Essay About Leading U.S. Toy Retailer And Growth Of Toys

Toys R Us Japan
Toys R Us Japan
Toys “R” Us Japan (A) and (B)
Mark J. Kay
Assistant Professor
Montclair State University
LOGISTICS CASE STUDY
DEVELOPED FOR:
COUNCIL OF LOGISTICS MANAGEMENT
Toys “R” Us Japan (A) and (B)*
Abstract
The cases describe the growth of Toys “R” Us (TRU) as the leading U.S. toy retailer to its
international expansion and entry into Japan. Access to the Japanese market was made possible
by adjustments to the Daitenho or “Big Store Law,” described in Toys “R” Us Japan (A). Toys
“R” Us Japan next had to develop the distribution and logistic linkages to suppliers in support of
the low price, wide selection, and in-stock retail strategy. This is examined in Toys “R” Us Japan
(B). TRU expanded rapidly to 27 stores, but as the case ends, management needs to quickly
respond to the crisis of losing its distribution center in Kobe.
Toys “R” Us Japan (A)
Tuesday, January 6, 1992, Toys “R” Us (TRU) Grand Opening in Kashihara, Naraken,
Japan. Arriving by helicopter, U.S. President George Bush appeared at the opening
ceremonies for the second TRU store in Japan. Attending were Minister Kozo Watanabe of
Japan’s Ministry of International Trade and Industry (MITI), U.S. Commerce Secretary Robert
Mosbacher, U.S. Ambassador to Japan Michael Armacost, Japanese Ambassador to the United
States Ryohei Murata, Toys “R” Us Chairman Charles Lazarus, and the local governor and
mayor. About 2,000 Nara-ken policemen and students from local police academies were
mobilized in a massive security measure. About 5,000 people came to witness the event, many
of them waved small Japanese and American flags1 .
President Bush thanked the gathered officials and praised the progress of the Structural
Impediments Initiative (SII) to remove economic barriers to trade, create more jobs in America,
and bring the Japanese consumer world-class goods. He continued,
“And what makes me so happy here today is that we see here the beginning of a
dynamic, new economic relationship. One of greater balance. There is much that
we can do for the world based on a forward-looking global partnership between two
great nations, two powerful economies and two resourceful innovative peoples. And
together we will go far”2
Few Americans would attach a great deal of significance to the public appearance of
politicians at ceremonies such as these. Surprising to TRU, however, the showcase appearance of
the U.S. President at Nara had an immediate impact upon Japanese toy industry vendors in the
weeks following the event. Negotiations suddenly improved between TRU Japan and its
Japanese suppliers. Japanese vendors apparently began to take seriously the previous
announcement that TRU Japan intended to open 100 stores in the next ten years and become the
major toy retailer in Japan.
Toys “R” Us Japan (A)
Company Background
The first TRU store was opened in Washington, D.C. in 1957 by Charles Lazarus. Three
stores opened over the next 10 years and Lazarus sold his ownership stake for $7.5 million to
Interstate Stores in 1966. When problems with other Interstate divisions drove the corporation
into bankruptcy proceedings,