It is a deep insult to business culture that the powers that fund let Toys “R” Us go bankrupt. It was an important company to retail, and more importantly, it had immense value culturally. The toy as we know it thrived because of Toys “R” Us.
There were reasons of changing tides that may have hastened the retailer’s downfall, but the truth of the matter is, the primary reason the chain fell apart was the fact that it has an insane amount of debt, debt that was built upon because of a leveraged buyout from years prior that ensured it’d be digging out of a hole for decades to come no matter how many good quarters it had.
“Like most retailers, Toys ‘R’ Us also lost sales to online rivals such as Amazon that offered lower prices and quick shipping,” CNN Business recalled. “But much of the chain’s resources were devoted to paying off that massive debt load rather than staying competitive.”
(If that story upsets you, know that a creditor lawsuit might scare off companies like Bain Capital from ever doing anything like it ever again.)
It’s heartwarming, then, to see another big legacy retailer embracing the idea that Toys “R” Us must live. The company announced last year that it would come back online in Macy’s stores around the country, with Macy’s offering digtal help to the chain as well. And recently, many of those stores-within-stores started opening, with the every Macy’s having a Toys “R” Us by October.
No, it won’t be the same. The scale of the stores is likely to be quite small compared to what they had previously, and the company will have to fight hard to revive its retail base from a department store chain that itself was once more dominant. Certainly the standalone store would be better, but I guess if this is what we have to roll with, that’s what we’ll roll with.
(That said, the model may actually make sense from the perspective of the holidays. After all, Toys “R” Us retail space can be scaled back in the months far removed from Christmas.)
This is actually the second comeback attempt by the chain, but the problem was a little thing called the pandemic, which slowed the company’s growth.
But the truth of the matter is, what the company is doing is really hard, and it may not quite meet the mission of the original store.
“What we are is a supermarket for toys,” Toys “R” Us founder Charles Lazarus once told The Washington Post. “We don’t have a competitor in variety. There is none.”
It’s hard to see that being true working with less than 10,000 square feet of real estate in someone else’s retail chain, but every comeback story had to start somewhere.
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