Toys R Us - Marketing in Japan

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This presentation was prepared for Dr. Yigang Pan, International Marketing professor at the Schulich School of Business. Members include: Anooja Basole, Manav Dutt, Keith Loo, Venkata Rani, and Eric Wong

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Toys R Us - Marketing in Japan

  1. 1. AnoojaBasole, ManavDutt, Keith Loo, Venkata Rani, Eric Wong<br />International Marketing<br />
  2. 2. The Toys "R" Us story<br />Founded in 1948, renamed in 1957 to Toys "R" Us by Charles Lazarus<br />Interstate Stores acquired the company in 1966 for $7.5 million<br />Lazarus rescued the company in 1978 and converted it into a national store in 10 years<br />The company opened its first International store in Canada in 1984<br />The chain operated 97 stores abroad by 1991 and planned to enter the Japanese toy market valued at $7.1 billion<br />Toys "R" Us have more than 510 International Stores and 200 licensed stores in 33 countries<br />
  3. 3. The last 20 years<br />First ‘superstore’ opened on December 20th 1991 with an investment of $100 million<br />Japanese toy retailers continued to protest (delayed the Niigata site until May 1993 and store went from 54,000 to 38,000 sq. ft.)<br />1991, Nintendo agrees to supply to Toys “R” Us Japan, keeping in mind that Toys "R" Us USA accounted for 30% of its worldwide sales<br />Toys "R" Us established their own distribution center in Kawasaki, allowing them to act as a wholesaler and forcing manufacturers to deal with them<br />Toys "R" Us Japan ended up tremendously successful with 16 stores opening by the end of 1993 and 4% of Japanese retail toy market<br />
  4. 4. The last 20 years<br />Japan Association of Toy Specialty Stores reported a 10-15% decline in members’ sales during the 1992 Christmas season<br />By 1994, ratio of toy retailers adopting manufacturers’ suggested retail prices had dropped sharply over the previous five years from 70.1% to 29.4%<br />Introduction of Toys “R” Us in Japan forced many changes to distribution networks including mass-scale discounters bypassing wholesalers to deal directly with manufacturers and small retailers forming joint entities for wholesaling<br />
  5. 5. The current situation<br />Japan’s largest toy retail chain<br />20 years after its entry, Toys “R” Us operates more than 160 stores in Japan<br />Enjoyed tremendous success throughout the 90’s and early 2000’s with $1.6 billion in revenues and $33.89 million in profits for 2002<br />Has struggled in recent years with projected revenues of $2.14 billion and net profit of $8.5 million for 2009<br />
  6. 6. Changing demographics<br />
  7. 7. Changing demographics<br />Declining birth rate and aging population has been a problem for Japan<br />Birth rate has dropped by 13.33 % from 2000 to 2007 and is expected to drop further<br />The median age population of Japan is 45<br />The number of people in the age range of 5-9 years is expected to decrease by 16% by 2015<br />
  8. 8. Recommendation #1<br />
  9. 9. Recommendation #1<br />Toys and games that appeal to older age groups<br />Japans aging population still has lots to spend on luxury goods. The company should take this as an opportunity and introduce newer toys and games that can appeal to the older generations.<br />
  10. 10. Internet retailing<br />
  11. 11. Internet retailing<br />Japanese consumers more prefer buying online<br />Recession biggest contributor to this trend<br />Trend towards digital communication over mobile phones and internet<br />Independent retailers collaborate to pool resources and gain through online traffic<br />
  12. 12. Recommendation #2<br />
  13. 13. Recommendation #2<br />The Toys "R" Us online experience<br />Develop an engaging online shopping store to attract consumers and grow sales<br />Partner with internet retailers <br />Innovative media communications that are more relevant to their customers and that offer customers more value<br />
  14. 14. Systemic discrimination <br />
  15. 15. Systemic discrimination <br />Although there are no explicit laws or regulations limiting foreign companies from competing, there remain impediments to doing business<br />Adjustments made to Japan’s Anti-Monopoly Law dictate that any company found abusing a superior bargaining position must now pay a penalty of 1% of their revenue<br />In 2010, officials from Japan’s Fair Trade Commission raided Toys “R” Us Japan on suspicion of monopolistic practices. This included pressuring manufacturers and suppliers to take back unsold product and providing them with a discount<br />
  16. 16. Recommendation #3<br />
  17. 17. Recommendation #3<br />Work with the competition<br />Opened distribution center in Kawasaki as part of solution to establishing relationships with manufacturers<br />Extend wholesaling to providing not just their own stores but smaller retailers as well and offer better terms than current wholesalers<br />Can now exert more influence on manufacturers by increasing size of distribution operations help preserve a part of Japanese culture, and lessens opposition to their own stores by essentially partnering with mom and pop stores<br />
  18. 18. Wrap Up Slide<br />Success in Japan<br />Sell toys that cater to older age groups<br />Deliver a usable and enjoyable online experience<br />Work with, and not against the competition<br />

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