Toys “R” Us has become Toys “R” Them.
For the first time in modern American retailing history, the majority share of a major merchandising classification is in play, the result of the dominant player disappearing from the marketplace.
By now, everyone knows about the demise of Toys “R” Us earlier this year and the resulting $11 billion free-for-all that was created when the retailer ceased to exist.
The beneficiaries of the TRU demise are the usual suspects: Walmart, Target, Amazon—and, to a lesser extent, niche players like American Girl and GameStop.
Each has aggressively gone after the toy business this holiday season with expanded assortments, extra marketing and all manner of promotions and retailing gimmicks. Exactly who gets how much of the business will not be fully known until fiscal-fourth-quarter figures are released at the end of January 2019, but it stands to reason that all of this will provide for some serious same-store sales bumps for the major players.
But what is really fascinating is that we are seeing a phenomenon unlike anything in the long history of retailing in this country.
Think about it: Has there ever been a product category where the single dominant player went out of business and there was no natural No. 2 to pick up the slack?
When Circuit City finally went belly up in 2009 after the usual protracted meltdown period, its prime competitor, Best Buy, was waiting to reap the spoils. And while the big national discounters and e-commerce did pick up share, it’s safe to say that the majority of the business in play went to Best Buy.
Or take the case of Linens ’n Things. It, too, shut its doors in 2009, again after the prerequisite attempt to keep itself in business the previous year. Likewise, it had a head-to-head competitor in Bed Bath & Beyond, and when LNT went bust, BBB gained a significant piece of its business.
There are certainly other examples of this dynamic, but the Toys “R” Us situation is different. Its only real direct competitor was KB Toys, which had long since disappeared as a national retailer, going under in 2004 (even though, like Circuit City and LNT, it continues as an online retailer under different ownership).
So we are witnessing an unprecedented occurrence in retail history this season: an entire merchandising category up for grabs with no natural place for it to go. It’s a once-in-a-business-lifetime moment.
Date: December 6, 2018