Turmoil in Toyland

America's No. 1 toy store isn't having much fun these days as kids grow up faster and competitors abound. Will yet another new concept lure holiday shoppers back to Toys R Us?

There's a kid in Alex Gonzales' seventh-grade class--we won't mention any names--who still plays with X-Men plastic action figures. "He's kind of weird," says Alex, 11, of Fontana, Calif. "None of us play with X-Men anymore. We like PlayStation better." Toy-industry experts call this "age compression"--boys shunning G.I. Joe and girls dissing Barbie at ever younger ages in favor of computer games and sporting goods. And it is just one of the obstacles confronting Toys "R" Us as the nation's No. 1 retailer of playthings tries to get itself back on track.

Toys "R" Us faces quickening competition from such all-purpose...

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