Wal-Mart is the market leader in the toy industry because of its efficient business processes, and bargaining power over its suppliers it is able to offer toys with the lowest price tags. Its cost leadership is the main factor behind its success in this industry. On the other hand, Target the number two retail merchandizing chain takes advantage of its image as a trendy stockiest carrying the most wanted and must have toys of the season that will not be carried by its competitors. Whereas, GameStop that sells both used and new games is an established leader in the video gaming industry and threatens Toys R Us’ initiative to develop its Games R Us in the high growth market of gaming. UBS Christmas 2008 Survey carried out in December, 2008.
According to America’s Research Group revealed that over the course of the weekend in which the survey was conducted. Sixty six percent people shopped at Wal-Mart and this figure was more than the sum of percentage figures of Sears (19.6 percent), Target (17.9 percent) and Toys R Us (12.1 percent). Furthermore, most of the shopping was dispersed in the product lines that are being offered by Toys R Us. These were Toys (33.8 percent), Children’s Clothes (23.7 percent), Electronics (23.7 percent), Video Games (18.9 percent) and Gift Cards (12.4 percent). (Wal-Mart dominates Christmas Shopping, 2008). This shows the stiff competition faced by Toys R Us because all of the big retailers offer toys and similar products. They all try to cash in the Christmas season that is also crucial to the earnings of Toys R Us. In fact Toys R Us makes the most sales in the last quarter or Christmas season. This competitive landscape further emphasizes the need to create a dependable revenue line that is profitable all year round or the need to encourage year round purchases amongst Toys R Us’ customers.
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