I'm a Toys "R" Us Kid, and I always will be
When I was around twelve or thirteen years old, I would go to the Toys "R" Us in Brooklyn's Ceasar's Bay shopping area with a mild bit of trepidation. You see, there was a security guard stationed at the front door, and no matter what day or time it was, he insisted that either a parent had to be with you or you needed to have a special card that this store would issue to you after you submitted a form signed by your parent. It was a strange policy to me but I would go hoping he would not be there. Sometimes I would wait for him to step away for a moment and charge in before he could stop me. One time he "caught" me in the Transformers aisle but by then I was already going to make a purchase and showed him my money. He actually escorted me to the cashier and made sure I left. I did not feel any outrage. Any trip to Toys "R" Us where I got to see rows and rows of toys laid out everywhere was a special treat.
In September of 2017, word began to leak that Toys "R" Us was going to file for bankruptcy. Soon enough the chain did so and announced it would close up to 182 stores. As the months went along the story became worse until today's official press release indicating Toys "R" Us would liquidate its U.S. based business. This means all 735 stores in the United States and Puerto Rico would close within 2018. There are an estimated 33,000 potential jobs lost due to these closures. This announcement follows yesterday's announcement that all the Toys "R" Us stores in the United Kingdom would be closing within the next six weeks. Options are still being discussed for the Canadian and international operations in Asia and Europe. For now they will remain open for business as usual. Asia at least has already announced this via the Toys "R" Us Philippines Facebook page.
I have been a Toys "R" Us kid for decades (the old 80's jingle is legit playing in my head as I type this). As a Geek and a collector of plastic space robots I have made visiting Toys "R" Us a regular part of my life. When I still lived in Brooklyn, I went to various Toys "R" Us stores on a weekly basis (ah to have that much free time again). As an adult, I have worked at least one Toys "R" Us into my weekend shopping routine. Whether I walk out empty handed or find an action figure I have been hunting for, Toys "R" Us has been a part of my life for decades, and seeing it go away truly hurts and fills me with sadness (and not just for me, refer above to the 33,000 people about to lose their jobs). Sadly, this fall has been a long time coming, and it may not be for the reasons you think.
In the early days of Toys "R" Us announcing its troubles there were articles that blamed the chain's troubles on the inability to compete with companies like Amazon. Fans of various action figures and toy lines jumped online to go on and on about how Toys "R" Us' relative lack of stock and their "high" prices accounted for their fall. While competition from online sources and pricing from stores such as Walmart and Target were definitely factors in the downfall of the chain, there was a much bigger one which dealt the killing blow to an already struggling retailer.
The short version of the killing blow has to do with three companies buying Toys "R" Us back in 2005. These three firms were Vornado Realty Trust, KKR and Bain Capital. However, most of their purchase price was financed, and this saddled Toys "R" Us with an enormous amount of debt that it could never pull itself out of. Without the ability to take money and reinvest it back into the company, Toys "R" Us could not improve its web presence or care for its brick and mortar stores properly (no less renovate them to modern standards in some cases). Meanwhile the firms that purchased Toys "R" Us continued to bleed it dry until it could no longer pay its financial obligations and it finally had no choice but to close its doors forever. To borrow an (admittedly imperfect) analogy from an article I read on the topic, imagine a friend had your credit card and they withdrew cash from it. They have cash and enrich themselves, but you are still on the hook for those withdrawals without getting any of the benefits. This is not the first time Bain Capital has been involved in the closing of a toy store chain. While some details differ, a similar fate fell upon Kay Bee Toy Stores years ago.
For sure Toys "R" Us has made its fair share of mistakes along the way. However blaming only one factor for the demise of Toys "R" Us is oversimplifying a story that involves a range of issues that worked together to bring down one of the most iconic store chains of the past six decades.
There are far reaching consequences with these closures. CNBC estimates that 10-15% of all toy sales could be lost forever since other channels such as Amazon and Walmart may not necesarily absorb all the toy sales from Toys "R" Us. Estimates put job losses for the economy at 33,000. Add in the closures of several Sam's Club stores and Winn Dixie stores hundreds of large scale patches of real estate will be left abandoned. The chain also still owes toy companies money such as the $59 million owed to Hasbro. Overall it is a very grim picture.
The day before I published this article I visited a Toys "R" Us in Elizabeth, NJ that had begun its massive sales earlier than other branches in the area due to their lease expiring. They were at the "60%" off stage (they started at 10% weeks ago) and it was a distressing scene. The store was packed like it was Christmas shopping season. Shelves everywhere were bare and there were "percent off" signs everywhere. I picked up a few Toys "R" Us exclusive items (including Primus and "Jedi Training" Rey) partly because I wanted the experience of purchasing Toys "R" Us exclusive figures one last time. As I was leaving, I saw a cashier who had helped me out many times over the years (her most recent assistance helped me get Movie Masterpiece Bumblebee before scalpers got their hands on him) and I thanked her for all her help over the years and wished her the best of luck. It was an oddly emotional moment as I walked out.
So what does the future hold? As mentioned above, certain international divisions of the company will remain open for now. Meanwhile, there is talk of possibly saving some stores by having some U.S. stores fold under the Canadian division. I take small comfort in this silver lining. At least in some parts of the world the Toys "R" Us legacy will continue. While Toys "R" Us exclusives may go away (no official word on this yet since some branches will survive) there are plenty of other venues for exclusives such as Target and Walmart. Whether or not the chain continues in any form in my parts, I know deep down inside I'll always be a Toys "R" Us kid.