations and 97 locations abroad. The company has an insatiable need for merchandise with close to 600 stores and an average of 8,000 to 15,000 stock keeping units per store. The company uses their size as leverage to demand low prices from the manufacturers. The uniqueness and success of the company can partially be attributed to the standardization of the business. Every store is similar in shape, design, size and layout. Customer’s can expect certain qualities or features to be present at every store. Advertisements and presentation including uniform colors are used at all stores. Store sizes are averaged at 54,000 square feet and the design, down to each aisle, are alike . The company is also successful because of their central control systems involving extensive computer networks. These networks connect point of sale terminal transactions with inventory levels and inventory ordering. This process ensures that the right amount of inventory is in stock at the right time.
Toys “R” Us should adapt to Japan’s market for several reasons. First, there are obvious differences in the way people shop in...