A Goodbye to Toys “R” Us?


Photo by Flickr Creative Commons

Is it possible we may see these signs again soon?

I can still remember how excited I was, back years ago when we used to go to Toys “R” Us. My eagerness was definitely justified- what kid wouldn’t want to visit a ginormous store filled with aisle upon aisle of toys? It was every child’s dream to run around the halls, watching the clip for the latest superhero action figure or eyeing the new DS game that had just been released. But as I look back now, I can truly see the huge disparity between the craze of the good old days and today’s drastically different trends.

There’s no easy way to say this, but superstores across the entire world are closing down. After all, there can only be one spot for success in today’s economy. It’s quite clear who’s winning right now in this race of box stores vs. online shopping, especially in the recent months. In fact, the past several years has overseen a huge expansion in E-commerce. Pew Research Center conducted a recent survey and found that nearly 80 percent of Americans do at least some shopping on the Internet. Even more interesting is the fact that 43 percent of the participants chose shopping online “weekly” or “a few times a month.” When compared to a June 2000 survey, in which only 22 percent of Americans said they had made a purchase online, these statistics show an intriguing yet scary truth.

In recent news, these trends have already precipitated detrimental effects on traditional brick and mortar businesses. On Monday, September 18th, Toys “R” Us announced that it had officially filed for Chapter 11 Bankruptcy Protection, which is intended primarily for the reorganization of businesses with heavy debt burdens. Although the retailer’s chairman and CEO Dave Brandon announced recently, “We are confident that these are the right steps to ensure that the iconic Toys “R” Us and Babies “R” Us brands live for many generations,” this news has already prompted vendors to curtail shipments, as they are concerned the company might not be able to pay its bills.

But just how much money does this well-loved toy store owe? It turns out, Toys “R” Us has been building up its debt for more than a decade now, and reports have said that the store has a $3.1 billion debtor-in-possession loan. Additionally, the store’s Chapter 11 petition stated that the company had approximately $6.6 billion in assets and $7.9 billion of debt. Though the store hopes to continue regular operations in its 1,600 locations across the world, this current situation definitely does not convey a promising future to the company.

It’s true that superstores in the toy industry were some of the hardest hit when online shopping came along, partly because of the rise in use of tablets and smartphones by an increasingly lower age group. However, bankruptcy is not only limited to this industry, as it is showing up in superstores of every kind. Dozens of other store brands are planning to close down locations all over the country, including shopping giants like K-Mart, J.C. Penney, Macy’s, Gap, Staples, RadioShack, GameStop, and Payless ShoeSource. The real mystery here is, why?

The truth is, going to a retail store just isn’t convenient anymore. Local shops tend to provide you with many knick-knacks that you would otherwise have to go to box stores to buy. If you can’t find the things you want at your local store, the general trend today would be to go right to online shopping. E-commerce giants like Amazon and E-bay literally provide you with anything you want, from food to clothes to furniture, at a faster, cheaper, and more efficient rate. I mean, you can get an entire piano delivered to your house in two days without getting in your car once! And for those that don’t have an Amazon account, most companies now offer an online shopping option that includes everything you would find at the physical store itself, sometimes with even better discounts! It’s easy to see why many people would choose online shopping over physically shopping at a superstore.

The truth is, going to a retail store just isn’t convenient anymore.

That’s not to say box stores will entirely succumb to the Internet. There is a significant amount of people who still feel comfortable trying out a pair of jeans or shoes before actually buying the product. Shopping online can’t provide you with that opportunity. Additionally, many superstores have experienced some of their best profits in the recent years, especially in popular outlets and malls that tend to attract a myriad of teenagers.

So what is the future of Toys “R” Us? Hopefully, the Chapter 11 petition can provide this iconic toy store with enough support to pay off its debt and climb back to the glory it once was. We’ll just have to wait and see.

Click on this link to see if a superstore is closing near you!