Things keep getting worse for the retail giant that was once a leader in toy sales.
Toys R Us is a shadow of its former self. Though they once sold more toys than any other location in the US during periods throughout the 1980s and 1990s, the title of top toy-seller now belongs to Walmart.
The emergence of American big-box retailers like Walmart and Target made Toys R Us less of a unique experience. Combined with lower prices and margins, this made it hard for the once-bustling company to continue their former success.
But things have been going bad for a while. Coupled with big competition from brick-and-mortar retailers as well as online shopping giants such as Amazon and eBay, Toys R Us has been struggling. New ownership used a lot of funds to pay off their own debts, and lackluster sale numbers continued – this left the company in a very tough spot.
Despite filing for bankruptcy protection and attempting to save their business by building up their online services to a larger degree, the company didn’t find the recovery it was hoping for.
Even their associated companies and product providers like Hasbro and Mattel reported losses as Toys R Us’s stocks continued to slip.
One reason for this is that toys and games may no longer offer the type of appeal they once did – at least enough to warrant a dedicated retailer. With big-box retailers now having their own toy departments, it is easy for parents to get toys for their kids while they complete their own shopping duties.
Likewise, kids are more likely to ask for digital games today, meaning the toy market isn’t viewed like it used to be.
Last year, the company reported they were closing 182 stores in an effort to save money and focus their efforts on their highest-performing facilities.
But those plans apparently didn’t work as well as management hoped. Next week, the company could potentially close all 800 of its stores within the span of several weeks.
This could have a chain reaction, affecting stock prices of their partner companies once more and also leading to a major rollback sale on the company’s remaining inventory. Management did note that in the event of complete liquidation, they wouldn’t want to drag the proceedings out.
Doing so would cause them to incur more costs. The longer they stay open, the more rent and fees they have to pay to their respective property owners and suppliers.
There have been multiple theories about what exactly went wrong and how the company could’ve extended their lifespan or at the very least changed their business model to remain relevant. Using the unique area for parties and gatherings could’ve been a good possibility, as could hosting live demos and product exhibitions.
But even that may not have helped the company generate the type of revenue it needed to stick around. But with retailers in general facing more pressure today, those based in specific industries are in perhaps the toughest spot of all.