As the annual Toy Fair trade show wraps up today, no doubt much of the talk in the aisles and booths was about the pending resurrection of Toys “R” Us. One has to suspect the conversations were as spirited as they were partisan.
While not entirely unexpected, the announcement this month that former executives of the very much defunct toy retailer were planning to restart the business certainly got everyone’s attention. Details are as sketchy as skepticism is high on whether this will all really happen, much less whether it will actually be successful.
Let’s face it: Past attempts to bring back a long list of retail brands that succumbed for a variety of reasons are not exactly encouraging. Radio Shack stands as only the most recent victim of this kind of strategy, and certainly one can come up with many more examples without a whole lot of mental exertion.
But the toy business is literally in devastation mode from the Toys downfall in a way few other industries have been. Because it was the No. 1 seller of products in the category, everything it did impacted everything everybody else did in the space. Think of Amazon getting out of the book business, or Home Depot or Lowe’s going out of business and leaving a bottomless void in the home improvement category. The supplier base—including the two powerhouses, Hasbro and Mattel—were no less injured.
If and when Toys returns, it will encounter a different marketplace than it faced even two years ago. Walmart, Target and Amazon all stepped up their games this past Christmas, and with a full year to plan for the 2019 holiday season, they will each no doubt be better prepared, more assertive and ultimately more successful than they were with the plans they pieced together in 2018.
Independent toy stores will also be better situated to deal with the Toys void. They too can make buying decisions in the first quarter that better reflect the state of a market without a top dog, a luxury they didn’t have a year ago.
That also goes for FAO Schwarz—ironically once owned by TRU but now a separate company—which has signaled it plans to expand its footprint both domestically and internationally, as well as beyond just the toy business.
Toys “R” Us did $11 billion in annual sales in its last year in business, of which about $8 billion was in the U.S. That’s a huge piece of business in play, even if much of it evaporated during the fourth quarter of last year, never to appear again.
If TRU2 actually does come back into the market and if it is successful—two very big ifs—it will get some portion of that business. The brand name and good feelings for the store still resonate with shoppers. But that only goes so far.
Still, just as the housewares and homewares business changed when Linens’n Things went under, and the consumer electronics business changed when Circuit City crashed, the market will be very different by the time the new Toys looks to start up.
The game may be the same, but the rules will most certainly have changed.
Date: February 28, 2019