During the economic growth periods of the ’80s and ’90s, it seemed Toys ‘R Us could do no wrong as its stores continued to grow larger and become omnipresent around the world. Today however, a sluggish worldwide economy and increasing competition from Walmart and Amazon have combined to put severe pressure on the toy giant’s once dominant market position. (Photo: Toys ‘R’ Us)
Toys ‘R’ Us mascot, “Geoffrey” (also unceremoniously “retired”), is looking a little less upbeat these days, especially after hearing the sad news that 100 of his beloved stores will soon be closing. (Graphic: Toys ‘R’ Us)
The End of “Brick & Mortar” Toy Stores?
In an article published Monday, March 3rd, 2014 in the digital edition of the The Record, stunning news was revealed regarding the not-so-rosy future of giant toy retailer, Toys ‘R’ Us. According to The Record’s staff writer, Joan Verdon, the once dominant company will soon cut 200 corporate jobs at its headquarters, and then close 100 of its stores. Here is the article (edited for length):
“Toys “R” Us is expected to announce layoffs at its headquarters in Wayne (NJ), and some 100 store closings in the coming weeks, according to industry sources. Toys spokeswoman Kathleen Waugh would not comment Monday on a New York Post report that the retailer is preparing to eliminate up to 200 corporate jobs, but toy industry sources said they expect cutbacks will be announced soon. “We’re all waiting for the shoe to drop,” said one toy analyst.
At the American International Toy Fair in New York City two weeks ago, several manufacturers said privately that Toys executives had told them they would be making cuts and streamlining operations in order to improve the company’s focus. “We’ve all heard the rumors and we all expect there are going to be layoffs and store closings,” said veteran industry observer Jim Silver, editor of TTPM, a toy review and news website.
Cutbacks and store closings have been predicted for Toys since early January, when the retailer posted another set of disappointing holiday sales results for Christmas 2013. Sales at U.S. stores declined 4.1 percent in the fourth quarter, which includes the important holiday shopping months of November and December, the period when Toys makes most of its profit for the year.
Sean McGowan, a senior analyst at Needham & Co., said he had no specific information about planned cuts at Toys, but said the company has been under growing competitive pressure, particularly from online retailer Amazon. “What’s ominous about Amazon’s growth is it strikes at the heart of one of Toys’ competitive advantages, which is selection,” McGowan said. While Walmart and Target have a smaller selection of toys in their stores than Toys, a website such as Amazon can offer a limitless selection of toys.”
Bottom Line: While Toys ‘R’ Us isn’t going away completely, the experience of taking your child, hand-in-hand to a neighborhood toy store to “marvel” at all the latest cool toys, may soon become a distant memory for many. In fact, playing with toys, games, dolls and other inanimate objects, which was once considered so vital, almost revered by children, also appears to be threatened. The world is changing. And the children of today are growing up so MUCH faster. As time marches on, it seems inevitable that future youth will become hooked on electronic distractions such as cell phones, the internet and video games at ever younger ages, leaving their innocence and carefree “play” of childhood behind all too soon. The ultimate result? Who can say?