Tag Archives: Toys R Us

This blog post is free*

*Okay, this asterisk doesn’t mean anything, but it is indicative of something that is becoming an epidemic – add-ons and exclusions.

I understand people buy based on the bottom line so companies price accordingly, but the hidden charges and exclusions are getting out of hand and as I surmise,  businesses will be nickel and diming themselves out of business.

We all know about airlines charging for every checked piece of luggage.  Sure they may make a few extra bucks, but how many people are they annoying because they have to check a bag at the gate or because there isn’t enough room in the overhead compartments.  Do they have a sense of how many people are making the choice to drive or video conference for their next meeting?

But the airlines aren’t the only ones, mechanics have disposal fees, big box retailers have appliance removal fees and hotels have spa fees – even if you never use the spa.

I recently read about a New York hotel that costs $1,499 a night but still charges for wireless internet access.

In a Sunday circular, Toys R Us told us buy any Lego, get the other for 50% off*.  The asterisk went on to tell us that four different Lego series were not included.

Department stores aren’t much better and should focus on having sales for specific lines versus store-wide sales that exclude half the merchandise.

With a more frugal consumer, companies are quick to focus on the advertised price to make sure they “win” someone’s business, when in actuality they run the risk of losing a long-term customer because they have charged for every little thing.

Look at your business, are you finding ways to run off your customers with add-on services?

So how do you compete?  Be open with your customers.  Show them how you ultimately provide a lower cost of ownership.

If you aren’t sure what your competition is charging, mystery shop your competition to see what they add on.  If possible build these items into your price (ideally still providing a cost savings for potential customers).

You’ll spend less time explaining everything to you customers and more time building relationships.

Your customer service costs will go down because they’ll be focused on making appointments versus dealing with unhappy customers.

Finally, customers will reward you with loyalty because there won’t be any surprises when they do business with you.

Consumers are focused on their budget and bottom line, but if they think they are on budget and then go over due to hidden fees, you’ll never get that customer back, and chances are they’ll let a few of their friends know about it too.

Don’t let your need to quickly bolster your bottom line do damage to your long-term growth.

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Filed under Customer Marketing, recession marketing

Recession Continues To Breed New Thinking

Toys R UsIn today’s Wall Street Journal, Toys R Us announced they are opening 350 temporary stores in traditional shopping malls and other locations to take advantage of the holiday season.   This strategy is borne out of two market changes:

  • KB Toys, traditionally a mall-only toy retailer, going out of business
  • Sears expanding their toy department to help grab share from the KB Toys deficit

Holiday sales were down 3.4% last year for Toys R Us. Anticipating similar results for the 2009 holiday season, the national toy retailer realized they could not rely on the same approach to reach customers and drive sales.

Toys R Us is leveraging three key areas:

  • Inexpensive rents – With retail sales down and retailers going out of business, there is excess capacity in shopping malls.
  • Lower pricing – Higher rents were baked into KB Toys’ pricing (so much that they weren’t competitive). Since rents are lower, TRU can keep pricing on par with freestanding stores.
  • Convenience – The convenience of a mall location should attract people who are already shopping versus having to go to another location.

Toys R Us stopped looking at their business the same way.

You should to and see where opportunities might exist to change how you do business.  There has never been a better time to do it.

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Filed under recession marketing