Target, Walmart Rush to Fill Void After Toys R Us Departure

Wallmart,Target, Amazon and other major retailers are scrambling to fill in the market void left after Toys R Us bankruptcy

With the 740-unit toy store chain set to go out of business this July, major retailers like Walmart, Target, Amazon, Party City and Ace Hardware are scrambling to fill the void its departure will leave in the $22 billion toy industry.

“There’s a lot of scrambling going on right now,” said Bernardo Melo, vice president of global sales and marketing for Singing Machine, which sells karaoke systems, told the New York Post. Target, for instance, may be “adding space [by] cutting into some other departments.”

USA Today recently listed five major reasons the toy chain had to go belly up. They included too much debt (“Toys R Us was saddled with heavy debt acquired when Bain Capital and other firms took the company private in 2005. By the time the company was approaching bankruptcy in 2017, it still had about $5 billion in liabilities. Those debt payments turned out to be a metaphorical anchor around mascot Geoffrey the Giraffe’s long neck.”) and bad timing (“That Toys R Us filed for bankruptcy in September instead of shortly after the holiday shopping season turned out to be disastrous. It was extremely bad luck.”).

Other factors, the paper said, were increased competition, nervous vendors, over declines in toy sales and online retailing. And as if to prove the adage that ‘when it rains, it pours’ department, Toys ‘R’ Us, Inc. founder Charles Lazarus died in March.

The Wall Street Journal, which waxed rhapsodic about “the rainbow-colored toy emporium that for decades was the go-to spot for birthday and holiday gifts,” called Toys ‘R’ Us “a classic example of a ‘category killer,’ a huge specialty store with low prices that squeezed independent shops. It swallowed up several rivals that have themselves filed for bankruptcy protection, including FAO Schwarz and Kay Bee Toys, a mall-based chain that liquidated hundreds of stores before it was sold.”

The filing in U.S. Bankruptcy Court for the Eastern District of Virginia “was triggered by vendors and suppliers tightening terms with the company ahead of the key holiday selling season, which accounted for 40% of its $11.5 billion in revenue last year,” the Journal continued. “For the past several years, the company has lost money in each quarter except its holiday quarter.”

But beyond the dollars and cents, there is very real sadness surrounding the end of a beloved retailer. TheStreet.com published several Twitter comments from long-time shoppers. This one was typical: “these are the few pictures of my local toys r us and today I went in my local toys r us and I felt sad and I just cannot believe that it might be closing down I had very fond memories in this store.”

By Howard M Reill

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