Toys “R” Us’s Failure: The Path to Business Transformation

When the digital age turns all the rules of business upside down.

The business world is entering an era where tech giants are redefining entire industries.

Amazon and Alibaba have shaken the traditional retail industry. Uber and Grab have completely transformed taxi services. Airbnb has created a global hotel crisis.

When this wave of technology arrived, most traditional businesses reacted instinctively:

Supermarket launches e-commerce platform.

Taxi company launches ride-hailing app.

The restaurant built a website for online ordering.

But most are caught up in an endless technological race, where old advantages are wiped out, while new advantages have yet to emerge.

They forget that "going online" is not synonymous with "digital transformation".

Case Study: The Collapse of Toys “R” Us – When the “Toy Giant” Loses on Its Own Market

In 2018, Toys “R” Us, an iconic toy retailer for over 70 years, declared bankruptcy and closed all 735 of its stores in the United States.

At first glance, many people think they failed because they were slow to adapt. In reality, they had already gone "online" in 2000 – partnering with Amazon to sell goods on the e-commerce platform.

So what caused their downfall?

Mistake 1: Changing channels, not changing mindset.

Toys “R” Us has brought its offline store model directly online.

They view e-commerce as just another sales channel, rather than a new customer experience journey.

When products are similar, prices are lower, and delivery is faster, customers gradually abandon "legendary brands".

Mistake 2: Losing ownership of customer data.

Selling through Amazon means losing all buyer data – information that, in the digital age, is "lifeblood."

Toys “R” Us cannot analyze behavior, personalize experiences, or re-engage with past customers.

When data is in the hands of the platform, businesses lose the ability to innovate.

Mistake 3: Failure to create unique value

From the product and price to the experience, everything is the same.

When consumers have hundreds of similar options at just a few clicks, established brands are no longer an advantage.

Result: Toys “R” Us didn't lose because of a “technological failure,” but because of a lack of differentiating capabilities.

They fought with other people's weapons – and defeat was inevitable.

When traditional businesses know how to "reinvent" themselves.

While Toys “R” Us disappeared, many other businesses in the same industry rose to prominence by focusing on creating value, rather than chasing after the latest technology.

Case 1: Build-A-Bear – Transforming Customers into Innovators

Build-A-Bear doesn't just sell teddy bears, they sell the experience of making teddy bears.

Customers can personally choose the color, stuffing, outfit, name, and even record a message to include in the product.

Each toy becomes a personalized memento – something that e-commerce cannot replicate.

Result: Revenue and the number of stores have grown continuously for four consecutive years.

Build-A-Bear is no longer just a "retailer," but an experiential and emotional brand.

Case 2: Ace Hotel – When the "hotel lobby" becomes a competitive advantage.

Instead of competing with Airbnb on price or number of rooms, Ace Hotel transformed its hotel lobby into a communal space.

They created an open coworking space with free Wi-Fi, coffee, and organized events for networking between tourists and locals.

From a place to rest, a hotel has become a place for connection, experience, and belonging.

Ace Hotel doesn't compete on "sleep options," but on the sense of community – something Airbnb can't offer.

Three crucial lessons for traditional businesses.

• Accept reality and leverage existing strengths.
• Businesses don't need to become "tech companies" to survive.
• Instead of imitating your competitors, leverage the value that only you possess: your people, your experience, your brand story, and your loyal customer base.
• Put the customer at the center, not the product.
• In the digital world, consumers don't just "buy," they "experience."
• Those who understand the customer journey, emotions, and underlying needs will maintain customer loyalty.
• Creating unique value, touching emotions.
• While everything else can be copied, what cannot be copied is the meaning and emotion that a business conveys.
• Emotional value – not low price – is the key to helping businesses escape the fierce competition.

Execution Playbook: What Traditional Businesses Should Do in the First 90 Days of Digital Transformation

Phase 1 – Building the Data Foundation (Weeks 1–2)

• Standardize customer information (name, email, source, purchase behavior).
• Connecting channels: Facebook, Zalo, Gmail, website, store → dumping data into a single system.
• Build your first landing page to generate leads from advertising channels.

Phase 2 – Automating the Customer Journey (Weeks 3–4)

• Create 4 basic workflows: Welcome, Post-Purchase, Reactivation, Workshop/Event.
• Use AI to write automated email and text message content tailored to each customer group.
• Monitor key metrics: Open rate, CTR, and repeat purchase rate.

Phase 3 – Expanding omnichannel & community (February–March)

• Implement Click & Collect (order online, pick up in store).
• Develop a Membership program: reward points, workshop discounts, early access to new products.
• Organize in-store experiential events (mini workshops, community gatherings).

Phase 4 – Measurement & Optimization (From March onwards)

• Set North Star Metric: % of revenue from returning customers.
• Evaluate the effectiveness of each advertising channel based on CPL, ROAS, and CLV.
• Automatically cut budget from underperforming channels and increase budget for profitable channels.

GTG CRM – A platform that helps businesses "re-emerge" in the digital age.

A platform that helps businesses "re-emerge" in the digital age.

Instead of being a standalone marketing tool, GTG CRM acts as a "growth operating system" for businesses during their digital transformation.

1. Data consolidation – a holistic view of the customer.

GTG CRM helps businesses store all information from multiple sources: Zalo, Facebook, Gmail, website, offline stores, etc.

From there, you can understand exactly who is buying, where they are coming from, how they interact, and what they need next.

2. Automating the customer journey – nurturing customers

Automation workflows allow you to set up intelligent sequences of actions:

For example, when a customer leaves their information on the landing page → the system automatically sends a thank-you email with a discount code → if they don't make a purchase after 3 days, it automatically sends a consultation message → after 7 days, it reminds them again via Zalo message.

All of this happens without a manual sales team.

3. Create a seamless experience – enhance emotional value.

GTG CRM allows you to create landing pages, emails, messages, advertisements, and more on a single platform, ensuring consistent brand messaging throughout the entire customer journey.

Customers feel valued, remembered, and served – not just "sold a product."

4. Data-driven measurement and decision-making

Consolidated financial statements help businesses understand:

• Which channel is generating real revenue?
• Which expenses are being wasted?
• Which customers are the most valuable to focus on?

As a result, businesses can optimize costs, increase efficiency, and build long-term competitive advantages.

Quick check: Has your business "awakened" to the digital age?

• Do you know exactly which 3 customer groups generate 80% of revenue?
• Are you collecting and storing customer data in a single location?
• Are your marketing channels interconnected or still disjointed?
• Are you using automation to nurture your customer base automatically?
• Can you measure the CLV (Customer Lifetime Value) of each customer group?

If you answered "no" to more than two questions, then it's time you needed a system like GTG CRM to restructure the entire customer journey.

Conclusion: Adaptation is not about "going online," but about "rethinking values."

Toys “R” Us failed because they viewed digital as a new channel.

Build-A-Bear and Ace Hotel succeeded because they viewed digital as a tool to amplify their own identity.

GTG CRM doesn't make businesses "succeed because of technology" – but helps them use technology in the right places, to:

• Gaining a deeper understanding of customers,
• Building longer-term relationships,
• And to create a more authentic experience in the digital world.

Digital transformation is not a race to keep up with technology – it's a journey to rediscover human values in the digital age.

And GTG CRM is the perfect companion on that journey.