About a year ago in September 2017 news came out that the beloved toy store, Toys R Us, was set to file for bankruptcy. They planned to restructure their debt to help with investing and the success of in store and online shopping. Since then, they have closed all 735 stores in the U.S. and discontinued the website, creating an $11 billion hole in the toy industry.
The company could not keep up with the lower priced stores like Target, Walmart, and most notably- Amazon. Originally, Amazon and Toys R Us had an e-commerce deal but ended in a bitter lawsuit. Now, Amazon sells $4-5 million in toys every year. Toys R Us couldn’t bring in as much and the brick and mortar stores brought along huge costs. During the holiday season, Amazon would price toys at low margins and offer flexible shipping costs; Toys R Us simply could not compete, considering they depend only on toys for profits.
Known for its endless supply of toys, dolls, bikes, and electronics, news surfaced this week that Toys R Us will be reviving after deciding it was too valuable to give up. The company plans to “create new, domestic retail operating businesses.” More details and when they plan to do this have not been released, which may cause more questions to be asked regarding the live of the company.
I believe one of Toys R Us’ problems was how late to the game they were with e-commerce. Traffic to their website declined around 40% between 2015-2016. Holiday traffic numbers were also a great indicator of the poor amount of conversions. Businesses that can’t thrive through online and offline stores will struggle against competitors. It will be interesting to see how the company picks back up.