A long-time behemoth in the toy industry, the American group was not able to stay ahead of the digital curve and respond to new consumer expectations. A resounding fall which should serve as an example.
The downfall of America's biggest toy retailer, Toys "R" Us, is the story of a giant with feet which turned to clay due to digital transformation. Unable to handle competition online and struggling with colossal debt, the group declared itself bankrupt last September, sending shock waves through its many branches around the world and its numerous partners. Apart from its leveraged buyout (2005) by investment funds (leading to a debt system which became unmanageable, totalling nearly 5 billion dollars) the end of this flagship brand shines a spotlight on the inability of large enterprise to keep up with the digital revolution, due to a lack of both innovative ideas and adequate financial resources.
An example of "Kodakisation"?
At the point that it came tumbling down like a house of cards, the American giant, founded in 1948, had 735 shops and over 30,000 employees in the USA. Even if the group had been experiencing difficulties for some years, this chronicle of a death foretold is an unfortunate example of "Kodakisation". This neologism – a reference to the former major photography company Kodak – indicates an inability to transform despite a favourable position, to evolve one's business model, change market or adapt to technological progress, new consumer expectations, etc. Put differently, in a market disrupted by the arrival of more innovative competitors – and not small ones, as we're talking among others about Amazon, which has since taken the top spot in online toy retail – Toys "R" Us was not able to "burn its bridges" and transform into a different company, one better adapted to the era of e-commerce.
Failure to stay ahead of the digital curve
However, when it was still run by its founder Charles Lazarus, Toys "R" Us was a model of innovation. Its original concept was to create a toy "supermarket", an Ali Baba's cave for children (and a "trap" for parents). This was a success which transformed the toyshop into a national and international chain with hundreds of thousands of Barbies and Hot Wheels cars. In the 1980s the company was still revolutionary, being one of the first to implement computer-based stock management. It was a visionary concept which put the New Jersey company ahead of the pack – a success which contrasts starkly with the errors that led to the company's failure to stay ahead of the digital curve and sent it to the wall. Coincidence or not, Charles Lazarus retired in 1994, the year in which Amazon was founded by Jeff Bezos, one of those who dug Toys "R" Us's grave. For example, at the start of the 2000s, the brand benefited from granting an exclusivity agreement for its products to… Amazon! But after 10 years of partnership (in 2006), the Seattle colossus opened its platform up to other players in the sector, leading to a fatal slow-down for Toys "R" Us.
Digital marketing is not enough
Toys "R" Us's error was its failure to invest in e-commerce in time. And when the company did want to do so it was too late, due to both the cumulative delay and the lack of financial means. According to some observers, the failure of the American group is synonymous not only with its inability to get to grips with digital transformation, but the result of an "archaic" approach to business more broadly. This was the case when, at its lowest ebb, the company focused heavily on digital marketing and advertising, aiming to boost traffic in its (too?) numerous physical stores. However, with an obsolete business model, this was a case of fighting a losing battle. It is proof that, more than being just a coat of "digital marketing" varnish, the digital era requires a real business revolution to respond to new consumer expectations, technological progress and the challenges posed by competitors. Adapt or fizzle out…
Scale-up concludes mega contract in the midst of the coronavirus crisis
The Antwerp-based scale-up IPEE transforms ordinary toilets into innovative products. BNP Paribas Fortis is more than just the financial partner. IPEE have already come into contact with the right people via the bank’s network several times.
“The traditional urinal has no brain. The infrared eye simply detects that someone is standing in front of the urinal. The result? A lot of wasted water and misery”, says Bart Geraets, who founded IPEE in 2012 together with Jan Schoeters.
The scale-up devised new measuring technology that makes it possible to detect through the ceramic of a urinal when someone is urinating or when the urinal is blocked. With this innovative technology, the scale-up designed urinals that use half as much water and toilets that can be operated without touching them.
“IPEE is an atypical scale-up that innovates in a sector where little has changed in the past few decades”, says Conchita Vercauteren, relationship manager at the BNP Paribas Fortis Innovation Hub.
Jan Schoeters: “At first we mainly focused on durability. But we soon felt that with non-residential applications, the potential water saving is subordinate to the operational aspect. We had to be able to offer added value for each stakeholder in the purchasing process.”
We opted for sleek designs to appeal to architects and end users. The simple installation attracts fitters and maintenance people see the advantages of the sleek design - that is easy to clean - and toilets that do not overflow.
Until 2015, Schoeters and Geraets, along with Victor Claes, an expert in measuring methods and originator of the IPEE technology, put their energy into product development and market research. The financing came mainly from money that they collected in their network of friends, fools and family.
They had to go elsewhere to obtain the funds for production and marketing. Geraets: “We had a product, but it wasn’t ready to sell. To take that step, we needed investors.”
Looking for new investors was a challenge. Schoeters: “We aren’t software developers and we don’t work in a sexy sector. So we miss out with a large target group of investors.”
The young scale-up attracted the attention of Ronald Kerckhaert, who had sold his successful company, Sax Sanitair, at the end of 2015. “He pushed us to think big, more than we dared ourselves. And he never headed for an exit. His express goal was to put our product on the world market”, says Schoeters.
IPEE has achieved impressive growth since then. The product range was expanded and new sectors were broached: educational institutes, office buildings and hospitals. The technology is now used by Kinepolis, Texaco, Schiphol and Changi Airport (Singapore).
“We very soon turned to Asia, because new technology is embraced more quickly there”, Geraets explains. The IPEE technology is distributed in Singapore - where the scale-up has its own sales office - China, Thailand and Vietnam, among other places. About half the turnover comes from abroad, although the coronavirus crisis will leave its mark this year.
“My biggest headache is achieving healthy growth”, says Bart Geraets. One advantage for IPEE is that in coronavirus times, hygiene stands high on the agenda. The scale-up's touchless toilet facilities meet that demand.
At the same time, the shortage of water and the need to use water sparingly is very topical. Geraets: “We notice that in these strange times we are gaining an even bigger foothold. In the midst of the coronavirus crisis we concluded a contract with the world’s biggest manufacture of toilet facilities. Now it’s a matter of further professionalising our business, the personnel policy and the marketing.”
The company’s main bank is an important partner here. Schoeters: “It is more than just a financial organisation. We have already come into contact with the right people via the bank’s network several times. Our bank feels more like a supporter that is also putting its weight behind our story.”
#StrongerTogether Lasea decontaminates masks using lasers
Lasea conceives precision laser solutions for high-tech industry. Faced with the coronavirus crisis, the Liège enterprise revived an old project to decontaminate surgical masks – and respond to the shortage of face coverings.
The secret weapon of Lasea is the femtosecond laser. This has an accuracy of 0.2 micron, 200 times smaller than a hair. Lasea’s high-tech equipment is notably used in horology, electronics, medicine and pharmaceuticals. Given the shortage of surgical masks, the Liège enterprise revived an old project for decontaminating, as Lasea CEO Axel Kupisiewicz explains.
“We had tested laser decontamination 20 years ago. At the time, the project had no commercial outlets. With the coronavirus crisis, we proposed using it to decontaminate used surgical masks. That’s how we joined a consortium managed by the University of Liège to develop a decontamination chain. Usually, it takes many months, even years, to carry out the tests and obtain certification. Thanks to the collaboration between the university and the Walloon government, everything was done in a few weeks.”
Reinvention thanks to a crisis
Lasea proposed two decontamination techniques. “For the first, we used a laser device manufactured by Aseptic Technologies from Gembloux, which we adapted to meet local needs,” explains Mr Kupisiewicz. “For the second, we have entered into a partnership with Optec, in Mons. This latter solution makes it possible to treat three or four times as many masks each day.”
Lockdown has also generated a new dynamic within the business. “We launched a brainstorming session to refine the strategy for the coming years. The result: a new organisation after the move to our new building, financed by BNP Paribas Fortis. On the other hand, the widespread use of videoconferencing has created a new dynamic at the heart of the company. Previously, the Belgian team, who were gathered physically on site in Liège, were in a way privileged in meetings with their French, American or Swiss colleagues, present via videoconferencing. Now, everyone is on an equal footing because everyone is behind their screen by themselves. It’s one of the interesting aspects of lockdown that has created a global spirit in an international group.”
A relationship of trust
“BNP Paribas Fortis has been by our side since the beginning, 21 years ago,” recalls Mr Kupisiewicz. “First via the local branch in Sart-Tilman and now, for seven years, via Corporate Banking. Given Lasea’s developments, enlargement to several banks was necessary, but BNP Paribas Fortis remains the primary bank. I place huge importance on personal relationships and a climate of trust. Be it the branch manager or staff at Corporate, our relationship managers know our activities and our products. It’s important: they understand the issues we face and as a result they know our financial needs.”
“Since the beginning of the crisis, the bank has asked if we need support to develop this project of decontaminating masks. We have been able to implement these solutions by redeploying our teams and we have not needed a large injection of capital. We have, on the other hand, welcomed the moratorium on repayment of capital on all our investment credits.”
#StrongerTogether Wearable tech guarantees distance between workers
The Antwerp technology company Rombit has developed a safety bracelet for workers in ports and industrial settings. This guarantees social distancing, and also allows for contact tracing in the event of coronavirus infections.
Since 2012, Rombit has developed digital applications for maritime businesses, port terminals, the industry and building sites. Its software and hardware solutions aim to make operational activities more efficient, safe and dynamic. For the purposes of social distancing, the company has now launched a smart bracelet: the Romware Covid Radius.
“This wearable tech guarantees 1.5m distancing,” explains CEO John Baekelmans. “If two employees get too close to each other, it sets off an alert. Thanks to contact tracing, a prevention advisor or confidential counsellor can check which colleagues an infected worker has come into contact with. Their privacy is 100% guaranteed. That is unique.”
The Romware Covid Radius is a variation on the existing Romware ONE: a bracelet that brings together 20 safety functions, including access control, an incident tracking system and an alarm for approaching vehicles. In just two weeks, Rombit optimised a derivative solution that facilitates safe working during the coronavirus outbreak.
“An extensive test of the Romware Covid Radius is being carried out in the Port of Antwerp,” says Mr Baekelmans. “Roll-out to other businesses will follow and they will integrate our safety bracelet into their new way of working. There is already huge interest at home and abroad. We are talking with some major players in the industrial sector.”
In response to the great interest in the Romware Covid Radius, Rombit has already markedly increased its production in Taiwan. Mr Baekelmans also expects a growing need for short-term financing. “Close cooperation with your lender is essential,” he says. “In BNP Paribas Fortis, we have a good partner.”
“Rombit is part of the BNP Paribas Fortis Innovation hub,” says relationship manager Conchita Vercauteren. “With the hub, the bank supports innovative start-ups and scale-ups that are contributing to a better society. The fact that Rombit wants to distribute its coronavirus solution so widely and at as low a cost as possible clearly testifies to social responsibility.”
#StrongerTogether: BeWell Innovations screens for coronavirus infections
The Antwerp scale-up BeWell Innovations has developed an app that screens the risk of coronavirus infections. The company has also launched a platform that monitors patients with mild symptoms at home and sends their details to the hospital treating them.
Using a questionnaire, the Covid@Home app assesses symptoms that could indicate coronavirus infection. Based on the answers, it estimates the risk of infection and advises the user on whether they should contact their GP. BeWell Innovations does this using an algorithm it developed with the expertise of UZ Gent. The app is also overseen by the government.
The young company has also placed self-test kiosks in hospitals. “They combine a questionnaire with measurements of temperature, blood pressure, oxygen saturation and weight,” explains CEO Alain Mampuya. “This is how an initial triage takes place, leaving doctors and nursing staff to concentrate on the people who are actually infected.”
The Covid@Home platform has a monitoring system that allows patients with mild coronavirus symptoms to recover at home in a controlled way. “They have to complete a questionnaire every day and register vital parameters such as temperature, blood pressure and oxygen saturation,” says Mampuya. “These details are automatically sent to the hospital.”
Thanks to this digital tracking, patients and doctors can be assured of close monitoring. The information is translated into specific alarm signals: based on these, medical staff can decide to hospitalise the patient at any time. The platform also makes remote consultations possible via videoconferencing.
Support from the bank
BeWell Innovations is part of the BNP Paribas Fortis Innovation hub. “This is a community of promising start-ups and scale-ups,” explains relationship manager Conchita Vercauteren. “As a bank, we approach them differently to traditional businesses: we focus on the future and not on the past. We want to contribute to useful innovations for our society.”
“BNP Paribas Fortis has played a crucial role in our growth,” says Mampuya. “The financing of a start-up or scale-up is not without risks, and the bank has always stuck its neck out for us. As a result, BeWell Innovations has been able to do its own thing, without being dependent on an investment group.”
- Toys "R" Us: the fall of a giant unable to adapt
- Scale-up concludes mega contract in the midst of the coronavirus crisis
- #StrongerTogether Lasea decontaminates masks using lasers
- #StrongerTogether Wearable tech guarantees distance between workers
- #StrongerTogether: BeWell Innovations screens for coronavirus infections