Toys ‘R’ Us Files for Bankruptcy Protection, Says Stores Will Remain Open
In another blow to the brick and mortar retail business, giant toy retailer Toys ‘R’ Us has filed for bankruptcy. The filing comes right as the holiday shopping season gets underway. The company, which has 1600 Toys ‘R’ Us and Babies ‘R’ Us stores in the US, has struggled under billions of dollars in debt for years. The company has vowed that stores will remain open as they work to restructure and adapt to a changing industry.
Toy ‘R’ Us, once everyone’s go-to toy store, has struggled to find their foothold in the era of online shopping.
The 60- year old company is has been a staple in toy and baby shopping since it opened. In 2006, they purchased FAO Schwartz, but closed the flagship NYC store in 2015. In 2016, Toys ‘R’ Us sold off the FAO Schwartz segment of business.
As the landscape of retail has changed, stores like Toys ‘R’ Us have remained unchanged, and face more competition than ever. Stores like Walmart and Target have exploded in recent years, offering the same product for less, and with more convenience. Online shopping, which now accounts for nearly 14% of toy sales, has also hit the retailer hard.
While sites like Amazon continue to give us the convenience of online shopping, Toy ‘R’ Us has failed to adapt to the changes in the ways we shop.
With so much debt, the company has been unable to invest in itself and make the necessary changes. Analysts say, “Toys ‘R’ Us hasn’t been aggressive about building its online business, and has let those sales migrate to rivals.” Additionally, the company hasn’t done enough to attract new or more customers, such as better incentive programs and in-store events like birthday parties.
In a particularly brutal blow to places like Toys ‘R’ Us, it turns out kids just aren’t really into toys anymore. At least, not like they used to be.
Electronics like phones, tablets, and other mobile devices have essentially replaced toys on most kids’ wish lists. Because these items typically carry a larger price tag, there usually isn’t much left over in the budget for toys and other things. Toys ‘R’ Us does sell some tech items in stores, but people tend to buy these directly from their phone carriers for packages and data discounts.
2017 has been a tough year for retailers. Toys ‘R’ Us joins Gymboree, Payless, Radioshack, and others on the bankruptcy list, as stores continue to struggle. Even seemingly popular brands like Lego and Mattel and Hasbro are having a hard time. Lego is laying off 1400 employees after a profit drop the first half of the year. Mattel and Hasbro, two of the largest toy makers in the country, both reported disappointing second-quarter numbers. We totally understand why companies like Toys ‘R’ Us are struggling, but it’s still sad to see. On the other hand, when you put out a product that allows you to make your own toys, what else can you expect?!
If or when the stores eventually close, it’ll be the end of an era. What is your favorite thing about Toys ‘R’ Us or Babies ‘R’ Us? Let us know in the comments!
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(Image: Fabeook/Toys R Us)