Toys ‘R’ Us files for bankruptcy in the US, stores remain open–but what does it mean for the brand?
Just yesterday, the huge worldwide toy chain Toys ‘R’ Us filed for bankruptcy in the United States, according to the British Broadcasting Network.
Reports say that massive debt and the continous fall of sales spelled the demise of the large toy store chain, especially in the face of changing retail landscapes that have been dominated by Amazon.
But the US Supreme Court had granted the toy chain $3 billion to restructure its loans and prepare for the Christmas shopping season, which could stabilize the company further.
The judge said, though, that the loan was mainly to help the retailer with its thousands of employees who would be affected by store closures.
So far, the bankruptcy has only affected the US stores.
From peak sales to bankruptcy in five years
International business experts have noticed the trend of megastores all over the US incurring huge losses simply because buying habits have changed. Payless, one of the largest store retail chains in the United States, has filed for bankruptcy protection, according to reports.
Despite Toys ‘R’ Us’ recording peak sales in 2012 that amounted to US $12 billion, five years has made the chain face dire bankruptcy measures.
Why the bankruptcy?
For the same reason that groceries and other large chains are showing slipping sales, Toys ‘R’ Us is having trouble keeping up with the changing face of commerce.
Amazon, which is now one of the biggest companies in the whole world, dominates retail in all aspects. People prefer to shop really close with a brand that they can relate to, or from the comfort of their own home.
While Toys ‘R’ Us has started its own webstores, there is a long way to go if they want to catch up with current buying trends.
What would happen if Toys ‘R’ Us closes down?
While thousands upon thousands of workers would lose much-needed jobs, parents nowadays grew up buying from Toys ‘R’ Us. Here’s what could happen in a world without the huge toy chain:
No more actual trips to the toy store.
While department stores and online stores can say the same thing, part of the Toys ‘R’ Us brand is how it was packaged as a kids’ Mecca for toys. There is no place as large as the chain that could look remotely like toy heaven anywhere.
Smaller toy manufacturers may find themselves in a bind.
Depending on how heavily they rely on the large toy chain for distribution, a scramble for better reach may happen. Large manufacturers like Hasbro, Mattel and others may not even have problems.
Christmas shopping may become a bit more difficult.
Since there is no one toy store to get gifts, you’d have to go with shoppers that are looking at clothes, jewelry, cosmetics and electronics at other malls. While getting gifts at Toys ‘R’ Us isn’t exactly pleasant, the trip is definitely a treat for the kids.
How about you? If Toys ‘R’ Us closes down all over the world, what would you do? Would it affect you and your kids that much? Let us know in the comments!