November 26, 2018 | By Clare Becker | Back to news

The summer of 2018 marked the end of an era for Toys “R” Us. As the popular retail toy company closed hundreds of stores nationwide, media outlets debated what the closure might signal more broadly for brick-and-mortar stores.

The Wisconsin State Journal turned to strategy expert Hart Posen, an associate professor of management and human resources at the Wisconsin School of Business, who noted in an article that the company’s troubles are characteristic of a “growing shakeup” in the retail industry. “There is a cascade of competitive interaction that’s affecting all of retail,” Posen told the paper.

Headshot of Peter Lukszys
Pete Lukszys, senior lecturer of marketing

Other media outlets speculated whether the loss for Toys “R” Us might be Target’s gain if the company could position itself to capture the market share left behind.

The shakeup was a prime example of changes and competition in the retail industry, and Pete Lukszys, a senior lecturer in WSB’s Department of Marketing and the Grainger Center for Supply Chain Management, wanted to capture the opportunity for students to learn from this real-time business scenario.

“How might we bring a live case study into the classroom?” Lukszys wondered. “Over the summer, we sketched out some ideas. At a meeting with Target’s supply chain and human resources teams, we agreed that the Toys “R” Us closure topic was ideal. It blended supply chain strategy with omnichannel logistics and was very relevant for our students.”

Thanks to the Grainger Center’s connections with top industry leaders, Lukszys asked Aaron Jillson, senior director of inventory management at Target, and Alex Thunstrom, senior inventory manager, to come to his undergraduate and graduate-level logistics management courses to share their expertise in supply chain and logistics and to talk about Target’s strategy to capture the Toys “R” Us market share.

 Learning about Target’s omnichannel strategy

 To give some context to the larger Toys “R” Us discussion, Jillson gave students an overview of how the company’s supply chain had evolved over time.

Target’s plan to increase toy sales benefits from the company’s move to an omnichannel model of shopping, which gives customers a seamless experience where they can choose among shopping online, by phone, or in brick-and-mortar stores. To do that, the company is transforming how its shipping and supply chain operations function.

“The role that operations and logistics now plays underscores how much of a pivot we’ve made as an organization,” says Jillson. “We used to talk a lot about about brands, marketing, merchandising, and partnerships, but we’re now treating operations and logistics as a headlining topic. We’re not just playing catch-up with other retailers; we’re using it as a point of differentiation and the opportunity to establish Target as a true operations-based company.”

Regardless of Target’s next move, WSB students will be watching—and understanding the strategy behind it.

With the omnichannel model, shipping demands innovative solutions and has become “more of an hourly conversation,” Jillson told students. Target now uses its stores as hubs—an item ordered online can be shipped directly from a store and no longer needs to come from a central shipping location—and recently acquired Shipt, a company that offers personal shopping and same-day delivery.

Despite the growing focus on shipping, Target’s brick-and-mortar stores continue to be an integral component of the company strategy. The in-person shopping experience underscores Target’s mission of helping families discover the joy of everyday life, Jillson said. As the father of two young children, he can relate. “Yes! I’m getting out of the house!” he said to laughter from the class. “We wanted to make Target the easiest place to shop.”

Anna Marie Kippley (BBA ’20) said having Jillson and Thunstrom walk the class through Target’s decision-making process was valuable. “Target keeps customer experience in mind which has allowed the company to make strategic decisions that maximize customer satisfaction. As a marketing and supply chain student, that is a concept and skill that I am seeking to optimize as well, so hearing from the experts is a very resourceful learning experience.”

Capturing the market share

Jillson and Thunstrom led students through a Toys “R” Us closure timeline and shared a Target activation plan. Students had the opportunity to ask questions about business forecasting, potential risks involved, and how increased toy production and sales might impact Target’s strategy.

As Target scales up and moves to close the Toys “R” Us gap,  Jillson and Thunstrom told students that the company is still working separately on efforts to optimize inventory planning and management across channels and deliver more fulfillment options to consumers. Paul Boyer (BBA ’19), a triple major in information systems, operations and technology management, and marketing, said he appreciated the opportunity to learn firsthand about Target’s logistics and supply chain, as well as how the company was positioning itself to succeed in the wake of the Toys “R” Us departure. “Target’s omnichannel strategy that emphasizes leveraging its vast network of brick-and-mortar stores to process customers’ orders via multiple fulfillment options will enable the company to win in the fast-paced, ever-changing retail landscape.”

Regardless of Target’s next move, WSB students will be watching—and understanding the strategy behind it. “For our students, there’s no substitute for that kind of sharing of expertise, particularly in a real-time business scenario,” said Lukszys.