Late in 2017, retail toy giant Toys R Us announced it was filing bankruptcy. With $5 billion in debt, the nation’s largest independent toy seller saw no other way out.
Since that time, the corporation has planned the slow closure of hundreds of its big box toy stores. That will impact thousands of workers. Companies that make toys and games, transportation services that deliver by the truckload, and owners of rental properties housing the huge stores will feel the pinch too, won’t they?
Toy Industry Impact
Small toy shops might be rejoicing. Other big companies like Amazon, Walmart, and Target might pick up sales when Geoffrey the Giraffe is no longer competing. But what happens to toymakers?
Toy companies will lose a place to test new toys. Toys R Us has served as a launchpad for emerging toys and trends. Jim Silver, toy review site editor, says, “Toys R Us was known as an incubator.” With miles of shelf space available, new toys got hands-on exposure in the aisles. If one flopped at Toys R Us, the manufacturer took that seriously. If it performed well, the manufacturer could confidently roll it out to other sellers.
In addition to recreating testing processes, toymakers will have to work harder to find new sales outlets. Will Walmarts and Targets offer space for all the variety? How many Mom-and-Pop toy shops would it take to replace a single Toys R Us?
Giants like Mattel and Hasbro will probably bounce back after an initial hit. But smaller toymakers will struggle to make up for the loss, says Silver. They may sell out to big companies rather than risk financial failure.
Real Estate Impact
Real estate executives differ about the Toys R Us impact on the mostly strip-malls that housed the giant stores across the United States. Some say rumblings about financial troubles have gone on long enough. Landlords may have future tenants already lined up to fill the predicted vacancies.
But others say the sheer size of the stores that are closing creates a difficult challenge. Few other potential clients can fill the 30,000-square-foot-each space Toys R Us used. Real estate analysts say it’s difficult to fill spaces over 25,000 square feet. Dividing large space into smaller ones is costly too.
What Went Wrong?
Sales were hurt by the gradual shift to mobile device playtime. Rather than interact with a real toy, game, puzzle, or ball, many kids pick up tablets or phones and choose apps instead. That’s a difficult trend to slow—much less reverse.
Additionally, analysts say that Toys R Us didn’t do enough to promote online purchases. It depended on foot traffic into stores to drive sales: see the toy, want the toy, buy the toy. But parents and even grandparents shop online. Some interviewed admitted that if they went into a Toys R Us at all, it wasn’t to buy anything. They say they went to browse, knowing they would buy online at lower prices through Amazon.com.
What could have kept the physical stores thriving? No one can say for sure, but ideas include making “can’t-miss opportunities” for families in stores. Birthday parties, holiday events, hands-on science exploration tied to specific toys or kits, performers—anything to get kids into the retail area with adults willing to pay for product on the spot.
Without that kind of out-of-the-box thinking, the 70-year-old big box may now be out of the game.
The vast variety and availability of disposable toys has been blamed for fueling materialism—desiring things—in children. We are naturally inclined to be discontent when we don’t get what we want. Deuteronomy 14 talks about our tendency to crave and spend on things that aren’t necessarily for God’s glory.
Will the loss of the massive, common toy center affect this generation’s materialistic attitude? Or will it simply shift elsewhere? Is “out of sight” really “out of mind” for Toys R Us kids?