Editor's note: Chains, independents can thrive after Toys“R”Us’ demise

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Editor's note: Chains, independents can thrive after Toys“R”Us’ demise

By Seth Mendelson - 10/04/2018
Fourteen billion dollars.

That’s what Toys“R”Us, the now-shuttered toy and baby care chain, racked up in annual revenue a few years back.

That also is what is left up for grabs in the marketplace and something that all retailers — large and small — should be extremely aware of as they make future plans.

Many already are. A report in late August said that Walmart is increasing its toys assortment in-store and online by about 30%. Target also is expanding its assortment of product, and one report stated that even the Party City chain is adding a greater selection of toys to its planograms. Amazon, for its part, is more aggressively going after the toy business, releasing promotional brochures to capture consumer interest online and through its Whole Foods stores.
Bottom line: Everyone wants a piece of this tasty and quite lucrative pie.

Let’s face facts here. There’s a lot to go around. As noted in this column previously, Toys“R”Us didn’t go out of business because of declining sales in the marketplace. The toy business continues to grow at a steady rate, and it’s really hard not to make money from baby products, where consumers are often oblivious to price points as they seek the best products for their young children.

Rather, the chain fell apart because of bad business decisions that included a private equity deal that reaped big rewards for the initial investors, but put the company more than $6 billion into debt, a number that even the most optimistic finance gurus knew was unconquerable.
So who ends up the big winners here? Walmart officials have been fast to jump on this bandwagon so it’s hard to think that that chain, with all its resources and abilities to keep price points low, will not be a winner. The same goes for Amazon and Target.

But other retailers can benefit from the demise of Toys“R”Us, too. Consumers still need to purchase toy products and baby needs for their children, and they will look to the most convenient outlets for these needs, providing they also offer a worthwhile selection, some in-store expertise and competitive pricing. For the first time in years, independent toy stores have a great chance to build sales, too.

They like to say that when one door closes, another one opens. That is most definitely the case with the demise of the nation’s largest toy and baby needs chains. Let the games begin.