Toys ‘R’ Us to rise from the ashes of bankruptcy, but should it?
When iconic toy retailer Toys “R” Us closed its doors earlier this year, it was a sad moment for many who grew up shopping (or begging their parents to shop) at the chain’s stores. While hope seemed lost for those individuals, it now appears that another generation of Toys “R” Us kids may be on the horizon.
The lenders who were managing Toys “R” Us during its final moments have shifted gears, according to Bloomberg. They are no longer auctioning off the company’s assets and instead hope to reorganize them into a new company that maintains current license agreements and “can invest in new retail operating businesses.”
But in addition to the challenges of assessing what went wrong with Toys “R” Us and trying to avoid those mistakes, the new chain will have to wrestle back share from a retail industry that moved quickly to fill the void. In the wake of the Toys “R” Us collapse, many other retailers began making moves to attract shoppers who would have otherwise gotten their toys at the chain, especially during the holidays.
For instance, Target announced that it had increased inventory in both the toy and baby categories in light of the Toys “R” Us closure. The chain reported significantly increased sales in the second quarter for those categories.
Party City announced in early summer that, alongside its seasonal Halloween City pop-ups, it would open Toy City pop-ups to cater to toy shoppers.
Even Bed Bath & Beyond got in on the act, giving holders of Toys “R” Us and Babies “R” Us gift cards a brief window to exchange their gift cards from the liquidating retailers for (reduced) store credit at its locations.
The demise of Toys “R” Us has also provoked some old names to re-enter the toy game. The current owner of the KB Toys brand, Strategic Marks, announced the impending relaunch of the chain. In March, Strategic Marks president Elia Kassoff promised that the company would have 1,000 brick-and-mortar pop-ups in place for Christmas, which will act as a springboard for a full revival.
DISCUSSION QUESTIONS: How do you see Toys “R” Us reconstituting itself if it attempts a comeback? How likely is a reboot of Toys “R” Us to prove more successful than the retailer that went out of business earlier this year?