Why Toys “R” Us May Not Go the Way of Cabbage Patch Dolls

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Toys"R"Us Times Square

There aren’t enough “Toys ‘R’ Us kids” any more, one of the reasons that the iconic toy-retailing chain has filed for bankruptcy and is trying to reorganize.

But that didn’t stop CEO Dave Brandon from visiting the newly reopened pop-up Toys “R” Us store in Times Square in New York on Wednesday. His goal—to rally the troops and send the message that as the holiday season looms, the brand is urging employees and customers alike that it’s business as normal at its 1,600 Toys “R” Us and Babies “R” Us stores around the world.

Problem is, Toys “R” Us’s permanent flagship store had stood there until two years earlier, so Brandon also was creating a bittersweet snapshot of a once-great brand in decline, and a sign of the times.

Indeed, in the wake of filing for protection under Chapter 11 of the US Bankruptcy Code, Toys “R” Us, the company faces both the short-term challenge of persuading consumers it’s not dead yet as well as the long-term challenge of what to do to turn around a debt-laden company in the unfriendly era of growing e-commerce competition.

“We are confident we are taking the right steps to ensure that the iconic [brands] live on for many generations,” Brandon said in a press release. “Our customers around the world can continue to count on an outstanding shopping experience and excellent service whenever, wherever and however they choose to shop with us.”

The bankruptcy filing itself also referenced the retailer’s once-iconic jingle:

“I don’t want to grow up, I’m a Toys ‘R’ Us kid.
There’s a million toys at Toys ‘R’ Us that I can play with.
From bikes to trains to video games, it’s the biggest toy store there is.
I don’t wanna grow up, ’cause if I did,
I couldn’t be a Toys ‘R’ Us kid.”

Much of the blame for the chain’s drastic step has been placed on the takeover of toy retailing by Amazon and other e-commerce players. A new generation of toys—video games and electronic-based entertainment—hasn’t favored the traditional notion of parents taking kids to troll the aisles of their local toy store.

But the truth is that, as the Wall Street Journal noted, Toys “R” Us and Brandon were placed at a huge disadvantage because of the mound of debt heaped on the company when three Wall Street firms took it private for $6.6 billion in 2005.

Nevertheless, Toys “R” Us might yet survive. For one thing, as Bloomberg noted, big toy makers such as Mattel and Hasbro depend on the last surviving big bricks-and-mortar toy chain to have any leverage at all in their pricing and distribution struggles with Amazon and Walmart.

And as the crucial holiday toy-buying season nears, toy makers aren’t expected to face liquidation crises because Toys “R” Us plans to keep operating most of its locations while in bankruptcy court, the Journal said.

As Toys “R” Us restructures its debt, Brandon told Bloomberg plans to refocus the chain on in-store experiences and spruce up its marketing—beyond using a decades-old commercial jingle, presumably. “Toys ‘R’ Us delivers children their biggest smiles of the year,” he said. It’s “here to stay.”

 

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