- Toys R Us is officially closing its doors. The famous toy company joins the likes of Sears, RadioShack and Payless ShoeSource -- crumbling retail giants that once ruled the day.
- Toys R Us kicked it all off with the company that would eventually help put it out of business.
In the continuing wave of name-brand brick-and-mortar stores going by the wayside, Toys R Us is officially closing its doors. The famous toy company joins the likes of Sears, RadioShack and Payless ShoeSource crumbling retail giants that once ruled the day.
This, folks, is what failing to embrace direct customer engagement looks like. It’s what happens when companies limit their focus to selling products instead of driving the interactions they can actually learn from. Even the most recognized names are not immune, and we can expect more chips to fall as the push for digital transformation continues to take hold of the market.
A Long Time Coming
So, where did Toys R Us go wrong? Probably back in 2000, when the company became one of the first to adopt Amazon as its e-commerce platform. A good move, in theory, but Toys R Us likely banked on the assumption that all it had to do was launch an e-commerce store and that the customers would come in droves. What resulted was a purely transactional customer experience.
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It used to be that if you needed the latest toys, gadgets and games, you’d head to the Toys R Us in your neighborhood. For kids, it was like a trip to a theme park. Since the rise of Amazon and e-commerce in general, though, things have changed, and Toys R Us, which eventually sued Amazon and got out of its contract with the e-commerce behemoth, has remained consistently late on the uptake. It seems as though the company just never quite committed to understanding the 21-century customer the customer on which its survival, ultimately, would hinge. And it never scaled out of the brick-and-mortar model that had sustained them the company 1948. Just think: It wasn’t until 2017 that Toys R Us updated its unwieldy online checkout process.
Go figure.
This, in my opinion, was the fatal mistake failing to understand how, when and why customers were interacting with the Toys R Us brand (i.e., making purchase decisions and consuming content). More importantly, failing to use that valuable information to improve the customer experience, both online and in-store.
I think there’s a valuable lesson here: Companies that don’t drive direct customer engagement in next three years will be out of business in the next five.
Today’s customers want information on how to get more out of their purchases and how to maximize their relationship with a given brand. And they expect those brands to meet these expectations. Fail to deliver, and customers respond by going elsewhere, a predictable result for companies that overlook direct customer engagement.
Embracing Digital Transformation
Toys R Us is on the brink because it did things backward. When it should have started with a focus on delivering a quality ownership experience to its core customer base, it instead focused on acquiring new business through an outdated digital experience. Ironically, Toys R Us kicked it all off with the company that would eventually help put it out of business.
It just goes to show how valuable direct engagement can be and how important it is to keep an eye on customers throughout the customer lifecycle. Not only that but to use that info to, for example, inform new product offerings or new ways of providing customers information about how to get more out of its products. At its core, direct customer engagement is about addressing customer preference throughout the customer journey something Toys R Us ultimately failed to do.
So, what should a business that’s facing a similar fate do? Just take a look at companies like Electrolux and Whirlpool. (Full disclosure: Whirlpool is a MindTouch client.) After decades of success, both of these multinational manufacturers answered the call by shifting to a more customer-centric model. They embraced digital transformation by taking control of the ownership experience and driving a more direct relationship with their customers.
How? Instead of dumping money into costly e-commerce initiatives, they underwent a massive overhaul of their self-service experience. They saw the need for the kind of useful, highly digestible content that can sustain a high-touch relationship one that allows companies to meet customers where customers expect to be met.
The fall of Toys R Us brings me no joy. But today’s customer has too many choices to stick around for an out-of-touch customer experience. Period. Digital transformation is here to stay — companies that ignore it are likely next in line to lose it all.
Date: May 01, 2018