The Five Principles of Performance Thinking by Jonathan Gifford and Mark Powell was published last week. Today on the blog, we look into the cautionary tale of Toys “R” Us and what we can learn about why performance is fundamental to continued business and customer engagement.
Charles P Lazarus started selling baby furniture from his father’s bicycle store in Washinton, DC when he returned home in 1945 after serving as a cryptographer with the US Army in World War II. Moving into baby furniture was a smart move. Lazarus noticed that, like him, his fellow ex-servicemen were all settling down and having babies. The baby boom was about to begin, and all the new mums and dads wanted nice new cribs and strollers for their babies.
In 1948, Lazarus turned the whole store over to baby furniture and renamed it Children’s Bargain Town, reversing the R’s in the logo to suggest a child’s writing. He started selling children’s toys alongside the cradles and high chairs and noticed that toys had a higher turnover.
“[I] realized that customers didn’t buy another crib or another high chair or playpen as their family grew, but they did buy toys for each child,” he told a retail trade publication.
In 1957, Lazarus opened his first dedicated toy store in Rockville Maryland, and named it Toys “R” Us, using the same backwards “R”. Before Toys “R” Us, toy stores had been small, independent and local, or a small selection of a department store. Lazarus created a kind of ‘supermarket for toys’, opening big-box stores around the US, offering thousands of products at discounted prices.
As a former CEO of the company told the New York Times, “He was a pioneer in the big-box movement. His business concept was as innovative as e-commerce is today.”
Toy’s “R” Us became a global operation – and arguably the most important toy store in the world. Its deep relationship with its suppliers – toy makers – galvanized the industry. In 1994, Lazarus passed on the CEO’s role to Michael Goldstein, the company’s chief financial officer – a man described in a CNBC article as having “an adoration for toys”. The article quotes a leading toy manufacturer: “Goldstein got to know nearly every start-up manufacturer and both he and Toys “R” Us wanted them to be successful.”
The CNBC article also records the experience of a generation of parents for whom a trip to Toys “R” Us with their children was a happy ritual, a key part of family life. “I bought all their presents and bikes from there” one New Jersey mother told CNBC. “I remember the last time I walked in there… I just walked in by myself and walked down the aisles feeling overwhelmed with emotions because my kids were told old for the store and our ritual was over.”
The toy loving Goldstein spent four years as CEO of the company before stepping aside in 1998 to take up the role of chairman. His successors seemed to lack Goldstein’s touch. As the new millennium dawned, the company seemed to lose its way. Toys “R” Us continued to add new stores but failed to invest in the existing roster or close underperforming stores. CNBC’s journalist, Lauren Hirsch, writing in 2018 after the company’s eventual closure, argued that the toy giant had “missed opportunities to make its stores nicer, cleaner and a destination for events. Toys “R” Us’ failure to translate the joy of toys into something more tangible in its stores was one of its biggest mistakes.”
This ‘failure to translate the joy of toys into something more tangible in stores’ is a perfect example of Performance Thinking. Or, in the case of Toys “R” Us, a failure of Performance Thinking. What Toys “R” Us was selling was joy and excitement; a thrilling family ritual where children and parents wandered through a wonderland where it seemed that every possible toy in the world was available to buy. At the outset, the very existence of a giant store full of toys was a ‘performance’ in itself: a thrilling thing. As the stores degraded they simply became warehouses full of toys – and the internet was beginning to offer a different kind of warehouse full of toys with a brighter, more engaging shop window.
Toys “R” Us stores stopped being places of excitement and wonder. They stopped putting o a performance that could challenge the internet and their price-cutting competitors. Nothing was happening in their stores: no special events, no exciting demonstrations of the latest gizmos, no flying toys or juggling clowns, no drama and no engagement with the audience.
There had been a time when Toys “R” Us understood how to “translate the joy of toys into something more tangible” – when it really did ‘put on a show’. In 2000 the company opened a flagship store in New York’s Times Square. The huge, 110,000 square foot store was created from two shuttered Broadway theatres. When they were constructing the store, builders had to leave one side of the building open to lift in a five-ton-34-foot model of a Tyrannosaurus rex, destined for the store’s Jurassic Park section. The store’s street frontage was made from giant digitally controlled screens, displaying shifting patterns of pictures of excited children’s faces. The screens became transparent every twenty minutes, giving passers-by a glimpse of the wonders inside.
Inside the store, alongside the giant T. rex was a 60 foot Ferris wheel carrying children in cars themed with images of favourite toys and characters, a giant model of a flying Superman saving a falling truck from a huge, two-story Barbie-themed dollhouse.
A former chief marketing officer of the company talked to CNBC after the chain’s 2018 closure about the opening of the Times Square store back in 2000. “We were getting ready to open the doors, and I saw what seemed like hundreds of kids. I saw the excitement in their eyes and I thought, ‘This is what Toys “R” Us is.’ I think we just lost that.”
Toys “R” Us moved out of Times Square in 2015, after rent for the prime location reportedly doubled over the length of its tenancy. But the excitement and drama – the thrilling engagement – of the flagship store was never introduced to the rest of the chain/ After a period of increasing decline, the company closed its US and British stores in 2018.
Faced with fresh competition from the new online stores and price cutting from the big discount stores, Toys “R” Us had needed to up its game, to put on a winning performance in every one of its stores – pulling the punters in, thrilling them, and leaving them wanting more. Being a big shop with lots of toys was no longer enough to deliver a winning performance.
There is a simplistic explanation for the demise of Toys “R” Us, which is that ‘it was killed by the internet’. It;’s not as simple as that. The internet is changing how we buy and sell things – a traditional retailing is still adjusting to the new realities – but many traditional retailers are still pulling in the punters. They are still putting on a show.
Build-A-Bear’s shopfronts are pretty funky. There’s a lot of bright colourful cuddly toy action going on. As you walk into the store, you are presented with a tempting array of all the different kinds of bear you could make. Or pony. Or a bunny. Or unicorn. Or Grinch. Doesn’t have to be a bear. Finally, after much heart-searching, you make your choice. New fun begins.
First, you fill your chosen toy with stuffing. An assistant helps you. Perhaps you want the toy to be plump and cuddly? Or plump and full>? You might like to add a ‘real’ heart, making a wish as you do. You might like to add a personalized voice message or a favourite song that will play when you hold your toy’s hand. You can choose from a huge range of clothes and accessories to dress your toy. The whole process might take an hour or more. It’s a lot of fun. Now you have your own, personalized stuffed toy. And the whole experience has been a performance. It has been fun.
Build-A-Bear have also created their own, immersive online experience for people who choose to build a bear online. They are putting on a performance and delighting their audience in everything they do.
Every business is, or should be, putting on a performance. We all perform in a public arena – in the marketplace – and we are judged by our performance. What really matters about our performance is how we engage with our audience. Everything else is just numbers – our attempt to measure how we are doing as a business. The numbers help us to run our business successfully, but they don’t io themselves tell about our performance. Performances are measured in emotions, to the extent to which we have moved our audience. To succeed in business, we need to recognize that we are performers, that we are artists.
The Five Principles of Performance Thinking by Jonathan Gifford and Mark Powell.
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