Toys ‘R’ Us Foot Traffic Analysis Reveals Challenges in Smaller Markets
If anyone has been cast as a villain in the fall of Toys “R” Us, it’s Amazon. The ecommerce giant was even mentioned by name by Toys “R” Us CEO Dave Brandon in a press release, in which the executive wrote, “Online retailers such as Amazon are not concerned with making a profit at this juncture, rendering their pricing model impossible to compete with.”
But the results of a new foot traffic analysis conducted by the location data firm Factual reveal that Toys “R” Us’ demise could just as easily be blamed on stiff competition from within the brick-and-mortar retail market.
In a foot traffic analysis conducted between November 2017 and January 2018, Factual’s data science team found that Toys “R” Us struggled most in smaller markets. On average, competitors like Walmart and Target saw 20x more foot traffic than Toys R Us in small markets, which included Biloxi, Mississippi, Tucson, Arizona, and Dayton, Ohio.
For the purposes of the analysis, Factual defined smaller markets as those cities with fewer than 400,000 people.
The data suggest that shoppers in these smaller markets preferred “one-stop-shops” over specialized stores. However, urban consumers showed different shopping trends.
Toys “R” Us stores in urban locations got considerably more visitors than those located in smaller cities. According to Factual’s data, Toys “R” Us stores in larger markets, including Boston, Seattle, and San Francisco, saw more traffic than the average Target or Walmart. For example, a Toys “R” Us store in Boston saw 55% more traffic than the average Target and 37% more than the average Walmart. In Seattle, Toys “R” Us got 22% more traffic than the average Target and 8% more traffic than the average Walmart.
The results of Factual’s foot traffic analysis suggest that Toys “R” Us stores may have been performing unevenly—some did well, and other failed spectacularly. It could also be used to argue that despite declining sales, Toys “R” Us locations in urban areas are actually well positioned from a geographic and city planning standpoint. The company had an edge on commerce giants in large cities, even while its stores in smaller towns were struggling.
“…Particularly in larger markets, we’re still seeing a lot of in-store foot traffic—an indication that those stores were well placed, particularly in relation to some of their superstore competitors,” says Ocean Fine, Factual’s vice president of agencies and strategic partners.
Fine believes that Toys “R” Us’ demise could actually be an opportunity for other toy retailers with brick-and-mortar stores.
“Perhaps even Target and Walmart, [if they can] fill the void left by Toys ‘R’ Us stores in those metros,” she says.
More generally, Fine says the bankruptcy and liquidation going on at Toys “R” Us stores around the country points to the fact that retailers could benefit from a better understanding of the interests and behaviors of customers at each of their stores individually. By tailoring their creative, messaging, and targeting techniques, retailers can ensure they’re reaching the right people with drive-to-store strategies—and avoid getting into the position that Toys “R” Us finds itself in today.
“Ecommerce is a large market, but the majority of purchases still take place in-store,” Fine says. “As retailers compete to create personalized experiences for their customers, we’ll see them utilize location data more intelligently, leveraging it to understand path to purchase and connecting online and offline consumer behavior. Expect to see location used throughout the campaign lifecycle, for insights, targeting, and measurement.”
Stephanie Miles is a senior editor at Street Fight.