I have to admit: a part of my childhood died when Toys R Us filed for bankruptcy. I vividly remember going to their stores, playing with every toy on my wish list while singing their jingle (“I don’t wanna grow up because if I did, I wouldn’t be a Toys R Us kid!”). My wife and I still own the Monopoly set we bought—at Toys R US—when we were in college.

When news broke that Toys R Us would close all of its remaining U.S. stores many people blamed Amazon as the culprit. But according to CNN Money, Amazon was not the culprit. They noted “The company’s biggest problem: it was saddled with billions of dollars in debt. That debt stopped it from making the necessary investment in stores. And that mean an unpleasant shopping experience that doomed the chain. (emphasis added).”

So what can credit unions and banks learn from Toys R Us? Here are four strategic lessons from the death of Toys R Us:

  • Invest in the consumer experience—As Greg Portell, lead partner at retail consultant A.T. Kearney said of Toys R Us, “If you’re going to have that breadth of inventory, you need someone in the store to help you experience it.” The same “experience” philosophy applies to credit unions and community banks. If you are concerned about competing against large national banking chains or upstart fintech companies, then you must make your experience your differentiation strategy. This means investing in journey mapping and training your staff to deliver that experience.
  • Make the hard decisions—The CNN Money article noted that “despite sharply declining sales, Toys R Us was extremely late to the game in closing stores…..the closings in recent weeks were too little, too late.” Toys R Us needed to make some hard decisions (closing stores) several years ago. But they chose to wait. Sound like any branches at your credit union or bank? Closing a branch is one of many hard decisions you sometimes have to make as a leader of a financial institution. Other difficult choices could involve people or policies. No matter what challenge you are facing, fence sitting won’t solve it.
  • Adjust your strategy—Once Walmart began selling toys in earnest they were a serious threat to Toys R Us. Then came Amazon. Along the way the giant toy retailer never really changed their brand or their strategy. They relied too much on an outdated business model. When was the last time your credit union or bank made a serious turn in its overall strategy? Too many years the strategic plan is just more of the same. A flexible plan is a winning plan.
  • Develop a multi-generational approach—While Toys R Us was certainly part of my childhood, it wasn’t necessarily a part of my daughters. We were registered for baby gifts there and we occasionally took them to a Toys R Us location when they were under five, but they don’t have the same connections that I did. Toys R Us had a wonderful opportunity to conduct a generational marketing campaign, linking one generation to another. But they never really adopted that strategy. Financial services plays a key role in the life of any family. Money is tied memories. Opening that first savings account for a child, getting a teenager a debit card to go with their checking account and helping a student finance part of their college education. Those are all “transactions” than can actually link generations together.

Rather than just reading about Toys R Us’ bankruptcy and lamenting the loss of a cherished childhood memory, we must learn from it. Avoiding their fate means avoiding making their strategic missteps.  Investing in your experience, making hard decisions, adjusting your strategy and reaching multiple generations ensures your credit union or bank is heading down a better path.