The Critical 'I'

Read. React. Repeat.

Wednesday, August 11, 2004

Kids grow up so fast these days. Too fast for Toys R Us, which is looking to sell itself out of its core toy-selling business to focus on its lucrative Babies R Us division.

I can understand why Wal-Mart and Target is winning the toy retail war. Parents have to be crazy to go to a store where they'll blow all their money on nothing but toys. Going to a superstore means they'll be able to buy at least a couple of more practical items while they indulge Junior (in fact, they'll probably wind up spending more money overall in that instance, but there's the illusion that they at least didn't blow too much on toys). The discounts help a lot, too.

The suggestion of Wal-Mart using their toy sales as loss leaders to draw in customers is rather rich. Toys R Us used to sell diapers in their stores at huge discounts, reasoning that young families would have newborns as well as older kids to take care of. That was held up for years as a textbook example of classic loss-leading strategy.