Toys Were Us: Are we a Society/Economy that Forgot about the Nature of Play?
Initially founded in 1948, the retailer Toys “R” Us came to have 700+ stores both within and outside of the US. However, as announced on March 15th, 2018, the company will be closing and selling off all of its stores. In addition to a case of nostalgic sadness, the closing of Toys “R” Us raises important questions such as: (1) What will happen to the US toy industry; (2) How will it affect the US economy?; and (3) Will it cause an increase, or a decrease, of innovation and manufacturing?
The Toy Industry & the US Economy
According to the “Economic Impact of the Toy Industry 2017 Summary Report,” the toy industry generates approximately $26 Billion per year in direct retail sales, and 95.2% of toy manufacturers, wholesalers, and distributors in the United States are small businesses. The 2015 report stated that 40% of the jobs created by the toy industry were attributed to small businesses channels. With Toys “R” Us’s closing, will small business see an increase in profit and labor force? I hope so. One of my very first interior design projects was for an independent toy store (2004), which has since become a toy manufacturer and online retailer, Kid O. Kid O manufactures and distributes quality toys that promote creativity and discovery, and engage young minds. As a young designer fresh out of college, I was grateful to have worked for and learned from the visionary toy designer and manufacturer.
Will small toy retailers be enough to keep the country’s economy on track towards its annual estimates, distributing the nation’s toys and employing many in local communities? Or, will a new brick and mortar mass retailer rise up to take over the toy landscape that Toys “R” Us once dominated? Collectively, the toy industry (i.e. manufacturers, distributors, etc.) had an approximate $107 Billion impact on the U.S. economy in 2017. Toys are not mere child’s play.
It appears that one of Toys “R” Us’s faults is that it was a business designed for an “economy of scale.” As Patrick Whitney highlighted in his article, “Design and the Economy of Choice,” published in the She Ji: The Journal of Design, Economics, and Innovation, under such business models, products are designed and proscribed for a mass group, verses being tailored for a more diverse and complex audience. Such companies’ business models are heavily dependent on long-term plans and investments that are aimed to help ensure mass products sell.
Whitney highlights that such companies, which were established after WWII, gave rise to adjacent industries — public relations, advertising, merchandising, mass media, and various fields of design. The adjacent industries help(ed) to ensure that economies built for scale have an engaged, loyal, and an enticed base of consumers to buy whatever their clients had in stock.
Overtime, the US “economy of scale” (i.e. mass toys designed with little diversity and marketed to the public), transitioned into an “economy of choice.” As the fields of design, social sciences, media, and marketing began to listen to the traditional end-users, as defined by manufacturers and retailers, in addition to those end-users who were never directly served, nor catered too before, it resulted in more design choices for public consumers. Consumers became more educated and empowered over time.
Designing and marketing with choice in mind, verses designing for a proscribed mass market, are two different models of design and business. With the rise and empowerment of the end-user, traditional mass marketing strategies and models are suspect to failure.
Within this context, on top of the growing popularity of online retailers, it becomes clearer as to why Toys “R” Us, and other chain toy stores had been facing economic hardships. The blame cannot solely be applied to the brick and mortars retailers. Toy stock/toy manufacturers have played a role in Toys “R” Us’s demise as well.
Yes, online retailers offer convenience and products at varying price points, which can be delivered anywhere a customer so chooses. Brick and mortar retailers of the future do have to contend with such offerings. But, are those the sole reasons why customers dialed back on shopping at chain brick and mortar toy stores? Are there ideal conditions that would draw more customers back into toy stores? Or, has the very nature of discovery, wonder, and gifting changed within the US social landscape?
In an “economy of choice,” consumers want to shop in a retail landscape (even if it be a digital landscape) that offers diversity/options. For instance, not all people want toys that are designed according to variations of gender, racial, and/or intellectual stereo-types. Some people are nostalgic and want to purchase toy characters that they grew up with for themselves or loved ones, and not the new versions of old characters. Look at the sector of toy collectibles. They grew by 33% in 2016. While some people prefer originals and classics, that does not mean they are not open to something new. For others, they want to support indie toy designers and stores, several of which offer customers additional in-store experiences. People want choices.
Is Innovation Lost within the Toy Industry?
Toy manufacturers, designers, marketers, and adjacent industries need to both learn from the case study now regarded as Toys “R” Us. They must take an honest assessment of the toy industry and the current “economy of choice.” If the industry wants to survive as a big economic heavy hitter, they must rediscover the nature and value of play, and the experience of discovering. Innovation is key!
Not only do manufacturers and retailers need to be honest about their market, they need to address the market’s diversity. This does pose a challenge to traditional models of business and design. However, with a change of mindset and strategy, embracing and addressing such challenges can create innovative business pathways with lucrative results—for those companies that step up to the plate, whether they are small or big businesses. This concept does not only apply to the toy industry.
The toy industry encompasses STEAM fields such as design, engineering, chemistry, sociology, and of course technology. But if you have ever seen films and shows such as Disney’s Pinocchio, Penny Marshall’s Big, or ABC’s The Toy Box, then you know, unabridged imagination is the x-factor for successful toys. However, ABC will have to come up with a different solution for the winner of The Toy Box since the planned distributor for the winning toy will be no longer. Perhaps the winner’s toy could be sold at FAO Schwarz?
FAO Schwarz is probably glad it was acquired from its then parent company, Toys ‘R’ Us in 2016, by ThreeSixty Group, Inc. The brand just recently re-launched in fall 2017. Its new retail store is slated to open in the fall of 2018 at Rockefeller Center. Will FAO Schwarz reclaim its throne within the toy industry and serve as a model for a successful toy store of the future? Will toy designers, manufacturers, and retailers innovate and jumpstart the small business economy?
In a time where there seems to be endless remakes of characters and tales of old, are we living in a world/an economy that fosters and encourages unabridged imagination? Are we fostering a climate that can jump-start innovation? Business owners, manufacturers, retailers, and economists need to begin to ask themselves the tough question, “Can imaginative and innovative retail toy destinations and experiences exist at mass scales?” Such is a great design challenge.
(As a xennial, this jingle will forever be embedded in my head)