ToysRUs, RIP

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mrichhcirm

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These are the strong undercurrents killing the business IMHO:

1. Decline of b&m retail in face of online competition
2. Offshoring of manufacturing to places that don't respect intellectual property
3. Counterfeiting and patent infringement are shortening the product life cycle...you may get squeezed by competitors before you even launch the product.
4. Short life cycle increases pressure to cut costs

Discuss?
 
I worked for Toys R Us for 6 years in high school and college. It was a great job, I met my wife, made lifelong friends and had a lot of fun but I'm surprised it's taken so long for Toys R Us to close.

A large majority of their sales were generated by a small number of skus, the same ones sold at every other department store. This meant Toys R Us was relegated to the handful of people that were looking for specific (unusual) toys or those that wanted to go out of their way to shop for Toys, instead of picking toys up at
Target/Wal-Mart while buying diapers, cleaning supplies, etc. Undoubtedly, online shopping has hurt too. Those unusual, unique items that Toys R Us used to sell were harder and harder to find in stores, forcing even more online shopping and further degrading the in-store stock, until there was nothing unique left. This forced Toys R Us to compete head to head with Wal-Mart and Target on price alone. That was a competition they'd never win given that they were devoting 5x the retail space to the same number of skus as the department store toy isles, driving higher overhead/sku and they couldn't negotiate the same volume discounts.

Over the last 20 years, Toys R Us put a huge focus on their Babies R Us brand which was lost for customers and focus. They were too expensive to appeal to the mainstream, but not niche enough to appeal to high-end buyers. The profit margins were great but sales always fell short.
 
1. Decline of b&m retail in face of online competition
2. Offshoring of manufacturing to places that don't respect intellectual property
3. Counterfeiting and patent infringement are shortening the product life cycle...you may get squeezed by competitors before you even launch the product.
4. Short life cycle increases pressure to cut costs

I'm with you on #1, but I really fail to see how #2, 3, and 4 would impact TRU more or less than any other traditional retailer.

James
 
From Estes. :clap:

Just bought two yesterday! My wife and her friend have said they want to fly something at Thunda Downunder in 2019. First time she as asked about building a rocket. :)

The patent infringement stuff is a bit of a worry for everyone. I know the Chinese are actively working on spectrometers similar to one my company sells. I think they have found out we have some cleverness which is not entirely apparent.
 
Undoubtedly, online shopping has hurt too. Those unusual, unique items that Toys R Us used to sell were harder and harder to find in stores, forcing even more online shopping and further degrading the in-store stock, until there was nothing unique left. This forced Toys R Us to compete head to head with Wal-Mart and Target on price alone. That was a competition they'd never win given that they were devoting 5x the retail space to the same number of skus as the department store toy isles, driving higher overhead/sku and they couldn't negotiate the same volume discounts.

Thanks for the insights. I think you're right on about the lack of unique products.

James Duffy, my comments 2, 3, and 4 are related to the difficulty of bringing unique product offerings to market. I think that affects the toy industry more than most. If the retailer doesn't have unique inventory to differentiate it from the big box stores, then it's a race to the bottom on price.
 
If the retailer doesn't have unique inventory to differentiate it from the big box stores, then it's a race to the bottom on price.

You can overcome higher prices by offering additional value (customer service, convenience, etc). For example, I'll happily pay a couple dollars more to buy something on range from the on-site rocket vendor because their presence at the launch is itself valuable.
 
Good video KT. Was listening to NPR this morning and they also mentioned the decline of demand for toys in general...partly due to digital competition, but also due to the large number of structured activities for kids and the resulting lack of unstructured play time.

And I had completely overlooked the debt load from the LBO....of course, if it weren't for that, the company would still have had plenty of headwinds.
 
You can overcome higher prices by offering additional value (customer service, convenience, etc). For example, I'll happily pay a couple dollars more to buy something on range from the on-site rocket vendor because their presence at the launch is itself valuable.

Good point, and thank God for small, local vendors who are in a position to fill that need.
 
My two favorite places as a kid. 1) The Enchanted Forest, a small local amusement park. 2) Toys-R-Us. Neither is there any more.
 
You can overcome higher prices by offering additional value (customer service, convenience, etc). For example, I'll happily pay a couple dollars more to buy something on range from the on-site rocket vendor because their presence at the launch is itself valuable.

On-site vendors don't have to pay rental fees for their building, insurance, utilities, employees, licenses, etc.

"Customer Service" means nothing to folks who buy strictly based on price which is over 90% of folks. They want customer service but they also want low prices.
It's difficult to have both and stay in business. :(
 
Well, at least there's the fun commercial jingle they had. ".... I want to be a Toys R Us Kid"

WaitAMinnit...... this jingle is not as fun as I recall it being.....

[video=youtube;VvTplYFJUFQ]https://www.youtube.com/watch?v=VvTplYFJUFQ[/video]
 
My two favorite places as a kid. 1) The Enchanted Forest, a small local amusement park. 2) Toys-R-Us. Neither is there any more.
+1...we just had our first baby 3+ weeks ago. We're sad he won't get the toys-r-us experience we got as kids. At least we can take him to Clark's Farm to get a little taste of The Enchanted Forest.
 
+1...we just had our first baby 3+ weeks ago. We're sad he won't get the toys-r-us experience we got as kids. At least we can take him to Clark's Farm to get a little taste of The Enchanted Forest.

Yep. Not the same, but I am so glad they have been able to preserve some of the stuff. It was much cooler when secluded away in the woods rather than out in a sunny field. But at least I can show my kids what fun was like when I was their age.

BTW, if you haven't picked up the book about the history of the Enchanted Forest, I recommend it. They sell it at the farm.
 
My two favorite places as a kid. 1) The Enchanted Forest, a small local amusement park. 2) Toys-R-Us. Neither is there any more.

When I read this I had to check out your location - The Enchanted Forest was one of my favorite places as a kid. My kids still love ours, though...

The MD Enchanted Forest was around from 1955-1995 and started as twenty acres growing to fifty. The OR Enchanted Forest was built in 1971 and is still running. It covers twenty acres. Thank you, Wikipedia.
 
I think they went out of business because of crappy service and apathetic moron employees.

I went into the store yesterday, looking for a Crayon Bank for a rocket project. I didn’t know where to look in the store, so I asked a group of three employees who were literally sitting on their asses doing nothing. Two of them were perched on the checkstand counter and one was leaning against a post, and they were BSing and laughing, having a great time, obviously doing nothing productive.

One guy said, “Yeah, we have one. I saw it this morning, but I don’t really remember where it was. But if you look around, you’ll probably find it.”

WTF?

I asked if he could be more specific, and he told me, “It might be arts and crafts, but it could be anywhere. No one buys them, so it doesn’t really have a home, and it just gets restocked in random places.”

”Will one of you come help me find it?”

”Well, I really don’t remember where it was... “

”Well, I don’t work here, so obviously you would know better than I do.”

”Yeah, I’d try arts and crafts first, and then just check around if it’s not there. It’s purple. I saw it this morning, but I couldn’t tell you where.”

This place DESERVES to go out of business! Good riddance! Begone Toys R Us!
 
I think they went out of business because of crappy service and apathetic moron employees.

I went into the store yesterday, looking for a Crayon Bank for a rocket project. I didn’t know where to look in the store, so I asked a group of three employees who were literally sitting on their asses doing nothing. Two of them were perched on the checkstand counter and one was leaning against a post, and they were BSing and laughing, having a great time, obviously doing nothing productive.

One guy said, “Yeah, we have one. I saw it this morning, but I don’t really remember where it was. But if you look around, you’ll probably find it.”

WTF?

I asked if he could be more specific, and he told me, “It might be arts and crafts, but it could be anywhere. No one buys them, so it doesn’t really have a home, and it just gets restocked in random places.”

”Will one of you come help me find it?”

”Well, I really don’t remember where it was... “

”Well, I don’t work here, so obviously you would know better than I do.”

”Yeah, I’d try arts and crafts first, and then just check around if it’s not there. It’s purple. I saw it this morning, but I couldn’t tell you where.”

This place DESERVES to go out of business! Good riddance! Begone Toys R Us!

Or is that a group of apathetic employees because they know they are soon to be jobless?
 
Or is that a group of apathetic employees because they know they are soon to be jobless?

To be fair- they're probably losing their jobs soon, and lost all motivation because of that...

I'm sure that is part of it, but I have shopped at this store over the past 20 years of living in this area, and the service has always been bad. If you can't provide service as bricks-and-mortar store, what can you offer versus buying online? Pretty much nothing. Time to go under...

To me, I found this level of bad service to be personally insulting to me as a human being, not just as a customer at a store. These employees were obviously not doing anything at all, and I'm a person asking for their help. I've gone more out of my way to help a stranger asking for directions than these jerks offered me as a customer looking to buy something at their store! Unbelievable!

To add to the story. I would have ordinarily walked out of the store, but there really isn't anywhere else I could go for a Crayon Bank, so I told them, "I guess if you won't help me look, I'll go search for it myself."

I spent about 5 minutes looking, and eventually one of the employees I had talked to wandered back to help look and told me that because the item doesn't really "have a home" it would probably not be on the shelves, and would be in the full shopping carts in the aisles waiting to be restocked onto the shelves. That would have been helpful to know before I went looking! We roamed through the store checking the carts, didn't find anything, and eventually gave up.

On our way back to the fromt of the store, I told him, "I'm glad you came to help me look, because when you and the others were standing around doing nothing and refused to send someone to help me look, it REALLY PISSED ME OFF!"

He didn't reply, and I left.
 
What happened to Toy R Us is the same thing that has happened to countless other stores. The growth of Wal-Mart, Target, and most notably Amazon. They also should have been more competitive price wise, their selection was easily only matched by Amazon. As far as B&M goes, they had the best selection, but price was always MSRP and rarely on sale. Their was no Value Added element to being a customer there. I love Target because I get not only Cartwheel discounts, but I also get 5% off of everything I buy there. Nor for using a credit card, but for using a card that takes the money out of the very account I would pay for things there with anyway. As far as grocery goes in my area their prices are also better on just about everything in store. It really is a no brainer why the Toys R Us's and the Books a Million, and the Borders, and the Linens and Things, and soon Bed Bath and Beyond's are headed to the once was nevermore.
 
I think they went out of business because of crappy service and apathetic moron employees.

I went into the store yesterday, looking for a Crayon Bank for a rocket project. I didn’t know where to look in the store, so I asked a group of three employees who were literally sitting on their asses doing nothing. Two of them were perched on the checkstand counter and one was leaning against a post, and they were BSing and laughing, having a great time, obviously doing nothing productive.

One guy said, “Yeah, we have one. I saw it this morning, but I don’t really remember where it was. But if you look around, you’ll probably find it.”

WTF?

I asked if he could be more specific, and he told me, “It might be arts and crafts, but it could be anywhere. No one buys them, so it doesn’t really have a home, and it just gets restocked in random places.”

”Will one of you come help me find it?”

”Well, I really don’t remember where it was... “

”Well, I don’t work here, so obviously you would know better than I do.”

”Yeah, I’d try arts and crafts first, and then just check around if it’s not there. It’s purple. I saw it this morning, but I couldn’t tell you where.”

This place DESERVES to go out of business! Good riddance! Begone Toys R Us!

I bought four crayon banks online from them a few weeks ago. They shipped all four for $5 shipping. When I received them, two large boxes arrived, and two were in each box, and each box could have easily held all four. I’m guessing they lost money on the deal...
 
On our way back to the fromt of the store, I told him, "I'm glad you came to help me look, because when you and the others were standing around doing nothing and refused to send someone to help me look, it REALLY PISSED ME OFF!" He didn't reply, and I left.

Working in a liquidating store is Retail Hell. Staff have little incentive to sell thru inventory faster because it just hastens the arrival of their last day at work.
Having said that, yes there were pre-existing problems. When you are servicing a ridiculous debt load from a leveraged buyout, you can't exactly recruit and retain top-shelf talent in the stores.
 
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