[https://www.youtube.com/watch?v=PJ0fBbutkgA]
What s up guys! It s Jason here and welcome to my YouTube channel, Fun Insight. Wow that
jingle brings back a lot of childhood memories playing in my mind over and over again. Remember
those days you had to beg your parents to go to Toys R Us? Well, the year is now 2021
and going into 2022. A lot has happened since our favorite Toy store from the past, Toys
R Us, filed for Chapter 11 Bankruptcy back in 2017. Has anyone heard of Amazon.com? Can
you believe that it s been nearly 5 years? Seems like an eternity and a lot has happened
since then. In this video, I ll run you through a quick summary of what happened to Toys R
Us, the bankruptcy and give you the current update on what s been going on in 2021 and
2022. By the end, you ll know when you can head over to the next Toys R Us store opening
and what to expect from the new experience concept!
But before we begin If you wouldn t mind just tapping that LIKE button for the YouTube algorithm,
I would really appreciate it. This video is quite unique because it s a collaboration
with Michael over at Money Lemma. So if you enjoy it or would like to see more, let us
know! We would love to hear your input. If you ve ever been to a Toys R Us, be sure to
subscribe and hit that notification bell for new videos each week. Thanks for doing that
and now let us continue on with the Rise and Fall and Rise Again of Toys R Us.
History of Toys R Us
Toys R Us started in June 1957 in good ol Washington DC. As a quick summary, Toy R Us
was having business fun by selling fun. Toys R Us was very much a part of the lives of
American kids growing up in the 80 s, 90 s and 2000 s, an American staple like baseball,
apple pie and hot dogs. When it filed for bankruptcy in the early 2000s it felt like
an old dinosaur had finally fallen. If you grew up in the 80s or 90s, this story may
feel familiar. The 80s and 90s were the peak of what s called the retail category killer.
This was a class of mega-stores that specialized in a narrow segment of the market. Home Depot,
Best Buy, Borders Books, Barnes and Noble, and Bed Bath and Beyond are all examples.
By specializing, these superstores offered a breadth of offering and a price advantage.
Before the internet was popular, product search was a major problem. If you wanted an uncommon
drill bit or an obscure book on bird-watching, where would you get it? You could drive around
to all the local stores and hope a seller happened to have one in stock. Or you could
go to a category killer and be certain to find it. Because of the convenient offering,
category killers tended to penetrate their target market deeply. A corner market might
be the destination for a neighborhood, but a superstore can be a destination for entire
towns or even regions, especially in less populated areas with fewer shopping options.
Because superstores attracted larger populations, they were able to get scale on each item they
sold. That meant lower prices for consumers. Low prices and convenience made category killers,
well, category killers. All across America retail market share consolidated - the big
kept getting bigger. Toys R Us was no exception. In 1983 it had 13% market share. That means
more than 1 in every 10 toys sold in America was sold by Toys R Us. Considering how many
different stores sell kids toys, that s pretty impressive. Smaller chains and independent
toy stores around the country just couldn t compete with the lower prices and wider
offering of Toys R Us.
Toys R Us had quite a run but nothing lasts forever. Sales increased, however so did the
competition. Two new types of businesses disrupted Toys R Us and ended its reign. First, of course,
was the internet. Toys R Us stores had a quite a breadth of offering, but they can t compete
with a company like Amazon, that can house infinite items on their website. Just as Toys
R Us disrupted traditional neighborhood retailers by aggregating the sales of a community, internet
retailers disrupted Toys R Us by aggregating the sales of a nation in one online store.
At the same time, discount retailers emerged to undercut the price advantage of Toys R
Us. The most famous of these businesses is Walmart, which remains the largest toy store
in America today. Toys R Us bought toys in large volumes and could sell at prices below
many competitors, but Walmart beat them at their own game. As Toys R Us tried to compete
with all these new businesses, they found themselves deeper in debt and frankly unable
to compete. That s how one of the brands that connected deepest with 80s and 90s kids folded.
This added competition along with the taking on of too much debt, which became a financial
albatross. The accounting ledger and financial pages of the company were opened and significant
financial anomalies were noted. Specifically, in 2005 where Toy R Us suddenly took on extensive
debt (via a leverage buyout) in the amount of $5 billion. Ultimately, under the weight
of their financial indebtedness, $400 million in interest payments alone, and a number of
other factors that were explored, it seems that they all combined together which led
to their demise, Toys "R" Us became toys no more.
Well to that viewer, who now can probably read, I excitedly proclaim that your giraffe
is back in 2021.
Repaired Toy Store
As the calendar days, months and years continued to be turned, the once iconic toy store re-emerged
from Chapter 11 bankruptcy after going back to the toy repair shop. In 2019, Toys "R"
Us became shiny and new and was purchased by TRU Kids, Inc, a company setup by the debt
holders of Toys R Us to own the intellectual property of the brand. Additionally, WHP Global,
a company that invests in the purchasing of identifiable brands, purchased significant
shares in TRU Kids. FYI - WHP Global was in the bidding for Reebok earlier this year and
just bought Lotto Sport Italia, an Italian sports brand which has also gone through tough
times. The financial terms of both purchases for Toys R Us were undisclosed. Under the
agreement, Tru Kids would take over the Toys R Us brand and subsequently would own all
of the associated brands including Babies R Us and Geoffrey the giraffe.
So this toy story is evolving under the leadership of Tru Kids. The focus for the new owners
has been on redesigning this huge toy box with the look and feel of the modern day customer
in mind. Their vision was that a family's exciting adventure of playtime will include
exploring the toy shop, and enjoying specifically highlighted toy brands located in the stores.
It's like a toy store within a toy store. A wonderful experience of many different toy
varieties that may bring in customers and keep them returning.
Toys R Us Reopened
Well, as the saying goes, you can't keep a good giraffe down. And so, Toy R Us announced
in mid-2019 that it would take up business residence in certain malls in larger markets
during the holiday season. Like a nerf target game, two malls were targeted. One in Paramus,
New Jersey and one in Houston, Texas.
In addition to actually having the latest fun and entertaining toys at their playground
locations they also incorporated a number of "to infinity and beyond" high-tech upgrades.
As part of their marketing strategy, a number of sensors were imbedded into the ceiling.
These sensors monitored shopping traffic, captured shopping patterns of the customers
and even recorded the shopper's steps and delays in certain parts of the store. All
designed to provide real-time marketing feedback on how the customers were reacting to the
various toy displays. Creepy or commercial genius? You decide!
Strengthening the reestablishment of Toys R Us were newly established partners such
as Macy's Department Store and other well-known brands like Lego. Like a game of Monopoly,
real estate would be provided to these partners as they would be offered the opportunity to
establish and display their own iconic brand within the Toys R Us location.
What was so exciting about the new Toys R Us stores is that they were redesigned to
compete in the modern age. An emphasis was placed on experience, something that internet
companies and discount retailers could never compete with. The new Toys R Us stores provided
a complete fun experience with the construction of an in-store tree house (with door chime),
a nook for reading and a cinema. And of course, what is a Toys R Us major event without the
toy ambassador. You guys may be happy to know that Geoffrey the Giraffe was in attendance,
but unable to cut the ribbon because his hoofs had been recently polished. (just kidding!)
This was probably something Toys R Us should have done years ago. The most successful category
killers, like Best Buy and Home Depot, responded to internet competition by transitioning their
business model to look a lot like the new Toys R Us. Physical stores were for the things
you couldn t get online: in-person (or in-giraffe) advice, opportunities to play with toys or
try out new products, and playground (or the Best Buy s customers, the corners of the store
where you can play video games). But Best Buy and Home Depot today are much more than
physical stores - they are also the 5th and 7th largest e-commerce companies in the United
States.
Toys R Us Closed Again
Despite Geoffrey's best efforts, the two experimental stores, rather than reflecting his strong
and long neck, fell short in the goals set. It seemed that timing is truly everything
and with the efforts of trying to reestablish a presence in the marketplace, there was that
thing called COVID. The resulting restrictions limited foot traffic in the malls and limited
the movement of potential customers. Because of the resulting poor sales, the Toys R Us
stores were shut down a year after opening but the Company decided to relaunch their
website in partnership with Amazon.
Toys R Us 2021 Update - Future Reopening
There is good news however. Although the Toys R Us battleship took a hit, it wasn't sunk
(Get it - You Sunk My Battleship game?).
There has been a toy silver lining revealed as a result of the COVID pandemic. A marketing
research company is reporting that toy sales have increased by 16% over the last year.
This revenue of $25 billion was the frantic attempts of parents to occupy their darling
kids during the recent restrictions.
And so, Toys R Us is not taking their toys and going home but is planning to re engage
the all-important family unit through brick and mortar stores. The plan is to have Toys
R Us locations in full operation for the year end 2021 holiday season.
The New Toys R Us in 2021 and 2022 Business Model
Again, the idea is to rejuvenate a brand that is a national pastime for many of today s
parents. Part of the plan is also to have satellite or pop-up stores at a variety of
convenient locations for the shopper. Some of these locations may include a kiosk within
a store or a presence in a variety of airports. The Toys R Us management has clearly said
that they will not concentrate solely on mall locations and that the focus will be where
people are or are trending to be. In August 2021, Toys R Us announced a huge partnership
that they would be opening in more than 400 Macy s department store starting in 2022.
As said by Macy s CMO, As a Toys R Us kid, I could not be more excited to bring this
beloved brand that so many of our customers know and love into Macy s online and to our
stores across America. Our toy business grew exponentially in the past year, with many
families looking to inspire their children s imagination and create meaningful moments
together."
So basically, rather than the stores displaying shelves and shelves of toys, the plan is for
smaller stores with a bigger and more personalized customer service experience. The idea is quality
over quantity.
The design of the new stores will be smaller, but more appealing, the company says. The
vision is the selling of fewer toys within the stores over the retail sales of in-store
purchases in prior decades, but providing more interactive experiences. The business
model for the toy store will purposely stock fewer toys in-house. It is anticipated that
the average store will carry about 1,500 items.
Also, the business concept is to allow an interactive and fun toy shopping experience.
The hope is to engage the shopper and their family and keep them coming back. The "hands
on" experience afforded to the families will heavily rely on in-store technology which
will allow for the parents to buy from a large stock of toys online. If the play-time is
enjoyable, the customer can purchase the toy through in-house technology that ushers the
customer into a toy wonderland consisting of over 15,000 items.
Of course, the basics of successfully operating a business are still in play. Those basics
include attentive customer service, developing and adhering to a strategic business strategy.
Unlike the 1950s, when Toys R Us first launched, competition from Amazon, Target and Wal-mart
means Toy R Us will need to rebuild with more than just a set of Legos. They need to offer
something different, something that leading retailers can t.
Finally, the family that plays together laughs together. The planned reimaging of Toys R
Us is counting on families playing in their stores as an outing that is looked forward
to when school is in recess or on a weekend. We all know that as human beings we have a
shopping gene as part of our DNA and so this may prove to be a winning strategy.
Conclusion
And that brings us to today. Perhaps, more critically, the successful future of Toys
R Us can help bring back Geoffrey the Giraffe to a new generation of kids. It seems now
the giraffe is returning and sticking his neck out once again. He is bringing his big
Toys R Us toy box perhaps to a local store or kiosk near you. Perhaps, if we are lucky,
the haunting jingle will also return.
So with that said, thank you so much for watching my video. There was a significant amount of
research, production and toy shopping that went into making this video possible. As mentioned
again, today s video is a collaboration with Michael over at Money Lemma. Let us know what
you think of the video or if you would like to see another one like it! If you haven t
seen already, check out my video on the Rise and Fall of Rainforest Cafe or the Rise and
Fall of Discovery Zone. Those are my personal favorites on my channel. I highly recommend
both. As always, stay happy and healthy and stay tuned for another episode of Company
Insight next week.