Toys R Us – what happened?

In the last month, we heard the news of Toys R Us facing financial crisis and claiming bankruptcy and loyal fans took to Twitter to voice their trials and tribulations.

The real question is how did this happen? Did children lose interest? Could the brand not keep up with the competition of today’s gadgets?

The truth is Toys R Us sold very traditional products that don’t correlate to what their current audience is interested in – children and parents are now investing their money and interest into games online, gadgets and technology – Toys R Us thought they could continue with their brand credibility and longevity, but they didn’t change the products to meet the needs of the new generation of techy-kids.

According to Forbes, Toys R Us has tried many strategies to help grow its business, including buying out competitors (such as FAO Schwarz and KB Toys), expanding internationally, and lowering prices. However, Toys R Us are very similar to many other organisation’s who couldn’t keep up with the new wave of digital disruption brands – we call this Digital Darwinism.

Digital Darwinism is when technology and society evolve faster than an organisation can adapt. Digital Darwinism is a fate that threatens most organizations in almost every industry. Because of this, businesses have to compete not only for today but also for the unforeseeable future.

From the original 1955 Fortune 500 list, only 71 companies have remained today.

Here are 3 companies that once ruled the roost, but failed to adapt to the demands of rapidly advancing technology

The film and video game rental company closed down in 2013 as Netflix proved to be a very disruptive innovation. Blockbuster failed to innovate and would have to change its business model and damage its profitability in order to compete with the startup.

The most obvious cause for the change in fortunes for HMV is the rise of the internet, which has brought both the competition for physical sales from sites such as Apple Music, Spotify, Tidal, Amazon as well as mp3 downloads from places such as iTunes now making up more than 50% of the music sales each year in the UK.

Photo film company Kodak filed for bankruptcy in 2012 due to the advanced quality of smartphone cameras and photo editing apps like Instagram. In the mid-2000s, the company made some belated efforts to keep up with advancing technology – they stopped sales of traditional film cameras in 2004 (as well as cutting around a fifth of its workforce), and had already designed some of the first digital cameras. But by the beginning of this decade, the rising ubiquity of smartphones and Instagram proved too much for the firm to keep up with. By 2012, it was bankrupt.

The reason Toys R Us and other brands have failed to stay relevant in the digital age is because they couldn’t keep up with the pace of where technology is going. Innovation is key and following where your customers are going will keep you significant.

“Technological capabilities may be rising exponentially, but so are the demands presented by the so-called digital revolution.”


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