Toys ‘R’ Us Didn’t Have to Die

https://www.bloomberg.com/news/features/2018-06-06/toys-r-us-the-world-s-biggest-toy-store-didn-t-have-to-die

by petethomas • 8 years ago

165 215 8 years ago

randomdata• 8 years ago

Has it died? The sale of the Canada arm was finalized only a few days ago[1]. There is no indication that they plan to shut down any time soon.

[1] https://www.thestar.com/business/2018/06/01/fairfax-complete...

dingo_bat• 8 years ago

The original US business is dead. The article is about that. It says that operations in Asia are also fine.

a_bonobo• 8 years ago

The ones here in Australia aren't independent and are currently in voluntary administration. For example they stopped accepting their customer loyalty cards, the one next to me seems to have stopped restocking as well. There are however some bidders to take over the entire Asian arm so it could be fine.

ChrisArchitect• 8 years ago

yeah I heard an odd radio ad in Canada last week where Toys R Us straight out said we're not going anywhere!

gkoberger2• 8 years ago

I read the whole article, and I didn't really see a convincing argument that it didn't have to die. Sure, it could have eked out a few more years... but it was living on borrowed time.

Not only do most people shop online now, most toys are also online. I imagine most parents put money into TV shows, video games, iPhone apps, etc.

ryanisnan• 8 years ago

I agree. Other than manage its debt more effectively, the authors don't really expound on what Toys R Us could have done differently to right the ship.

Was it moving more effectively into online sales? Or alternate business lines altogether?

joe_the_user• 8 years ago

The company had been paying an unsustainable $400 million a year in interest.

Normal intuition would say that maybe the company could enter bankruptcy, wipe out that debt, turn the bond holders into the new owners, have the owners issue stock for a debt free company and sell the stock to pay off a fraction of the money they owed. That would seem like a rational approach that would maximize utility for at least owners and employees.

The problem apparently was that bargaining and brinksmanship destroyed the company before such a result could be considered.

jandrese2• 8 years ago

Wasn't that debt dumped on the company by the firm that bought them out?

jaysonelliot• 8 years ago

There's nothing about the brick & mortar toy space that's inherently living on borrowed time. It was Toys 'R' Us' own mismanagement that doomed it.

Toy stores can be a destination. Provide a compelling experience for parents and kids alike. It's easy to imagine a space where kids get to play with toys hands-on, and parents get to judge for themselves whether they think they're appropriate in terms of fun and quality—something you can't do online.

Make the adult experience a mixture of café and Apple store, and give the kids a safe "penned in" experience like IKEA does in their kids' section. Parents will enjoy the respite, and kids will beg to go. And of course, once they get there, they'll cajole their parents to spend more money. Never underestimate the power of a child in a store.

IKEA has nailed the brick & mortar experience, even though most of their products could easily be purchased online. Toys 'R' Us merely had to abandon their hubris and old thinking, and they could have killed it.

Instead, they languished with a chain of dirty, disorganized, depressing stores, ill-treated and unmotivated employees, and no vision.

They didn't have to die, but their leadership and strategy did.

tlb• 8 years ago

There are a few destination toy stores, but mostly limited to affluent, progressive markets like NYC, SF and Boulder. If your theory is correct, they should be able to scale up nationwide. Why do you think this hasn't happened?

gkoberger2• 8 years ago

It's easy to rattle off a list of things on HN, but a lot harder to build.

If people were invited to come play with toys, they'd just do it for free, enjoy the day, and buy it online after. Your other ideas just seem like... free babysitting? It's not like parents are going to shop for toys while their kids are babysat for free.

I agree the stores aren't great now... but they were working with insane debt and a dying business model.

I don't think it's impossible to sell toys (see: Disney), but it's really hard to do it when you're trying to pivot something like Toys 'R Us with no money to spend and nowhere to really go.

koolba3• 8 years ago

IKEA doesn’t work online because of the cost of shipping on a per unit basis.

yourapostasy7• 8 years ago

IKEA's physical presence only works because they are sole and best-priced supplier of what they offer. Don't build a retail business on the premise that people will want what they handle in the store right now instead of saving a few bucks ordering it online from elsewhere.

The underlying price of the real estate to the revenue brought in by a toys-based sales funnel simply makes these locations untenable to flog products that can be sourced online for cheaper. You need a hell of a lot of sales volume to keep up, and online took away enough volume to starve these models.

The parenting culture is also wise to the models that are built around "hook 'em young and get them to insist on instant gratification". Look inside parenting forums and you'll see a shift in shopping habits, where toy stores are deliberately and consciously avoided precisely because parents are annoyed at the effects.

Personally, I'd rather see more parents teaching children through involvement in daily activities than throwing more toys (including computer and video time) at their children. We're "over-toyed", over-retailed, and "under-practicum'd".

seanmcdirmid4• 8 years ago

FAO Schwartz was such a destination as you describe, until they ran into trouble and were bought by the giraffe.

ghaff2• 8 years ago

And the ultimate toy destination store FAI Schwarz also went out of business. Maybe Toys R Us could have done better but they were in a place where digital was making big gains.

I’m not sure to what degree you can focus on elaborate experiences for stores that are in every shopping mall.

pdpi• 8 years ago

Hamley's (in London) seems to have nailed the whole "destination" thing, and I think it's largely because it treats the adults as bigger, hairier kids.

jonhendry184• 8 years ago

" It was Toys 'R' Us' own mismanagement that doomed it."

It was the private equity investors who loaded it up with debt in order to cash out who doomed it.

You don't have a hope in hell of adjusting to market changes when your funds are tied up paying off the loans your owners made you take on in order to fund their takeover.

pandapunchpower• 8 years ago

There is some scope for a brick and mortar toy store provided they are willing to be double as a pseudo-playcenter.

Toy aisles and toy stores are frequently populated by exhausted parents standing around while their children entertain themselves checking out the toys. The kids are happy enough. The parents are content just to have a few minutes to themselves. Toy retailers typically try and dissuade this behavior.

Meanwhile indoor playgrounds/play centers are a huge and growing business. They are happy for parents to unleash their children while they make their money from entry charges, selling cups of coffee to the parents and snacks for the kids.

Despite having a huge inventory of toys play centers never actually sell toys that I have seen. Tearful children have to leave their new favorite ride on racing car (or whatever) behind when they leave.

_ah• 8 years ago

I think there's a pretty good opportunity here for a large format combined playspace/toystore. Build out the toy area around some hands-on demo spaces, and include the normal playspace items nearby with climbing structures and coffee/alcohol for the parents. The key is: charge admission, then credit back the admission price toward the purchase of any new toy.

People are terrible calculating sunk cost, and I'm pretty sure that the pre-paid $15 admission credit makes a $29 toy look like a "steal", even if you could buy it on Amazon for $24. In fact, I'll bet most parents would be hard-pressed to leave the experience without buying something for every child.

ben10402• 8 years ago

Meanwhile indoor playgrounds/play centers are a huge and growing business. They are happy for parents to unleash their children while they make their money from entry charges, selling cups of coffee to the parents and snacks for the kids.

There's a mom and pop place like this near me. They rented an old dead big box store (I remember shopping there when it was a Circuit City) and filled it with bounce houses and arcade games.

They charge $10/kid admission. Adults are not allowed in the bounce houses, and they've got an area set up with tables and free WiFi for the parents. They'll charge you $3.79 for a soda, so overpriced for sure but not quite movie theater or ballpark pricing.

My son begged to have his birthday party there this year. The parties have to be the big revenue driver, as it was $300 for twelve kids' worth of Domino's Pizza and use of a party room for an hour.

JKCalhoun• 8 years ago

Toys 'R' Us had "curated" the vast swath of toys that exist down to a handful of the usual fair. Barbie, the latest Pixar toys, the standard board-games....

Like corporate bookstores, theater chains, music stores you got the same selection at all their million outlets in the country.

Perhaps it's just me that was tired of the same-ol' same ol' or maybe the public became tired of it as well.

_rpd• 8 years ago

amazon.com killed them, like it is killing whole categories of traditional retailers.

The owners knew it and sold while it was still possible to sell. The buyers gambled that they could cut costs fast enough to compete, but they lost the bet.

voidmain2• 8 years ago

Despite the title and the focus on the form of financing, none of the facts in the article even suggested to me that the company would be in any better shape if it had used equity financing rather than debt. It sounds, rather, like an unprofitable business that no one in their right mind would give any more money.

If someone thinks they can figure out how to make a workable business out of big box toy stores, it sounds like the name is for sale.

hn_throwaway_99• 8 years ago

It at least sounds plausible to me that you could make a toy store a "destination" business if you did something to differentiate it from Amazon: kids parties, video game tournaments, something. You'd have to transform what it means to be a "toy store". Of course, that takes a lot of money, and with Toys-R-Us' debt load there was no way they could have afforded that.

Analemma_• 8 years ago

I don't know if it scales up to big box stores, but this– plus adding food/café– is what a lot of game and hobby stores have been doing, and it seems to be working. There at least five stores like this in the Seattle area (2 of Café Mox, Meeples, etc.) and they seem to do good business.

jwlato3• 8 years ago

You're missing the key piece: Toys R Us didn't go into debt for any good business reason, it was bought by a private equity firm and loaded with debt it didn't need. This is how private equity works:

1. A PE firm uses a combination of other people's money (limited partners a.k.a investors) and debt to buy a company.

2. The PE transfers the debt to the company's books. This way, if the company goes bankrupt the PE fund isn't liable for that debt.

3. The PE firm charges millions of dollars in fees for providing management services. This way the PE firm makes money regardless what happens to the business.

Toys R Us was profitable before it was bought and saddled with debt that was essentially used to purchase it's own business.

JumpCrisscross2• 8 years ago

Toys R Us was profitable before it was bought

“In 2004, after years of flat sales and falling profits, the Toys R Us board of directors put the company up for sale” [1]. Then, over “the next five years, sales at Amazon quadrupled to $34 billion”.

Toys ‘R’ Us was bought as meagre profits fell and right before Amazon went for them. Blaming this outcome on the debt load is inaccurate.

[1] https://www.google.com/amp/s/www.marketplace.org/amp/2018/03...

amelius3• 8 years ago

Why is this legal?

bjl• 8 years ago

I don't understand why people keep repeating this story. Bain Capital had to provide huge amounts of collateral (upwards of a billion dollars), all of which was lost in the bankruptcy. Do people really believe that PE firms will write of a loss of hundreds of millions in order to make a few million in management fees?

chillingeffect• 8 years ago

very sad how far down i had to scroll, through mountains of support for the partyline, before getting to this, the truth of the matter!

here's one of many play by plays out there of what Bain capital has been doing for years: https://youtu.be/NS3s0xDL8A8

voidmain2• 8 years ago

I'm familiar with this narrative, I'm saying that the evidence in the article, though the article is written by someone sympathetic to this point of view, contradicts it. The PE firms, despite their huge fees, lost a boatload of money. No one wanted to buy the business out of bankruptcy for more than it was worth piecemeal. There are easily identifiable reasons (Walmart, Amazon) why the competitive landscape is much tougher than when it was a profitable business. It sounds to me like the PE firms did a lot of harm by keeping the company from bankruptcy for so long.

In general, if a business is clearly profitable it should continue no matter how thoroughly you screw up the capital structure: the worst case is a bankruptcy in which the shareholders get nothing, the debt holders get very little, and a new capital structure gets created. When this doesn't happen, it's because the business is worthless or nearly so.

thisisit• 8 years ago

Retailing seems to be dying in US irrespective of the company:

https://www.bloomberg.com/news/articles/2018-04-17/retail-st...

Couple of years ago, one of my friends bought a store at a strip mall. The store was making a loss. And the previously owners were an elderly couple. So my friends thesis was that they weren't exactly tuned into the digital presence business and it was still entirely possible to run a store in US.

Two years later footfall in the mall has decreased a lot. And in spite of the digital strategy etc my friend's store hasn't worked well. Now he is not only in debt but he is also trying to sell the store. But there are no buyers.

aviv• 8 years ago

In a few years strip malls will be occupied only by food businesses, pharmacies, check cashing places, and urgent care clinics.

tdeck• 8 years ago

You forgot mattress stores.

mgkimsal2• 8 years ago

you forgot "internet cafes" - meaning gambling storefronts.

prostoalex• 8 years ago

pharmacies

Anecdotally, a guy at the gym I frequent is a commercial real estate broker of some sort, and according to him shopping plazas with CVS/Walgreens as headliners are selling at a discount to comparables, as the market figured out that if Amazon didn’t enter the pharmaceutical retail sector this year, they will next year.

duxup4• 8 years ago

Don't forget spas and nail salons!

booleandilemma• 8 years ago

And gyms.

code_duck• 8 years ago

Don't forget vape stores, liquor stores and Smoke Shop.

jonhendry184• 8 years ago

In my town in Connecticut, medical offices are multiplying like rabbits.

ccozan2• 8 years ago

As a, maybe, counter example, in my small bavarian city they opened 3(!) new shopping malls in the last 5 years. Me being more global than the rest of the fellow locals, I was baffled.

bobthepanda2• 8 years ago

The US in general is heavily over-retailed.

By one measure of consumerist plentitude—shopping center “gross leasable area”—the U.S. has 40 percent more shopping space per capita than Canada, five times more the the U.K., and 10 times more than Germany.

https://www.theatlantic.com/business/archive/2017/04/retail-...

duxup4• 8 years ago

What I don't get is there are a lot of empty storefronts and places moving that I see... and retailers say the rents are still sky high for those storefronts.

Is it really worth the property owners keeping them empty?

bunderbunder4• 8 years ago

Wild guess:

Dropping the rents would prompt their remaining tenants to renegotiate their contracts.

yourapostasy7• 8 years ago

Is it really worth the property owners keeping them empty?

Yes. It's a tax dodge. [1] [2]

The owners "...hold out for higher rents to increase the worth of their properties because value is based on future income stream...They can afford to forego current rental income, waiting for higher-paying tenants because they claim big business losses. Landlords get a tax loss from negative rental income when no rent comes in, which cushions their lack of cash flow."

There are also perverse incentives structured by the debt instruments securing these properties. [3]

There's some more miscellaneous reasons, like not wanting to hassle with renegotiations from existing tenants who hear about a lower psf/psm rent of a new tenant, not wanting to attract the "wrong" class of tenant, etc., but by and large, the money reasons talk loudest.

High real estate costs preventing affordable, energy-dense and hyper-efficient living and working for most of the world's population are imposing quite significant externalities around the world. Not really discussed much though, as it gores too many oxen. Saliently changing this status quo would require fundamental changes in how real estate and credit interact, and that's not going to happen without some real not metaphorical blood spilling.

[1] http://www.nydailynews.com/opinion/change-math-keeping-nyc-s...

[2] https://gizmodo.com/full-bank-accounts-empty-storefronts-the...

[3] https://commercialobserver.com/2016/09/soaring-retail-rents-...

seandougall2• 8 years ago

I’ve been wondering the same thing. There’s a former Borders in Pasadena that sits empty for most of the year, and only houses a Halloween costume store seasonally. They finally brought down the part of the sign that said “Borders” a few months ago, but they left up the “Books - Music - Cafe” part.

It’s clearly not worth renovating, but maybe the seasonal business brings in enough that it doesn’t need a tenant the rest of the year. But also, the store is huge and its layout is unwieldy for most types of retail.

What I don’t understand as well is how many empty storefronts around here still have Radio Shack signs above the doors, even in what should be prime locations. I’ve started wondering if having been a Radio Shack is a curse of some sort.

oliwarner2• 8 years ago

At least in the UK, they're more likely to get permission to convert to residential if it's long abandoned.

Housing demand in cities is much higher than the normal available space on the boundaries. Carving a big box into 300 apartments more than justifies a couple of years of doing nothing with the place.

Spooky23• 8 years ago

Commercial real estate like another dimension. They make money up front based on tax and accounting games and rent. The empty strip mall with a dollar store and tae kwon do is used as a way to offset profits in other places.

Shivetya• 8 years ago

having been invested into a REIT which tend to have these strip malls as one type of property, the other being office space, and more.

was it built during the rush thereby incurring high land and building costs?

do they have good clients? good are grocery stores, popular chain restaurants, and such. bad are "I want to run my own coffee, cupcake, and such, stores.

So if they ended up with the less than favorable clients in order to get storefronts it does tend to lead to vacancies. that is always compounded by not having the big draw, I love grocery.

tim333• 8 years ago

In the UK if you occupy the space you have to pay business rates (a local government tax) which are not cheap - of the order of £1000/week. Unless you are a charity shop which are able to get freebies. Hence a lot of bust businesses get replaced by temporary charity shops.

clutchdude• 8 years ago

From my personal datapoint, I agree with that question.

There are 2-3 abandoned moderate sized retail buildings in a suburb I pass on my way into work that have sat vacant for the better part of a decade with a big "for sale" sign out front.

On the odd times I look up the listing price, they want high hundred thousands to low million. Keep in mind this is for buildings and land that have not been maintained for years now.

Without a massive surge in pricing, they are already vacant maintained spaces that will capture most interest before that vacant tear-down gets bought.

Mankhool• 8 years ago

Here in Vancouver, BC, it IS. The property values are SO high and continue to go up every year, that retail income is almost irrelevant to the owners. They are just waiting for a developer to buy the property so they can cash out.

rorykoehler• 8 years ago

The same is happening in Singapore. The maps have re-strategized to focus on food and drink experiences. Now people go out to make to hang out mainly

pouetpouet• 8 years ago

The US have too much retail space. Retail is not really dying there is too much of it.

https://www.statista.com/chart/9454/retail-space-per-1000-pe...

https://qz.com/1032723/theres-much-more-empty-retail-space-i...

https://www.theatlantic.com/business/archive/2017/04/retail-...

bunderbunder4• 8 years ago

I wonder if it's also a case of there being too much of the wrong kinds of retail space.

If there's a retail store within a mile of our house, I'll happily walk to it and do my shopping there. Especially when it's a pleasant day outside, that's an enjoyable way to get out of the house and get a little light exercise.

If the only kind of store left that sells what I need is one of the big box stores, so that going there means having to get in the car and deal with traffic and haul myself halfway across town and, seriously, ugh, that is enough of a chore that I'm already feeling vaguely annoyed just thinking about it. No thanks; I'll happily order online.

And I would rather starve in the woods than drive all the way out to the nearest shopping mall.

Ntrails• 8 years ago

Couple of years ago, one of my friends bought a store at a strip mall. The store was making a loss. And the previously owners were an elderly couple. So my friends thesis was that they weren't exactly tuned into the digital presence business and it was still entirely possible to run a store in US.

Did your friends have extensive experience running such a business?

autokad• 8 years ago

retail sounds really perilous to me. there is little to differentiate yourself from competitors. even if you find something, others can just copy.

landryraccoon• 8 years ago

They can't easily copy your location, and that's one of the key differentiators.

simonebrunozzi• 8 years ago

Sorry to be pedantic, but there's (almost) always a buyer at the right price. "there are no buyers" means "there are no buyers at the price he wants to sell".

Makes sense?

Areading314• 8 years ago

https://www.bloomberg.com/features/american-mall-game/

ggg99902• 8 years ago

Toys R' Us was dead so many years ago. I went there once to buy a present for a kid and it was just so depressing and not at all a fun or cheerful place. When I had a kid of my own I never took her there. I regret it not being what it was when I was a kid but I don't regret it going from its state ~10 years ago to dead.

PhasmaFelis2• 8 years ago

I wonder if what you're actually describing is the change in your adult perspective, not in the store. As a kid, and as an adult who likes toys, shelves piled high with toys are "fun and cheerful" all by themselves. I'm not sure what else you felt was lacking.

ggg99902• 8 years ago

The kids in the store weren't happy or excited to be there, that's what was different from when I was a kid.

PhasmaFelis2• 8 years ago

The thing that's really lacking to me in online toy stores is, I guess, discoverability. Amazon can give you a list of all the Transformers, or all the Legos, in an instant, and with a bit of prodding it does an acceptable job of showing you the current top-selling toys, but it's impossible to walk down an aisle at Amazon and see something awesome that you've never heard of.

sitepodmatt• 8 years ago

At least with books, Goodreads takes care of that.

krallja• 8 years ago

I went to our neighborhood Toys-R-Us to be a vulture, and discovered quite a few toys I wouldn’t have considered purchasing otherwise. Of course, the 40-70% discounts helped a lot.

amyjess• 8 years ago

Same here. I went there to soak in childhood nostalgia one last time before it closed, and I was surprised by a) all the things I saw there that I would have never heard of otherwise and B) all the random things I have vague memories from when I was a kid that are still around.

And it made me feel profoundly sad that that experience will be gone forever soon. Soon, it'll just be the top brand names that anyone will have ever heard of and the random weird stuff will all be gone. I'm talking about the toys that you had growing up that you never knew what they were called but you had because your parents passed by it at random and went "ooh, that looks interesting, I bet [kid's name] will like this".

suresk2• 8 years ago

Yeah, my wife and I are definitely disappointed they could find a way to make it work, largely because of discoverability. It definitely made it easy to find new toys, see how they would look/feel in person, etc. Others stores just don't have the selection they did and the experience on Amazon isn't as easy.

Another thing is knowing the quality of stuff you are getting. Of course, plenty of cheap crap gets sold at Toys-R-Us and elsewhere, but some of the stuff on Amazon is in a league of its own in terms of poor quality and I suspect it will continue to get worse.

spockz• 8 years ago

VR could en a thing here for Amazon. Instead of seeing endless lists, just walk down the isles virtually. Maybe accompanied by some cheerful sounds of kids playing in the background to set the mood and incentive to buy.

triviatise• 8 years ago

I dont know the economics of our local toy stores, but the ones that seem to thrive allow you to actually play with the toys. If it was more like a theme park or a playground you would get parents to bring their kids in just to play.

For example, let kids drive power wheels around a track. Have playscapes that they can play on and buy. And sample toys that kids can play with.

benjaminwootton• 8 years ago

I remember reading 20 years ago how retail stores need to turn into experience destinations. I think the perceived risk at the time was mail order rather than the internet.

However, even with Apple and the Apple Store there for all to see, few retailers still seem to get this. Without the hands on element, they are really fighting a losing battle vs ecommerce.

suresk2• 8 years ago

Apple sells high-margin products that are typically priced the same (or roughly so) everywhere - I don't know that there are interesting lessons for all industries to learn here. Wasn't Ron Johnson's attempt to take some of those lessons to JC Penney pretty disastrous?

Everyone always has the same ideas when retailer struggles come up, and a lot of the ideas would undoubtedly make many stores more pleasant to visit. But people still buy based on cost, and that makes it hard to compete with a company who has a much lower cost model than a physical retail store and has much larger scale.

I don't think retailers will stop the bleeding and start implementing some of these ideas until they can figure out how to solve the showrooming problem. They may never do so, and physical retail in most categories will be a distant memory for most of us.

wgerard• 8 years ago

What a trip.

I used to go to the Times Square location with people who came in from out of town, as an attraction for when they inevitably wanted to check out Times Square. The article doesn't really do justice to what a spectacle it was (which is saying something, since the article calls it out repeatedly). The person-sized Lego Hulk they built for that store is still my phone background.

Made this even more shocking to read, since it was always packed:

In late 2001, Eyler oversaw the opening of a flagship store in New York’s Times Square, with a 60-foot Ferris wheel, a life-size Tyrannosaurus rex, and a Barbie dollhouse bigger than many Manhattan apartments. Eyler promised that 20 million people a year would visit, and maybe they did, but the store never made money.

Of course, thinking back on it, I went several times but rarely bought anything from the store.

Maybe that's the (21st century) story of Toys "R" Us, summarized into a sentence.

walru• 8 years ago

Flagship stores are a form of advertising. Many many retailers embark on this journey. Does advertising work? Or, more importantly, which is the case here, does selling your store shelves to specific brands hurt? (rather than stocking what's selling?) Some youtubers have done in length videos on Star Wars toys that sat on shelves for years.

0xcafecafe• 8 years ago

Yes, visiting the times square location always used to be the highlight of my NYC visit. It reminded me of the toy store showed in home alone 2 (which I watched a lot growing up). Another one which I will miss is the FAO Schwarz store in NYC (which was also owned by Toys R Us).

I feel sad thinking that my son will never experience that joy of going to these huge Toy stores. At best, his experience will be limited to the kids section at Target/Walmart (if they are still around by the time he is old enough to visit them).

autarch• 8 years ago

The toy store in Home Alone 2 was based on FAO Schwarz. I remember going to it as a kid a few times. It was very cool and a big NYC attraction for families. But I don't remember if we ever bought anything there.

bunderbunder4• 8 years ago

I'm not sure it's terribly surprising, though. That Times Square location was mostly for tourists. Tourists, having come by plane, are probably not going to be terribly inclined to buy anything other than fairly small items. Nothing that would be a bother to try and pack home on an airplane.

proee2• 8 years ago

Do anyone know how FAO Schwarz is doing? This is also a huge destination-location in New York that sells toys.

proee2• 8 years ago

Some research suggesting that it's coming back to NYC in 2018

https://www.cntraveler.com/story/fao-schwarz-is-finally-comi...

lotsofpulp2• 8 years ago

Manhattan location closed a few years ago.

srathi• 8 years ago

They would have survived if they hadn't filled all their aisles with stupid star wars and disney princess stuff. There was a severe lack of creative toys.

trumped• 8 years ago

Even with 20% off coupons, Toysrus was often more expensive then Walmart and Amazon...

amriksohata• 8 years ago

If you are a parent you will feel it did need to die. I went in there years after being a kid and nothings changed, that old warehousey look,the same toys, nothings changed since I was a kid. Worse, is they are all overpriced compared to even other stores let alone internet stores.

WhiteSource1• 8 years ago

That's the key. It's not just online or competition lost to Amazon. The same toys were available at Target for a lot less money.

dragonwriter• 8 years ago

The same toys were available at Target for a lot less money.

True for a relative handful of the most popular toys, but Target doesn't have the floorspace dedicated to toys to cover any but a small fraction of what a Toys R Us would carry. Last time I was in a Toys R Us, the section dedicated to play houses was, no kidding, the size of an entire Target toy section. Target might stock one item in that category in store (though I don't think I've ever seen one in a Target).

It's Amazon and friends, not brick and mortar stores with smaller but discounted toy sections that killed the advantage of having floor space and variety in stock to browse, since people would use the store for discovery and then order from a discount online channel that didn't have the overhead of brick and mortar showrooms.

stealthmodeclan2• 8 years ago

My kids love video games, I thought toys don't give them enough kick.

crummy• 8 years ago

Toy's R Us sold a lot of video games.

toufique2• 8 years ago

Begs the question, what kinds of local businesses are structurally safe from being disrupted by Amazon? Some that come to mind:

* Food - restaurants, fast food, pizza, takeout

* Social experiences - bars, cafes, arcades, comedy clubs

* Things that can't be shipped - gas stations, perishables

* Things you want right away - milk, delis, convenience stores

* Things that can't be commoditized - Copying keys

* Services - Barber shops, mechanics

Other ideas?

arkitaip• 8 years ago

Every single one of those industries can be disrupted by Amazon given the right setup with partners.

stevehawk• 8 years ago

And any of them thinking they can't be all be the first ones to fall.

owie829• 8 years ago

perishables - Amazon ships goods including PrimeNow delivery and leveraging their acquisition of Whole Foods to ships fresh food

things you want right away - Prime Now, 2 hr delivery in select markets

services - Amazon has an entire section of services, from auto detailing to household cleaning

scarface742• 8 years ago

Copying keys...

https://www.gokeyless.com/blog/new-website-allows-users-to-c...

mathiasben• 8 years ago

* Things that can't be shipped - gas stations

https://www.trybooster.com/ https://filld.com/ http://www.startyoshi.com/ https://www.gasrevolution.net/ http://www.fuelmeapp.com/

toufique2• 8 years ago

Wow, I stand corrected. Question still stands, is anything safe?

dirktheman• 8 years ago

Bloomberg made a really nice 80-esque adventure game where you're the manager of a mall: https://www.bloomberg.com/features/american-mall-game/

timwaagh• 8 years ago

and the morale of the story is, dont let your business get taken over by a bunch of vultures fueled by a lot of debt. unless you like seeing it die a slow death, that is.

nikanj• 8 years ago

One of the more interesting theories I've heard is the link between the housing crisis and the retail crisis. When you live in a tiny shoebox, the last thing you need is more stuff. Back in the days people had comparatively huge houses all to themselves, and could buy crap to their heart's content.

rashomon• 8 years ago

Any source on that theory? I think you have something solid there. George Carlin put it quite eloquently: https://www.youtube.com/watch?v=MvgN5gCuLac

We're definitely seeing a resurgence to simplicity after advertisers had performed scorched-earth on frontal cortex lobes.

DoubleGlazing• 8 years ago

The article mentioned the Irish chain Smyths. This is a company that has grown from one store in a small Irish city to expanding in to and dominating the UK market in just over 30 years. Having shopped in both I can see the difference.

Toys 'R' Us felt like it wanted to be part of the toy experience with their whimsical logo, mascot, jingle and colourful in-store decoration.

Smyths on the other hand is just a toy warehouse. They forego the mascot, jingle and colorful stores instead focusing on making sure they always have what the children want. In other words Smyths knows that the toy is the experience, not the store.

CalRobert2• 8 years ago

Smyths also:

* Tends to be reasonably priced (I've gotten things there the same or cheaper than Argos)

* Is a quick walk from my flat in city centre

Though so far I've only bought baby things there (pram, etc.) not actual toys.

Neither of which applied to any ToysRUs in cities I've lived in.

zer0faith2• 8 years ago

I worked for a home improvement retailer for a long time, around 2008 they stopped building 120k sq ft stores and moved down to 80k sq ft, Then staff was cut (2010), a few years later (2012) more staff was cut, now they are talking about replacing some staff members with self help robots that have video conferencing to help customers(2014). These traditional retailers are trying hard to stay in the game but i just don't think they can compete and Toys 'R' Us is just another name on the long list of the dead.

mkirklions• 8 years ago

Things that make me go to a store

Instant
Helpful employees

Prices didnt matter if I showed up to the store, but it should be cheaper than shipping to your home. Employees should be knowledgeable and helpful.

Instead most stores have the exact products or fewer online, higher prices, and an empty store.

zer0faith2• 8 years ago

I once tried to stock up on some generator connectors and like electrical items in my department before Hurricane Sandy. My orders were denied because last year sales and previous three week trends weren't enough to justify the order. The shelves stayed empty for almost 2 months.

scarface742• 8 years ago

What types of toys are kids buying these days? I’ve never been a parent of a really young child, my experience with parenting are with my stepsons - the youngest was 9 in 2010. Besides a bike, the only toys he was interested in were video games, he collected action figures for awhile, and water guns.

All of which could be served better by Amazon or for video games by GameStop - a store with a much smaller footprint.

Even when I was growing up in the 80s by nine, I remember most kids being interested in video games, bikes and sports equipment. All of which were available at Walmart either at the same price or cheaper.

With video game downloads becoming more popular, I don’t see how GameStop is going to survive after this round of the console generation.

brownbat• 8 years ago

"Bain, KKR, and Vornado... will end up losing well over a billion dollars combined."

A lot of retail debt will be renegotiated in 2019 as underlying interest rates are increasing, so the pace of these might be set to increase dramatically as delaying reckonings like TRU did becomes steadily more costly.[1]

The article points out that the collapse of this one big name was pretty expensive to lenders, even if lawyers made some money during the unraveling.

I'm curious about the prospects for another financial crisis. How many billion dollar losses happening all at the same time are we looking at? How many can retail financing divisions endure without undermining the stability of larger banks?

It's not my main area of expertise, so I genuinely don't know if there's a serious contagion risk, but Google alerts for retail apocalypse have been a fun ride.

[1] https://www.bloomberg.com/graphics/2017-retail-debt/

Toys ‘R’ Us Didn’t Have to Die

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