It’s official. Toys’R’Us filed for a motion this morning with the intent to cease all operations and liquidate inventory in the U.S. I’ve been reading a bunch of articles to find the exact source of the motion, this CNBC article is the closest thing I can find. There are some other tidbits I picked up though that are worth repeating here:
- Engadget states that a deal to sell the Canadian chain is still in the works, and Toys’R’Us is attempting to include 200 U.S. locations as part of the deal.
- BBC is reporting that efforts to find a buyer for the UK chain failed and the remaining 100 stores will close within the next 6 weeks.
- Toys’R’Us blames Amazon and Walmart for their downfall. I’m more inclined to believe what this CNN article spells out as to exactly what started it all. I have another theory in that their move to charge a premium over MSRP, known as the TRU tax, is what turned shoppers off from going there. I’m not entirely sure if the start of the TRU tax coincided with the buyout that CNN describes, but I wouldn’t be surprised if the two were connected. Toys’R’Us took the opposite approach of slashing prices, what Amazon and Walmart typically do, and raised them instead. That was not a smart strategy. Walmart does this to undercut competitors and it unfortunately works. Doing the exact opposite just spells out your own doom. You are basically giving your competitor an edge without them having to work for it.
- Toys’R’Us is projected to run out of cash by May, which means store closings will happen sooner rather than later.
I was just there on Sunday with my three kids. Spent a solid 60 minutes there browsing the aisles, and looking at all the stuff. The store was packed. You can’t have that kind of experience at a big box store. It’s upsetting on so many levels that a store that sells just toys can’t survive the retail environment due to a Wall Street deal.