Farewell, Toys R Us

Last updated on: March 9, 2018 at 9:23 am by Jane the Actuary

Farewell, Toys R Us 2018-03-09T09:23:02-06:00 Jane the Actuary

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In the news today, Toys R Us is most likely liquidating its US operations. Bloomberg reports,

Toys “R” Us Inc. is making preparations for a liquidation of its bankrupt U.S. operations after so far failing to find a buyer or reach a debt restructuring deal with lenders, according to people familiar with the matter.

While the situation is still fluid, a shutdown of the U.S. division has become increasingly likely in recent days, said the people, who asked not to be identified because the information is private. Hopes are fading that a buyer will emerge to keep some of the business operating, or that lenders will agree on terms of a debt restructuring, the people said. . . .

For Toys “R” Us, the situation has also deteriorated for many of the retailer’s overseas divisions, which weren’t part of the bankruptcy. Its U.K. unit put itself in the hands of a court administrator after discussions about selling the business fell apart. Its European arm is seeking takeover bids. And talks are being held to offload the growing Asian business, the company’s most profitable arm. It’s not yet clear what will happen to the Canadian unit, which filed at the same time as the U.S. division.

I am not an expert in the economics of Big Box retailers, and in particular, I can’t claim any expertise in whether the failures are due to overall developments in the economy — the preferences of consumers to pick up there more everyday toy purchases (“my kid has a birthday party to go to and I’d better get something generically popular ’cause I don’t know the boy”) at discount stores and more specialized items at Amazon — versus mismanagement at the company specifically. And our family was never big Toys R Us shoppers in the first place, making a trip or two for Christmas presents but getting our Lego from the Lego Store and the Playmobil, well, from Grandma, mostly — though we did get a lot of baby gear at their Babies R Us store, especially for the first kid, when we had a number of full-shopping-cart trips. It did seem, though, that our traditional last-minute trip this past Christmas was not as chaotic and long-lined as I remembered in the past, perhaps not unrelated to the fact that, some years ago, they replaced a significant portion of the store with baby gear.

But I’m still asking myself, how will the near-disappearance of The Toy Store affect, not just the toy industry, but the way children play with toys more fundamentally? Toys bought online can’t be examined pre-purchase, and it’s not especially easy to browse for them. Will the TRU demise mean that children will be forever playing with the plastic playsets that Target and Walmart sell? Will word of mouth, or Word of Internet, be more important? What about those of us parents who always wait until the last minute for our present shopping? Will this provide some breathing room for small independent retailers? And where did I put that Dominion board game that I picked up on clearance at Meijers years ago and hid somewhere until Christmas?

Here are a few further words from Bloomberg:

The liquidation will be a big blow for the toy industry, as the chain makes up about 15 percent of U.S. toy revenue. Moreover, the retailer was willing to take chances on new products and small companies. Bigger competitors like Walmart Inc. and Target Corp. would typically take a more cautious approach.

And, yes, I’m not thrilled about the disappearance of bookstores, either, though at least there’s always the library, and that’s really a subject for another day.

This is as far as I go, though, before inviting reader thoughts. Happy Friday!

Image: https://commons.wikimedia.org/wiki/File%3AToys_R_Us_Winchester%2C_VA_(7018801713).jpg; By Mike Kalasnik from Fort Mill, USA [CC BY-SA 2.0 (https://creativecommons.org/licenses/by-sa/2.0)], via Wikimedia Commons

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