05/16/2018
Like a lot of people my age, I spend a lot of time in Florida in the winter. Mostly I just want to escape the harsh Upstate New York weather and get outside in the sunshine, but it’s also important to me to get away from my daily routine.
One of the things I try to do while in Florida is to unplug. Not completely, of course, I still use electric lights and I do have a television, but to the extent possible I stay away from computers, tablets, smart phones, et al.
First thing in the morning, I read the print version of the local newspaper, which is something I haven’t done up north in more than a decade. I know it sounds morbid, but one of the sections I always check out is the obituaries.
It’s hard to miss, because obits cover pages 2 and 3, and I have the feeling that I’m not the only person in Florida who pays close attention. It also seems to be one of the few newspaper features which has not migrated to the internet. Print is somehow a more dignified and respectful way to speak of the departed.
When I look through the obituaries, I am especially interested in people who were in their mid to late 90s, because they represent the rapidly disappearing remnants of the World War II generation. Most of the men and some of the women served in uniform, and virtually everyone assisted in the war effort in some capacity. Their survivors are proud of that service, as the obits often devote a lot of space to what was, in years, a small part of a long life.
In March, I read the obituary of a 94-year-old man named Charles, who had been an army cryptographer during the war. That had to be fascinating work, and critically important to the cause, but after the war Charles returned to the relatively mundane task of running the family bicycle shop in Washington, D.C.
Charles was a sharp guy, however, and an ambitious one. He saw the huge wave of servicemen returning home and realized that the next big spike in demand would not be in bikes, but in cribs, cradles, high chairs and strollers. To go along with the furniture, Charles gradually added baby toys to the business, which he renamed “Children’s Bargain Town.”
Eventually, Charles realized that there was a limitation to the growth potential of children’s furniture. Parents would buy things for their first child, but then simply pass the stuff along to any number of subsequent siblings. Toys, on the other hand, were usually purchased new as gifts for each child, and also tended to wear out.
For those of you who haven’t yet guessed Charles’ last name, I’ll give you one more hint. He flipped the two Rs backward in Children’s Bargain Town, to make it look as though a child had written it.
In 1957, when Charles Lazarus opened his first toys-only store in Rockville, Maryland, he named it Toys “R” Us, partly as a play on his own name. It was modeled on Korvette’s, a supermarket-style department-store chain in the New York City suburbs.
Timing is everything, and Toys “R” Us grew with the baby boom generation for which its merchandise was intended. Throughout the late 1950s and early ’60s there were more than 4 million births in the U.S. every year, and Toys “R” Us grew by an annual rate of nearly 20 percent.
The birthrate finally dropped off in 1965, and the following year Mr. Lazarus, not coincidentally, sold his business to the Interstate department store chain. He stayed on as head of the toy division, and when Interstate went broke in 1974, Lazarus took it over as an enlarged Toys “R” Us.
Once again, Charles Lazarus’ timing was spot-on. In the late 1970s the birthrate started to pick up again, as 75 million baby boomers reached their prime child-bearing years. Social scientists referred to it at the time as the “echo boom,” but nowadays it is generally called the “millennial” generation.
Toys “R” Us rode the new wave as it had ridden the old one. By 1987, Charles was the highest-paid executive in America, according to Forbes magazine, at $60 million a year.
Shortly thereafter, though, the company became a victim of the same monster it had helped create. The big-box superstores, led by Lazarus’ old friend Sam Walton, began to eat away at Toys “R” Us (and every other toy store) with more leverage, more shelf space, more advertising, more everything. Lazarus was famous for playing hardball, but so were these guys.
Had that been the only blow to the Toys “R” Us business model, Lazarus’ toy empire might have survived, but there was another one gathering strength right behind it. Everyone saw it coming; they just didn’t know what to do about it.
The worst thing you could do about the online threat was to launch your own ecommerce site prematurely, which is precisely what Toys “R” Us did. Its failure to deliver gifts on time for the Christmas season in 1999 was catastrophic for the company.
Unfortunately, its response to that debacle was another blunder. In 2000, Toys “R” Us signed a 10-year contract to serve as the exclusive toy supplier for Amazon.com. Along the way, Amazon reneged on the deal by letting other retailers sell through its site as well, claiming that Toys “R” Us didn’t carry an adequate selection.
TRU sued Amazon in 2006 and eventually won in court, but by that point Amazon had taken clear control of the online marketplace. If you think the whole episode sounds a lot like Aesop’s fable about the frog and the crocodile, you’re not alone.
Of course there were other contributing factors in the decline of Toys “R” Us beside the big boxes and the internet, not the least of which was the way that the current owners piled it up with debt. And even so, there were probably a number of stores among the 800 U.S. locations that would have been profitable as standalone businesses.
I find myself identifying in a small way with the story of Charles Lazarus, and I’m sure many of you do as well. When I started my own business 34 years ago, my partner and I were baby boomers who were well aware of the echo boom, and hopeful that it would put some wind at our back.
It did, for a number of years. The big-box trend hurt us by hurting our readers, and the internet was worse. It hit our readership, but it also hit the magazine business in general. Yet we persevere, as you do.
Ironically, Charles Lazarus died on the very day that Toys “R” Us began to liquidate its stores. He led a remarkable life, and I don’t feel sorry for him.
For the rest of us, maybe a little.
You can e-mail Kevin at kfahy@fwpi.com.
