Toys R Us is looking to save $23 million by implementing a Pan-European structure with shared service centres, outsourcing back office finance functions and streamlining reporting.
These savings are part of a number of cost-cutting and other measures that form part of the company’s TRU Transformation plan. The measures could see numerous head office posts being made redundant in European countries as the company moves away from managing each country in Europe as its own autonomous region.
A new European Management Board will be set-up to take overall responsibility for the region. Existing management teams will continue to handle all issues local to its territory, however, large cost-savings could be made by ordering own-brand and FOB merchandise in larger quantities for a greater number of stores across Europe, rather than allowing each national office to place its own orders.
The potential savings Toys R Us may include reduced manufacturing and cost prices for own-brand and FOB merchandise. There would also be a possible reduction in head office staff as the specifications and negotiations for these goods would be dealt with by fewer people.
The company recognises that attempting to increase market share as a toy retailer against the likes of Amazon and Walmart is unsustainable and therefore it will concentrate its efforts on profitability rather than gross sales.
In 2014, the company benefited from holding back on discounting and plans to do the same this year, as well as spending less on marketing through print and television advertising.