Tru Corporation

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....