Backstory: Toys ‘R’ Us — The Epic Tale of ‘The World’s Biggest Toy Store’

It was the late 1940s and the dawn of a new era in the U.S. With World War II firmly planted in the rearview mirror, families settled down in some of the country’s first planned communities. Amid the suburban sprawl, Charles Lazarus — a cryptographer in the U.S. Army — returned to civilian life and began to crack a different code by accident: how to build an iconic, multigenerational retail empire.

Lazarus started Children’s Supermart by dealing cribs, changing tables, and other baby furniture out of his dad’s bicycle shop in Washington, D.C.

“Everybody I met in the service said they were gonna go home and get married and have children,” Lazarus told Mark Aaron in a biographical interview in 2016, parts of which were later released on YouTube. “I did anticipate that there might be a baby boom, but I had no idea where it would go or what the size of the toy business could be.”

Within a few years, he noticed parents hunting for toys as their kids got older. In 1957, the business evolved into Toys “R” Us (TRU) with the opening of a new store in Maryland, but babies remained key to the store’s success. During the same year, Chicago entrepreneur Larry Hochberg opened a similar store with a similar concept, mission, and name: Children’s Bargain Town U.S.A.

Borrowing tricks from the grocery trade, Lazarus and Hochberg fashioned their stores in a “supermarket” style. By the mid-1960s, both Children’s Supermart Inc. (doing business as Toys “R” Us) and Children’s Bargain Town U.S.A. were sold to Interstate Department Stores and eventually rebranded as Toys “R” Us across the country.

By the mid-1970s, Geoffrey the Giraffe was an advertising icon, but TRU was Interstate’s only profitable division. When the parent company went bankrupt, Lazarus took the helm as CEO of the newly formed Toys “R” Us Corp.

TRU developed its famous “rainbow stripe” store design and expanded rapidly just in time for a pop culture-fueled explosion of new toys based on popular TV shows and movies, including the release of Kenner’s Star Wars action figure and vehicle collection.

“Toys ‘R’ Us was the heart of the toy business,” says Isaac Larian, founder and CEO of MGA Entertainment. Larian founded his company in 1979 as ABC Electronics before changing the name to Micro-Games America Entertainment. “I got my start in Toys ‘R’ Us by selling directly to Charles Lazarus first, and because of that, the company will always have a special place in my heart,” he says. Amid the birth of the U.S. video game industry, Larian was selling imported electronic games to the kids who grew up to become the first, official “kidult” collector generation.

Future novelist James Patterson was working in the advertising business when he came up with a slogan that Linda Kaplan Thaler turned into one of the most famous jingles of all time: “I Don’t Wanna Grow Up, I’m a Toys ‘R’ Us Kid.”

In the ‘80s, some of the hottest toys and properties of all time propelled TRU’s success, including Cabbage Patch Kids, Care Bears, Transformers, the Nintendo Entertainment System, and Teenage Mutant Ninja Turtles. Lazarus believed that his stores had to have everything — piles of toys that would “wow” kids and, borrowing from the Sears catalog’s model, exclusive toys and games that customers couldn’t get anywhere else.

TRU was a global operation that grew as its direct competition gradually disappeared, but trouble was brewing at home. The retailer was losing market share to Kmart, Target, and Walmart as stores used diapers as loss leaders to get customers in the door. Meanwhile, TRU ruffled feathers by using its heft to pressure vendors into priority pricing and wider assortments.

As competition from other toy chains — including Child World and Lionel Kiddie City — crept in, TRU stayed on top with its secret weapon: babies.

Lazarus knew that baby products were the hook to create lifelong customers, but they had a limited shelf life. Parents might buy a single high chair, but they’d spend years coming in for diapers and would eventually turn their attention to toys. With Kids “R” Us, the company tried capturing the fashion business as kids aged up, but those efforts failed. Lazarus stepped down as CEO in 1994, but stayed on as chairman of the company. Two years later, the company launched Babies “R” Us (BRU) as the toy industry continued to evolve.

“We had an amazing brand identity. If you asked, ‘Where should I get toys?,’ people would say, ‘Toys ‘R’ Us,’” says Michael Drake, who ran the TRU action figure business from 1998-2002. Drake struck up an accidental friendship with Lazarus that grew over lunches together at Pizza Hut.

“There was an unspoken thing that you weren’t supposed to talk to Charles because he was considered to represent ‘the old way.’ He was like Stan Lee, a figurehead for the company at that time,” Drake says. The “new way” was untested computers that initially made bad decisions. “For the most part, the system worked, but it needed human intervention,” Drake says.

TRU began a fight with technology as market share plummeted. The Toy Book reported in May 1999 that Walmart dethroned Geoffrey to take 17.4% of the market share versus TRU’s 16.8%.

Under CEO John Eyler, TRU opened its flagship store in Times Square in 2001. The store was hailed as “The Center of the Toy Universe” — a public symbol of what the company could be. But behind the scenes, things weren’t as cheery.

TRU leadership came and went, along with the company’s drive to be No. 1. As the years went on, a deal and lawsuit with Amazon — under which TRU basically taught Amazon how to sell toys — took its toll and there was just no competing with Walmart. In a 2004 interview with The New York Times, Ursula Moran, vice president for investor relations and corporate communications at TRU, declared “We’re No. 2. Nobody else is close to us at this point. We have held our own against Walmart reasonably well.’’

By 2006, the company was a year into the leveraged buyout that would ultimately crush it. CEO Gerald Storch tried to unite its divisions with side-by-side TRU/BRU combo stores, but the company was buried in debt and losing focus. It scooped up the scraps of rivals FAO Schwarz and KB Toys, but did so without investing in its existing stores.

Over the next decade, Geoffrey fell out of favor as consumers complained about dirty, overpriced stores; a clunky website; and frequently out-of-stock basic items and hot new toys. In 2015, the flagship TRU and FAO Schwarz stores in Manhattan closed their doors.

During the company’s 2017 first quarter earnings call, CEO at the time David Brandon blamed “overall weakness in the baby business’’ and “aggressive price discounting by competitors” for a $35 million decline in sales.

Less than a year later, following the largest retail bankruptcy in U.S. history, TRU closed its doors in the U.S., just three months after its founder died.

But Geoffrey wasn’t gone long, as TRU emerged as a new company in 2019 — Tru Kids Brands — and made an attempt to keep the brand alive through short-lived partnerships with other retailers, including Kroger and Target. A pair of experiential mall stores in Houston, Texas, and Paramus, New Jersey, opened in 2019, but were quickly shuttered thanks to the COVID-19 pandemic. Now, under ownership from WHP Global, Geoffrey is making another go at things in the U.S.

A new, double-decker global flagship store operated under license by Brooklyn’s Toys 4 U opened at the American Dream mall in New Jersey just before Christmas last year. The new store packs a ton of toys and games into a 20,000-square-foot space that includes some features inspired by the old Times Square store, including an ice cream shop, a two-story slide, and areas for photo ops. A partnership deal with Macy’s will launch TRU store-within-a-store concepts open in more than 400 Macy’s stores later this year.

“The Toy ‘R’ Us brand is big and growing fast,” Yehuda Shmidman, WHP Global and TRU Chairman and CEO said in a statement issued in December. “Today we have more than 900 stores and e-commerce sites operating across 25 countries. … Now our U.S. expansion plans are in high gear.”

But with the toy industry having evolved to record sales numbers in the absence of TRU, there are some conflicting views as to how successful the relaunch and expansion plans will be, particularly because specialty and mass retailers have upped their game.

“Frankly speaking, I’m not sure that consumers care at all — the public has moved on in the U.S.,” says Basic Fun! CEO Jay Foreman, citing the success of TRU internationally. ”We hope that Macy’s can make it work, and we will support them. But we have no confidence that the owners of the Toys ‘R’ Us brand can make a go of standalone stores.”

Larian, who tried to buy TRU in 2018, is cautiously optimistic. “There’s a need for a self-standing toy specialist chain in the U.S., and if it’s done right, it will succeed,” he says. “I hope the new owners are serious and invest in the business.”

As Geoffrey moves forward into a new era, perhaps it’s time to look back on what Charles Lazarus built and what made it great the first time around.

“It’s a happy business,” he said in his 2016 interview with Aaron. “Nobody has to buy what we sell — you buy it because you want to buy it.”

This article was originally published in the May 2022 edition of the Toy Book. Click here to read the full issue! A version of this story previously appeared in the Winter 2022 issue of our sister publication, the Pop Insider.