Toys "R" Us Rebuttal
by Yi-Hsin Chang ([email protected])

It's funny that Rick is comparing Toys "R" Us to the Deceptor toy. While he clings to the illusion that the company is transforming itself into a "rugged plaything powerhouse," I see the wobbly company unintentionally deceiving faithful Toys "R" Us kids like Rick as it struggles to find the right direction in which to steer its operations. Really, it's the blind leading the blind.

Rick's right that the Deceptor is a Toys "R" Us exclusive, but from his description, you'd think the remote-control car transforms into some "monster," kick-butt, Terminator-esque, all-terrain vehicle. Au contraire. Toys "R" Us describes the toy as an unimpressive "buggy" that turns into a "truck in seconds." The Deceptor "goes forward, in reverse and turns left and right" -- sounds like the uncertain path Toys "R" Us has been following the past few years.

Rick is similarly delusional when it comes to the Toys "R" Us website versus eToys. Despite his blind personal preference, eToys is unquestionably the superior of the two sites and the online market leader. It's easier to use and navigate, more comprehensive, and more well-known among Web users. If any comparison is to be drawn to Amazon.com it should be eToys, which is solely focused on doing business online, not Toys "R" Us. Speaking of Amazon, the one-time bookstore recently added toys to its expanded line of offerings, giving the toy retailer more competition.

Besides eToys and Amazon, there are other formidable competitors that have established a firm footing online. Check out the colorful F.A.O. Schwarz site. Now, as for exclusivity of products, which Rick finds so compelling, about two-thirds of the toys sold by F.A.O. Schwarz are either only available in its stores or hard to find elsewhere. In addition, the aforementioned federal ruling against Toys "R" Us, if not overturned on appeal, will likely limit if not eliminate exclusive items at the toy store.

The Hoover's Company Capsule on Toys "R" Us describes the company as follows: "The only Monopoly that Toys "R" Us holds these days is on its shelves." Indeed, competition is fierce and coming from every direction on and offline. Other key competitors on the Internet include BrainPlay.com, Toys in Demand (toysid.com), Galoob Toys (galoob.com), and hobbyXpress.com. Toys "R" Us may be the biggest bricks and mortar toy store around, but its virtual store is being left in the dust by rival sites.

I asked a fellow Fool here who has two young kids if she was doing her Christmas shopping at Toys "R" Us. Her answer and explanation were quite telling: No, she doesn't shop there anymore because it carries cheap (as in low quality) products and there are never knowledgeable sales associates on hand to help. She and her husband prefer going to stores like Zany Brainy and Store of Knowledge, where the sales people are friendly and informed, and where they can buy high-quality educational toys for their kids. For more general kiddie items, she simply goes to Wal-Mart or Target.

My sentiments exactly. The fact is Toys "R" Us has foundered and squandered its lead in the toy market. For the company to transform into a "rugged plaything powerhouse," it's going to take a lot more than pushing yet another costly restructuring button -- especially when we don't even know if the button will actually work.

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