Charles Lazarus, one of several children, was born on October 4, 1923. The Lazarus family lived in an apartment above their shop in Washington D.C. His father bought old, broken bicycles, repaired and painted them, and then sold them for a profit. Charles spent a great deal of time in his father’s bicycle shop when he was young. When he grew older, he helped his father fix the bikes and serve customers, as well as give input on how to improve the business. Charles didn’t understand why their store didn’t sell new bikes, and his father explained that larger stores could buy the bikes cheaper in large quantities and therefore could sell them at discounted prices. Charles often longed for his own store when he grew older.
Lazarus was in his early twenties when he left the Army. He didn’t want to go to college and knew only one thing: “I wanted to work and I wanted to make money.” Because of his ambitiousness and hard work ethics, Charles decided to go into retailing. It was his father’s example as well as his years spent in the bicycle shop that gave him much of his business training.
II.The History of Toys “R” Us
During the post war years of the late forties and early fifties, Charles Lazarus anticipated the baby boom because many soldiers were being discharged from the Army and were beginning to start families. In 1948, he borrowed $2,000 and started his first business, selling baby furniture. His first shop was 40 feet by 60 feet, filled with cribs and baby furniture. After two years of operation, Lazarus realized that many customers had been asking if he stocked baby toys, to which he always replied “no.” It was at this point that he realized “the customers want toys.”
To begin with, Lazarus stocked only a few infant toys. As the customers’ kids grew and their needs became more varied, however, he began to sell tricycles, books, and a much wider range of toys.
Charles first got the idea for a self-service supermarket while on a trip to New York. He recognized the efficiency of the supermarket grocery stores and decided to reorganize his store, modeling it after a supermarket. In his new reorganized store he had several different styles of an item in stock, as opposed to the one or two styles in his original store that had to be ordered from the company after a customer decided to purchase the item. Not only could he sell the items at a lower price to his customers and still make a profit, but also when a customer chose a particular item, he could deliver it immediately. He renamed his improved store to Baby Furniture and Toy Supermarket.
Soon after the reorganization of his first store, Lazarus opened another one. He quickly realized that he would have to invest in training other people to manage the stores and keep them up and running.
After deciding that the current name of his store still didn’t convey an accurate description of what the store had to offer, which was now primarily toys, he renamed his stores to Toys “R” Us, with the “R” reversed. This became the distinctive logo for his company. In later years, Geoffrey the Giraffe would become the company’s “mascot”, and would create a memorable, positive impression with shoppers.
III. Toys “R” Us’ Current Status In the Market Place
A. How Toys “R” Us Exists Today
Today Toys “R” Us is more successful than ever. With 700 toy stores in America and 441 international stores, they are the largest toy store chain in the world. Along with the Toys “R” Us toy stores, there are 215 Kids “R” Us stores in the United States, as well as 98 Babies “R” Us stores nationwide. The company is listed as common stock on the New York Stock Exchange (see Appendix) and as of March 10, 1998, had 31,700 stockholders on record.
B. Market Growth and Expansion Strategies
Charles Lazarus’ company developed many strategies to stay ahead in the market and of the competition, if any. The most important strategy was buying in quantity in order to sell at a discount. Toys “R” Us could buy items in large quantities at a discounted price per item because of the large volume. They could then turn around and sell the items to consumers for little above wholesale cost and still make a profit.
Lazarus identified another main attraction for customers – a large selection. He decided that if people knew that he had, for example, every different type of stroller available, they would come to visit his store and see the largest selection of strollers all in one place and save time. He bought not just one line, but everything, so that if a customer wanted to buy a stroller, they would have hundreds to chose from. Although customers only wanted to buy one stroller, they still wanted to see all the strollers that were available.
Another way Lazarus figured out how to attract customers was to sell a standard, essential item at outrageous discount, especially in the non-holiday season. The item he chose was Pampers, and his stores are known for selling Pampers at rock bottom prices. However, in every Toys “R” Us store, the Pampers are located far away from the check out lines. Therefore, shoppers have to walk through the entire store before they can get to the diapers. When the shoppers, most likely with their children, pass all the merchandise, they are bound to leave the store with more than simply a package of diapers.
Yet another important attraction for customers, as Lazarus found out, was having an adequate supply of an item the customer wanted. In other stores, a shopper might only find five of the items on his or her list. Therefore they would have to go to other stores to find the other items, which wasted too much time. By using a very complex computerized system, the inventory stays on pace with sales. This helps to reduce the chances of a customer not finding what he or she is looking for on the shelves. “When a customer walks into our store with a list of ten items, we hope to have all ten,” said Lazarus.
C. Competitive Market
In reality, Toys “R” Us really has no true competition. While several department stores and smaller toy stores located in shopping malls sell a respectable volume of toys, Charles Lazarus has clearly eliminated all competition. He explains, “Department stores have such overhead that they simply cannot compete with what we are able to do. We can sell an item at a much lower price. What we have is more of a distribution system. What we’ve done more than anything else is to get the merchandise from the manufacturer to our register at the least possible cost.”