In 1999 Toys 'R' Us faced the most challenging time of its history. After recording losses for the first time in 1998, it lost its number one position in toy retailing to Wal-Mart and was late in entering electronic retailing where eToys was pre-empting the competitive space. How would TRU be able to reaffirm its competitive position and improve its profitability? This case allows an analysis of the strategy of 'commitment'/'category killer', its sustainability, the threats and opportunities of e-commerce to established players and the strategy/viability of the new e-commerce competitors.