Toy R Us Trying to Defend Against Wal-Mart

Toy R’ Us trying to defend against Wal-mart

1) Do you think consumer can have too much choice in shopping? What might this depend on?

Consumer can have too much choice in shopping as various choices provide consumers with a better picture of what they would like to buy. However, having too many choices can be quite a burden as it may cause confusion, make decisions difficult, and may be time-consuming. This might depend on several factors.

- Customers with budget constraint may not view too many choices as favorable as they choose products base on lowest price.

- Busy people with time constraints in shopping will prefer limited choices because too many choices will take too much time to choose a product.

- The type of product is another factor as consumers tend to require fewer choices for commodity good and more choices for luxurious goods.

- Personal preference is another factor as some people prefer variety of goods whereas others prefer not having too many choices at all.

- Consumers with brand loyalty are indifferent with too many choices in shopping as they tend to ignore other brands and chooses product from their preferred brand.

2) Do you think the absolute lowest price for an item is most important for many consumers? What percent would you say comparison shop for the lowest price? What implications, if any, do you see from your estimate?

Absolute lowest price for an item can be most important for many consumers but not all consumer as it depends on factors such as income distribution and product type.

Income distribution has an impact on consumer’s purchasing power.

- Lower income population is more price sensitive and will be more concern about the absolute lowest price for an item.

- Higher income population is less sensitive towards price of products and will select items base on other factors such as quality as they have higher purchasing power.

The type of product is also a determinant of consumer’s need for lowest price.

- For commodity goods, consumers are more inelastic to price changes. As commodities are at affordable price, the price differences are rather small. Therefore, lowest price is not a main concern for most consumers.

- For durable and luxurious goods when deciding to buy these products, price is one of the most important factors to be considered as the price of these products are high. Therefore, people will compare the price among various shops and purchase from the shore that offers the best deal at the same quality.

The estimated percentage of comparison shop for the lowest price is 20% of all consumers for commodities and 90% for durable and luxurious goods. This implies that for more expensive goods such as durable and luxurious products, consumers tend to be more price sensitive and will take time to shop for the shop that offers the lowest price. As for cheaper goods, consumers are less price sensitive and will purchase base on convenience rather than price.

3) Compare the future promise of Borders, the book superstore, and TRU. What in your judgment accounts for the difference in their prospects?

Both Borders and TRU had been using the same “category killer” concept as the foundation for their business models. This strategy had given them the competitive edges over their competitors during the beginning years. However, different changes in customer behavior have played a major role in defining the future prospects of the two businesses.

For bookstores, customers still value the vast number of book titles that the stores have to offer. It is still valid that the more titles offered, the more appealing the stores are to the book shoppers. For Borders, as long as this specialty store concept remains, it will continue to be the key factor for a prosperous future.

For toy stores however, customer behavior has changed dramatically over the years. Customers now place high value not just only on the large assortments of toys but also on other aspects including ease of shopping, price, service, store decorations, etc. with aim to make toy shopping a desirable experience. So if TRU still employs the vast assortments concept as its flagship strategy, it will continue to lose its competitiveness and market share.

4) Let’s face it. TRU has seen its heyday. It will never come back again. It should be content with a smaller share of the market, and not worry so much about Wal-mart,