07 Jun, 2018

Major Retailers “See the Light” at the End of Toys R Us’ Tunnel

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With the disappearance of Toy R Us from the market, major retailers are preparing for the void in market share, especially in the toy category. Ever since Toys R Us filed for bankruptcy last fall, people in all aspects of business have been speculating on who will become the front-runner in the market and who would claim their large part of the market share. Now with their closure, many retailers are making plans to dive deeper into that category to increase sales and a customer database.

Who Killed Toys R Us?

Toys R Us blamed Amazon, Walmart, and Target for creating a “perfect storm” over the holidays this past year that ultimately sent the major toy chain into a death spiral that ended in the closure of all of its US stores.

“Private equity obscures its role in the ruin of retail by hiding behind e-commerce. But Amazon didn’t kill Toys R Us. Greedy Wall Street profiteers did it.” USA Today reports.

Those companies slashed prices on toys so steeply in November and December in lieu of the holiday season that Toys R Us could not compete, eventually leading the announcement of their bankruptcy and closure. Although major retailers are to blame, new business models also played a factor, while other analysts claim that the primary cause of the company’s collapse should be traced back to its billions of dollars in corporate debt. That debt stopped it from making the necessary investment in stores, which led to an unpleasant shopping experience that doomed the chain and allowed for other retailers to step up.

Walmart, Target, Amazon, and More Step Up to the Plate

Just last week, Walmart announced that they are planning on expanding their toy offerings. Target, which added around 1,400 toys to its offering in 2017, is also increasing the size of the category in stores across America. Amazon, the e-commerce giant, expects to rake in around $2 billion to $3 billion extra in sales this year due to the 70-year-old retailer’s demise.

“We’re buying more toy inventory than we would traditionally in the past, because there’s more volume up for grab. We’re also doing some work on space in our stores and programming around the back half of the year and holiday time frame. You should expect us to be very competitive in the toy space.” – Steve Bratspies, Chief Merchandising Officer of Walmart U.S., reports.

Unable to resist the opportunity, other retailers are gravitating to the category as Toys R Us winds down its domestic business. Kohl’s, the American department store retailing chain, plans to increase their relevancy in the toy space, rivaling not only Walmart, Target, and Amazon, but also other department stores like J.C. Penney in the impending battle for increased market share.

A “Toy Story”: The New Era of the Toy Market

Toys R Us’ closing is one in a lineup of examples showing just how much the retail industry, cultural norms, and consumer habits have transformed in recent years, even for traditional categories like toys. E-commerce sites like Amazon have fundamentally shifted the way most consumers shop nowadays, while the rise of online events like Cyber Monday are further pushing the norms on how, what, when, and where we buy.

So, plainly speaking, the shift is clear in the toy industry: the toy market size may have remained steady over the past few years, but the number of consumers who stay that they have shopped online for toys and games over the past year period has shot up due to the efficiency of the online retail market. With that news, retailers need to prepare themselves for a new era of production, advertising, placement and sales of toys.

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