What happened to Toys R Us and why are they closing their stores?
Toys “R” Us, Inc is an American toy retailer founded in 1948. Kids consider Toys “R” Us to be an absolute wonderland with fascinating gizmos and gadgets that will keep even the most ADHD of kids entertained for a little while. Unfortunately, however, Wall Street Journal reported that America’s largest toy seller is closing down a total of 380 stores in the past year. That about 1 fifth the total amount of stores they have altogether. But why is this happening?
Brands, today, are in a constant state of having to reinvent themselves with the rise of technology. People would rather shop online. This isn’t just a problem with Toys R Us, but with all major retailers. Companies like Macy’s, Forever 21, and many others have shutdown hundreds of stores, as well. Also, announced in an open-letter, the CEO of Toys R US, Dave Brandon said “As you may be aware, we launched a financial restructuring of our business last fall.” It would seem, due to the change of shopping habits, companies are now restructuring in order to better fit consumer trends.
Does this mean Toys R Us will die entirely? Probably not. They will simply change their marketplace from brick-and-mortar retail to an online marketplace. Which will be challenging considering Amazon controls most the toy market online.
Toys ‘R’ Us filed for Chapter 11 bankruptcy on Sept. 19, entering bankruptcy with a $3.13 billion bankruptcy financing package, the largest ever for a bankrupt retailer. While negotiations surrounding the bankruptcy have been ongoing, a judge recently allowed Toys R Us to pay millions in bonuses to its top executives. Toys R Us did not provide severance for its employees.