Your Guide To The Demise Of Toys’R’Us In The US

*NOTE: The day after I initially wrote this piece comes news of Charles Lazarus' death at the age of 94. RIP Mr. Lazarus and thank you from a Toy'R'Us kid.

For those of us in the toy business, the bankruptcy filing last September did not come as too big a surprise although the timing (right before the all-important Q4 selling season) may have. But for this time-honored, iconic retailer the troubles started long before September of 2017.

·      The founder, Charles Lazarus, stepped down from running the company in the mid-1990's and several subsequent executives were at the helm of this retailer. While they were all talented business people, why did they fail to achieve the success that Lazarus enjoyed? These leaders didn’t love toys, did not understand children in all their wonder and failed to tap into their inner-child to see the value of play.

·      Remember when Amazon only sold books? Not recognizing the future of e-commerce to come (okay, so a few of us didn’t either), in 2000 Toys’R’Us entered into a ten-year contract with Amazon to be the exclusive supplier of toys on their website. The relationship did not last the full term. But, yes, you heard me right – TRU actually introduced Amazon to the toy business!

·      As the power of e-commerce and price competition became apparent and started gobbling up market share Toys’R’Us missed an opportunity to make their stores true destinations for kids and adults alike. (Did you ever visit the flagship FAO Schwarz store in mid-town Manhattan? Did you ever see the movie Big?)

·      In 2005 a group of financial investors announced a leveraged buyout of the company. While this may have seemed a good business decision at the time it ultimately created such a large burden of debt that it was unsustainable.

The complete liquidation of Toys’R’Us in the US is a shock and a blow to the toy industry, consumers and, not to mention, the loss of 33,000 jobs! I recently had a text conversation with a colleague that I once worked with when she was a buyer – one of the best I have ever worked with. She said she is devastated but committed to staying as long as it takes to help others deal with the trauma.

For a more in-depth look at the current situation, I suggest you view Richard Gottlieb’s interview with Canadian Business Network News.

Check out my post on Can E-Commerce and Brick & Mortar Compliment Each Other.