“Developing a Strategy for Distribution Channel Management”
In my case assignment I will be talking about Wal-Mart, Leapfrog and Toys R Us in the toy industry. Also, why I think toy manufacturers and other vendors in the toy industry should consider joining Wal-Mart into partnership to become less competitive in the toy industry.
In the research I have done with the background materials and search engines through the internet, I have learned a lot from the developers, producers and sellers of toys in the industry. Many companies are now facing problems when the world monster was organized called Wal-Mart. In the Toy industry I believe back in the early 70’s and late 80’s were successful in selling toys to the customers. As Wal-Mart grew stronger introducing the consumer’s needs, other organizations became a target on who had the better sales especially around the holidays. As Toys R Us became a well known organization was very successful in other ways of attracting individuals into their stores expanding the products sold in their store. They established a method into selling baby items and some kids clothing with the brand names from Kids R Us, Baby R Us and other brand names in the approximate 380 plus Toys R Us stores throughout the US. With Wal-Mart started inclining in the business world, Toys R Us started to notice a decline in their net earnings within the organizations stores. With the document provided by Eryn Brown on the September 2004 statement “Imagining Toyland without one of its Giants” has stated that the net Earnings for Toys R Us fell dramatically in 2002 and 2004 in the millions. The net earnings that sent Toys R Us under were the rise of Wal-Mart taking over the sales over Toys R Us advertising a lesser price for the products offered. This is why a business such as Leapfrog should to take into consideration in investing with Wal-Mart to ensure they are meeting the cut in their net earnings making their distribution channel more effective in order to stay in the game. With Wal-Mart offering many items at discounted process will surely and swiftly take lead over Toys R Us products sold as their vendor’s all over the world producing products very cheaply and sold at the store with moderate prices.
Although Toys R Us had a vision to be a store to attract the children having products such as clothing, toys and furniture would only bear so long until Wal-Mart unleashed the Super-centers where customers can make a one stop shop deal. This was a headache for Leapfrog facing the distribution of products into Toys R Us. Leapfrog still trying to keep up with the competition, Toys R Us in the late 1990’s launched a campaign with technology in their hands advertising and selling products over the Internet in their own website making the distribution channel more effective for the customers to receive their products directly from the vendor. With technology and competition kept getting harder for vendors supplying the goods to stores such as Toys R Us, Wal-Mart right along with technology in their hands built their own website with more than a million products offered to the customer making millions from the low cost products purchased around the world. With a super store such as Wal-Mart making it easy for customers to buy products online and either have them delivered or pick up at a local super-center made the challenge even harder for smaller businesses to match up to the everyday low prices Wal-Mart offered and guaranteed over the products sold in the store. This is why Wal-Mart is one of the largest retailers in the world without any competition to match them.
As I read through the articles, Wal-Mart is one of the largest private employer in the US and Mexico and continuing to expand to other parts of the world working the distribution system work with technology and tracking their goods all over the US. With Wal-Mart having a combined store with grocery and products for the consumer has made itself one of the largest retail stores and has surpassed the retail toy business with other competitors such as Toys R Us in the late 1990’s here in the US. As Wal-Mart continues to campaign low prices every day has made it difficult for Toys R Us to keep up with their profits each quarter. I think in order for businesses to be successful, organizations that are producing products should consider selling certain products to other business opening up a distribution channel to keep them from going bankrupt. This will become a nightmare to toy companies if Wal-Mart continues to continue to sell more from their store instead of customers going into Toy store for the same or similar product. This is why organizations such as Leapfrog should consider into investing part of their products to Wal-Mart and Toys R Us forming distribution channels to other organizations. If the company wants to make its profits they should consider the products offered to businesses to be different from one another in order to keep them alive in today’s era.
In conclusion, many organizations will become very successful while others will strive to make their gains when products are not sold and distribution slows as stores have a hard time selling products on the shelf. Small and big organizations should come into an agreement to not sell the same products in both locations and attract the demands of the customer and ensuring vendors keep up the distribution going on new developed products. Or maybe they just need to branch off Wal-Mart to make their quarterly gains worth staying in the business sharing the same distribution of products.
Brown, Eryn (2004, Sep. 12). Imagining Toyland Without One of Its Giants. New York Times, pg. 3, 5.
Gogoi, Pallavi (2006, Nov 03). Tis the Season for Price Cuts
Tsao, Amy (2002, Nov 27) Will Wal-Mart Take Over the World? the insatiable chain’s next target?
Chambers, Erin (2004, Nov 24). How a Toy Store Plays to Win: Debi Grymes’ small shop thrives despite a nearby Wal-Mart, thanks to unique items, tea parties for little girls, and attentive service.
Palmeri, Christopher (2004, Nov 29). March Of The Toys — Out Of The Toy Section