Due to billions of dollars of debt, iconic toy retailer Toys R Us is reportedly planning to sell or close all 800 locations within the United States. As reported by the Wall Street Journal, this move is taking place on the heels of announcing closure of all 100 retail locations within the United Kingdom as well as a previous attempt to only shut down one fifth of U.S. locations in January. The company expects store closures to happen over an extended period of time rather than all at once and the move will include all Babies R Us locations.
Closure of all locations in the United States would lead to the loss of 33,000 jobs. However, the company is studying a proposal that will allow the retailer to continue operating at roughly 200 locations in the United States. This would require the retailer to sell off the Canadian side of the business (82 stores) along with 25 percent of the most profitable U.S. locations to a new buyer.
While crippling debt taken on during a 2005 buyout led the company to this precipice, Toys R Us was also extremely late to invest in ecommerce. As the company’s senior management admitted in an interview last year, Toys R Us was about a decade behind in ecommerce investment when compared to retailers like Amazon, Target, and Walmart.
Toys R Us also missed other opportunities in the digital space, choosing to invest in a custom in-store augmented reality game rather than partnering with more established apps like Pokémon Go. Toys R Us could have had an entirely new generation of kids wandering the aisles searching for Pokémon while also checking out the latest toys. Roughly six years ago, the company tried a similar strategy releasing an in-house tablet called the Tabeo, which failed in comparison to more successful tablets from LeapFrog and Amazon’s tablet offerings.
Over the last several years, Toys R Us has struggled to offer discounts found at big-box competitors like Walmart as well as compete with activities found at small, niche toy stores around the country. It’s arguable the toy retailer peaked decades ago when the iconic “I don’t wanna grow up, I’m a Toys R Us kid,” jingle was blasting on the airwaves and kids would easily recognize the company mascot, Geoffrey the Giraffe.
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