The changing dynamics of market trends are analyzed using the PEST analysis. The political environment of Toys R Us is sound with ongoing political stability. However, any changes in government’s taxation policies will impact the organization’s profitability indirectly. The economic environment is changing considerably as the United States economy is undergoing recession. Sales of a toy retailing store such as Toys R Us is directly related to consumer spending and the discretionary income of population. Under the current circumstances the consumption in the economy is expected to be low. This is also going to impact the already price sensitive customers in the industry to become more price oriented.
Opportunity lies in addressing this emerging need of lower priced toys that can appeal to the changing needs of customers. The social environment of Toys R Us is undergoing change, wherein the customer age groups remain of segments below five years and the five to twelve year kids segment is decreasing. Their customers are not being replaced by similar number of children. In Addition, there is an increase in pressure on children’s leisure time with mothers encouraging educational activities over leisure. Similarly, the technological environment is also not expected to undergo any major change that would impact Toys R Us.