The New York Times Money & Business Sunday, September 5, 1999 Seeking Mr. Potato Head In All the Wrong Aisles For Toys ‘R’ Us, Advice On getting it Right By Dana Canedy It was one of the first and biggest of the “category killers,” and in the early 1990’s, it expanded as rapidly as a 10-year-old in a growth spurt. Toys “R” Us conquered the toy retailing world with warehouse-style stores, heavy promotion and lower prices than its mom-and-pop or department-store competitors. The doors were barely open on new stores before they were packed with minivan-driving moms clutching Christmas lists and youngsters with allowance money. But Toys “R” Us has hit an awkward stage. Parents have grown weary of dragging children through its 1,400 huge, often chaotic stores. Wal-Mart has taken aim at it with cut-rate pricing. And the Internet has emerged as a way to buy dolls and toy trucks from home with fewer aggravations. Those trends have thrown Toys “R” Us into disarray. Last week, the company abruptly announced that its chief executive, Robert C. Nakasone, had resigned. He was the fourth senior manager to depart this year, as the company’s profits declined and its foray into Internet retailing fell flat. How can the company get back on track? A spectrum of business experts and everyday consumers offered their suggestions last week. John Osher, founder and former owner of Cap Toys, a $100 million company in Napa, Calif., that makes Stretch Armstrong toys and Spin Pops; the company is now part of Hasbro. “The first thing they have to do is get the management picture correct. In toys, you effectively need co-management: a very strong toy merchandiser and a very strong business manager. “You can’t just hire someone from General Electric and put them in charge of toys, because they don’t know the toy business. But you can’t just take someone who is a super merchandiser and tell them to turn the company around when he really has no experience in it.” Toys “R” Us, he said, “has really been jumping back and forth between running it with an operations guy or a merchandising guy, and going to extremes that don’t work.” Mr. Osher would also urge Toys “R” Us to commit to hiring better workers. “Toys ‘R’ Us now is going to have to go from being pretty much a nonservice business and having people work the floor for about two weeks, to a family-trained service business where people take pride in taking you through the Toys ‘R” Us experience.” Mr. Osher thought the company needed to rethink its use of real estate. “They are going to have to expand their electronics department,” he said. “They are going to have to really combine the Babies ‘R’ Us and Toys ‘R’ Us locations to get more from the real estate, and make it more of a happening. Be the Starbucks for kids.” Eryk Casemiro, co-producer of “The Rugrats Movie” and senior vice president for creative of Klasky-Csupo Inc., creators of “Rugrats” and other animated TV series. “Everything about our culture is experiential now. It’s fascinating when you see stores that create an environment that draws you in, like a thrill ride. That’s what we do with our shows, and shopping has to be similar. I love it when you go into a store and there’s something going on. “Disney has figured this out. In their parks and their stores, you are having an experience even when you are waiting in line. Always there’s a narrative. And Viacom has a store in Chicago that’s really great; it’s a fun experience walking through each of their cable channels. If you are going into a Toys ‘R’ Us store, it ought to be worth your while.” Carreen Winters, 30, married mother of Emily, 4, and expecting a second child in December. She lives in Bergenfield, N.J., a 10-minute drive from the company’s headquarters in Paramus, and says she is a former Toys “R” Us shopper. “I’m always sort of amazed that the stores that senior executives are most likely to pop into unannounced, because they are so close to their headquarters, could be so unpleasant to shop in. The aisles are cluttered, the service is mediocre at best and I find the stores to be rather dirty. I have to imagine if the stores near the headquarters are like that, it’s somewhat representative.” If she were in charge, she said, “I would clean up the stores and make them more user-friendly.” Checkout lanes should move faster, she said, and “it would be nice if somebody smiles and says ‘thank you’ after I pay them. I don’t even get a grunt.” Big improvements in customer service are needed to bring shoppers like her back to the store, she said. Instead of the blank stare she once received when she asked for help finding a Mr. Potato Head and a Barbie item, she said, “it would be really helpful if someone came to the aisle to show me where it should be.” “And I have to imagine they can check the computer and tell me if it’s in stock, or call another store to see if they have it,” she added. “If they really wanted to be great they would take my phone number.” David Coscarelli, a 10-year-old in fifth grade in Shaker Heights, Ohio, and a frequent Toys “R” Us shopper whose most recent purchase was a Nintendo Game Boy. Asked what he would do to make the store more appealing for parents and children, David said: “Have a computer somewhere, so you can type in what you’re looking for. And, probably, make it bigger, and have lots of toys from the year 1991 or, like, old toys from the 80’s and early 90’s. Usually you can’t find those kinds of things anymore. “They should probably put in a lot of toys where you can look at what they can do, and test them out to see if you like them,” he added. Children would buy more toys that way, he said, “because they would know what they’re getting.” David said the store had lost more ground with adults than with children. His mother avoids the place, David said, and his father takes him “mostly because I’m the one who mainly like to go.” David Stewart, professor of marketing at the University of Southern California. “If I were Toys ‘R’ Us, I would try to be sure that toys I was selling did not also go through the likes of Wal-Mart. I would want certain exclusives and tie-ins with popular movies. “It’s really hard for a store with a limited line of merchandise to make it when it has to be a special shopping trip to get there. It would certainly be possible for them to extend beyond the toys they now carry; perhaps items for adults, the kinds of things that are sold at Sharper Image, or computers and electronics.” Jo Ann Farver, a professor of developmental Psychology at the University of Southern California who has shopped at Toys “R” Us for toys to use in her research with children. A shift in product mix toward toys that challenge and develop children’s imaginations could help the chain, Ms. Farver said. “The kind of stuff they sell is boxed Playmobil toys and Barbies,” she said. “They don’t sell much that is educational. Instead, they have a Barbie that you can put clothes on, or a Playmobil pirate ship. There is not much room to improvise.” If there were a way for children to touch and try out the toys, she said, “when a kid actually looks like they are enjoying a toy, parents will but it. It’s marketing.” Sid Good, president of Good Marketing, in Cleveland, which specializes in marketing to children. “The one advantage Toys ‘R’ Us has is large locations, so they have the opportunity for unique promotions or events that bring families in. Because as much as Mom and Dad might not want to go back, the kids are excited and want to go to Toys ‘R’ Us. “Once they get there, it has got to be fun to be there. That might include play areas for kids, not only to try out toys but also to watch videos or any other entertainment they might provide. And it might include any kind of food court, something to make the visit that much longer.” Bobby Calder, professor of marketing at the Kellogg Graduate School of Management at Northwestern University. “Generally, they need to find some way to convey that they stand for something in the mind of consumers that makes them special, something that makes the experience of shopping there meaningful, or some concept that says ‘this is different.’ “They can do that by creating displays, altering their layout – setting the store up more for interaction in particular is a good way to create a difference from the Internet. Just create something other than tripping over stuff in the aisle and kids running around grabbing stuff off the shelves.” 