Submitted by: Submitted by syedjmohammad
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Category: Business and Industry
Date Submitted: 07/20/2010 02:38 PM
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, Lazarus regained control in 1978 through a management-led
buyout.
The TRU strategy is based upon price, selection, and keeping stores in-stock. As Lazarus
explained, "When a customer walks through our doors with a shopping list, we better have 95
percent of what's on her list or we're in trouble."3 The EDLP (every day low prices) strategy and
in-stock image stimulates purchasing year-round instead of primarily during the Christmas
season. Baby diapers and formula are sold at or below cost, in hopes of winning over new
parents and keeping them as customers as their children mature. This strategy has won TRU a
steadily increasing share of the retail toy market, rising to about 22 percent in 1995.
TRU shifted its goals for expansion dramatically in 1983. The firm entered the children's
clothing market with Kids "R" Us and established the International Division. Joseph Baczko was
recruited from his job as chief executive of the European operations of Max Factor to lead
international expansion.
Baczko perceived that there were increasing global opportunities in the toy business. In
an article in 1986 for the industry trade magazine, Playthings, he noted that customers overseas
had higher disposable income, were more educated, and had more free time. Moreover, these
buyers were more price conscious and tended to prefer specialty retailers, factors that favored the
international expansion of TRU.4
The first international store opened in 1984 in Canada. In 1986, TRU struck joint venture
deals in Singapore and Hong Kong. The company next expanded to the United Kingdom in
1987, into Germany in 1988, and into France and Taiwan in 1989....