Several months ago, I found out that Toys 'R Us was in the middle of a terrible financial situation, with the chain on the brink of collapse. Bigger companies had bought the chain, hoping to somehow revitalize it from its current state of atrophy. But apparently, it just was not enough, and they will be closing their stores and liquidating the rest of their products.
Toys ‘R Us was an iconic store for me when I was growing up. Whenever we were going somewhere and passed by the store, odds are we’d either think or say “I want to go in!” Maybe, if you were lucky, you’d be able to go in and at least look around, see all the things you want to add to the Christmas or birthday wish list.
Even after I had gotten a bit older, in my middle and late teen years, I still thought Toys ‘R Us was the place to be if you’re a kid. When I was 18, I just so happened to get a job there for the Christmas season as well, so you could say I have a bit of affinity with the iconic toy store from being both a shopper and an employee.
What caused the toy store giant to fall? Well, $5 billion in debt, for one. The company declared bankruptcy back in September as it could not pay its creditors. But even more problematic for them was the growth of other companies that managed to get their clientele.
The big-box toy retailer's demise was years in the making. The chain was hobbled by debt stemming from the 2005 leveraged buyout by KKR, Bain Capital and Vornado Realty Trust (VNO). That deal placed it at disadvantage against larger rivals such as Amazon (AMZN), Walmart (WMT) and Target (TGT), which have made inroads in the toy market in recent years. A 2016 IBISWorld report estimated Toys "R" Us' share of the retail toy market was 13.6 percent, lagging Amazon's 16.3 percent and Walmart's 23.9 percent.
Many places that we never imaged would go out of business are now falling by the wayside. Mall anchor stores like Sears are on the decline, Circuit City is long gone, and now Toys ‘R Us is on its way out. While it seems sad to us that these companies are fading away, we should expect good things in the future.
Consider why these companies have gone under: better options have come along. Companies like Amazon have come along and offered us one of the greatest shopping conveniences ever devised: two-day shipping.
Many of us may lament the fact that companies like Toys ‘R Us are falling by the wayside because of other companies like Amazon, but such is the way of the free market. New innovators come along each year and attempt to offer alternatives to what is already tried and true. Very few succeed, but the ones that do help to make our lives better, and that’s why we purchase them.
Toys ‘R Us is one of the last giants of retail to still be around, and more will fall as time goes on. But we should remember that better things are yet to come, as there is still plenty of innovating for people to do. And along with that innovation will come new kinds of opportunity for Americans.