By: Alex Curran
Toys ‘R’ Us has announced its closing this week after filing for bankruptcy last September. The toy empire that was considered “another American giant” by the Washington Post and that once dominated the market in the 1980s and 1990s, has finally met its demise.Charles P. Lazarus founded the business in 1948 as a baby furniture store. However, soon after, Lazarus realized that selling solely toys offered untapped potential. So, in 1957, he opened his first toys-only store and soon after, Toys ‘R’ Us became the preeminent toy retail chain. However, once Lazarus stepped down, the company slowly deteriorated.After Lazarus left the company in 1994, things started to go awry when Walmart began to offer lower prices on diapers and toys. According to toy industry analyst Jim Silver, “That changed everything.” Sales began to drop drastically, eventually causing the company to be taken private and ultimately sold for $6.6 billion in 2005. And finally, the nail on the coffin was the emergence of e-commerce. Toys ‘R’ Us simply didn’t invest in their online market and almost immediately faced the consequences. “Walmart had a better online experience. Target had a better online experience,” said Silver. “They lost online and couldn’t adapt.”Toys R Us could not compete on price, quality, or convenience. It didn’t invest in its stores or adapt to the emerging online market. More specifically, it didn’t close stores that weren’t making money, or invest in stores that were doing well. In its heyday, Toys ‘R’ Us fostered a sense of loyalty in its customers. But over time, the toy magnate lost touch with what was truly important, the kids.Because of this loss, not only will 33,000 jobs be impacted, but it is expected that many toy manufacturers will go out of business as well. According to Marc Wagman, who heads insurance Broker Gallagher’s U.S. trade credit and political risk business, “Unfortunately, for a lot of these toy companies, Toys ‘R’ Us represented a means of testing consumer taste, a big retail opportunity and, for some, accounted for 20-40 percent of revenue.” It has yet to be seen how many of these manufacturers will recover.Also, what does this closing mean for other seemingly indestructible big box empires like Walmart, Target, and Kmart? Will Amazon and e-commerce take over those businesses too? The answer, for the time being, ultimately appears to be no. In fact Toys ‘R’ Us’ closing will help the big box stores. The retailer chains actually caused the ultimate undoing of the toy empire; they purposely slashed prices during the holiday season to ensure its demise and capture the toy industry.In order for the big box stores to survive, though, they need to constantly improve upon their competitive advantages: their low prices, convenience, and economies of scale and scope. If they can maintain their low prices and buyer power over suppliers, while also keeping up with online trends, then they will not suffer the same fate as Toys ‘R’ Us.https://bangordailynews.com/2018/03/14/business/toys-r-us-said-to-be-selling-or-closing-all-remaining-us-stores/ http://money.cnn.com/2018/03/17/news/companies/toys-r-us-history/index.html https://www.cnbc.com/2019/01/26/toys-r-us-built-a-kingdom-and-the-worlds-biggest-toy-store-then-they-lost-it.html https://www.reuters.com/article/us-toys-r-us-bankruptcy-vendors/exhausted-toys-r-us-suppliers-weigh-options-as-huge-retailer-shuts-idUSKCN1GT0DY