Troubles at "Toys R Us" Could Mean a Brighter Future for PlayCo. . .
The President and COO of Toys R Us is resigning. . . last year they made the headlines when they could not get Mattel products into their California stores. Now they claim that customers are tired of the Toys R Us store model. . .
On the other hand, Play Co Toys, focused on customer service, has the philosophy that the kid should be able to reach and play with every toy in the store. . .so they placed a 6 foot limit on store shelves and put their stores in high-traffic areas like shopping malls. According to conversations with PLCO, their customers claim to enjoy the friendly, warm atmosphere of Play Co stores. This store model has performed well for PLCO and has contributed to the recent rapid growth in the company.
Maybe it is this focus on customer service that is the reason that Play Co same store sales, revs and net are rising, while Toys R Us, with its warehouse-stacked-to-the-ceiling, is hurting badly. Here are a few excerpts from a New York Times article out today:
Just a year after arriving at Toys "R" Us as second in command, Bruce W. Krysiak has resigned as president and chief operating officer of the beleaguered retailer.
In a terse statement announcing his abrupt departure, the company gave only the obligatory explanation that he was leaving "to pursue other interests." But the resignation of Krysiak, 48, is emblematic of the continuing turmoil at the company, the world's largest toy seller, analysts said. Management is struggling with increasing competition and declining profits.
Toys "R" Us has been struggling with how to hold on to once-loyal shoppers who have grown weary of its mammoth stores, as well as how to compete more effectively with discount chains like Walmart that are selling a wide selection of playthings at affordable prices.
As customers tire of making a separate stop at Toys R Us, maybe due to an incomplete selection, hard-to-find service and most things out of reach of children. . . the smaller more efficient store model like Play Co is picking up market share.
Play Co claims to have most every popular toy that Toys R Us has. But Play Co proudly specializes in educational toys, unique and collectible toys. . .an area that neither Toys R Us or Wal-Mart is covering.
Will there be announcements of store closings by Toys R Us? If so, Play Co should begin to get more attention as the "better alternative" to Toys R Us, at least on the West Coast for now. They are already adding 8 stores in 99, slowly making their way eastward. If they receive an added windfall from customers previously loyal to Toys R Us, perhaps their rate of growth will likewise expand.
Remember PlayCo is focusing on customer service. That is why they are putting the internet kiosks into their stores. . .items they do not carry in their stores, or are not in stock, can be instantly ordered via the kiosk that is hooked up to the PlayCo website [that has not yet been announced].
Call me a romantic, but I see these developments as a slam dunk for Play Co. . . making the stock a far better long-term hold than it was before.
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