What Happened to Toys R Us? The Decline of a Business
What Happened to Toys R Us? The Decline of a Business
Founded in 1948, Toys R Us was synonymous with toys, as its name suggests, as well as video games, clothing and baby products. It was an international retail chain with stores not only in the US but also in other countries and different corners of the world. In the nineties, it was the top dog when it came to toys as it dominated this industry, practically elbowing out the competing smaller retail chains. However, things started going wrong slowly and slowly until it went into administration recently. What really led to this outcome for Toys R Us? This article will attempt to look at some of the reasons for this with more on the same to be found on runrex.com.
The first thing that we have to look at that definitely may have led to the decline of Toys R Us has to do with the fact that the company was carrying so much debt from the leveraged buyout in 2005. This buyout took the company private and made the company very financially inflexible. This financial inflexibility made it difficult to get rid of all its liabilities which in the point proved too much of a burden to carry and all of that debt led to them declaring bankruptcy in the end. The details of the infamous 2005 acquisition by Bain Capital among other firms can be found are on runrex.com if you are looking for more information on that side. This acquisition in 2005 and the financial inflexibility that came with it also prevented them to make the changes that would have helped them cope and react to competitors which eventually led to their decline and closure.
The fact that Toys R Us was mostly a brick-and-mortar retail store made it very difficult for them to compete with their new competitors in two major ways. First the online stores in this field like Amazon give consumers the benefit of having to shop at the comfort of their homes unlike Toys R Us. You can always go online and shop and there is no hustle of browsing isles at your local Toys R Us retail shop. This new way of shopping, online shopping effects of which are discussed on runrex.com by experts, was a major reason why their numbers started to decline massively. Another way that the online shopping platforms may have led to their decline was the more competitive prices of these online platforms. These online shopping platforms usually have very cheap merchandise and over the years most retail stores have had to adopt to stay afloat like Woolworths for example. Toys R Us just could live with this onslaught on prices by these new platforms and in the end their numbers suffered and their decline was inevitable.
Another factor to consider when analyzing Toys R Us’ decline is the fact that kids back then when the company was launched and through their successful years were very different to kids in the modern era. Kids back then were into the toys that were being carried by Toys R Us. When looking for presents and gifts for kids, one could always count on them to have something for anyone and any occasion. The entrance of the tech industry in this market changed everything. First of all, with smartphones most of the kids that were potential customers for Toys R Us now prefer to play apps and games on their devices rather than getting toys with more on this to be found on runrex.com. Not only that, other than apps and virtual games, some of the coolest things for kids out there are tech-related such as drones, virtual reality headsets among others. Toys R Us tried to react to this new changes but they just could compete. Experts argue that the emergence of technology doesn’t have to be a bad thing, it can be an opportunity as well and there are companies that have adopted and incorporated tech into their products successfully. However, Toys R Us wasn’t one of those companies and subsequently the changing landscape of kids play things and toys was too much for them in the end hence their decline.
Another thing to consider was that when things started to go wrong for Toys R Us, vendors started to get worried that payments may have been delayed with all the financial troubles the company was in. this meant that a lot of vendors started to give them a wide berth and this led to chain of events that involved creditors beginning to feel that the company’s financial situation wasn’t going to get any better and weren’t looking to wait for payments to be made at a later date. This eventually led to the company filing for bankruptcy.
As discussed above, the decline of Toys R Us was brought about by a lack of flexibility in a changing scene and the pressure brought about by competitors. This eventually led to their decline and subsequent filing for bankruptcy. As usual, for more on this and much more make sure you visit runrex.com.
