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Toys ‘R’ Us Didn’t Have to Die

165 points by petethomas 8y ago

srathi 8y ago
They would have survived if they hadn't filled all their aisles with stupid star wars and disney princess stuff. There was a severe lack of creative toys.
trumped 8y ago
Even with 20% off coupons, Toysrus was often more expensive then Walmart and Amazon...
amriksohata 8y ago
If you are a parent you will feel it did need to die. I went in there years after being a kid and nothings changed, that old warehousey look,the same toys, nothings changed since I was a kid. Worse, is they are all overpriced compared to even other stores let alone internet stores.
- WhiteSource1 8y ago
  That's the key. It's not just online or competition lost to Amazon. The same toys were available at Target for a lot less money.
  - dragonwriter 8y ago
    > The same toys were available at Target for a lot less money. True for a relative handful of the most popular toys, but Target doesn't have the floorspace dedicated to toys to cover any but a small fraction of what a Toys R Us would carry. Last time I was in a Toys R Us, the section dedicated to play houses was, no kidding, the size of an entire Target toy section. Target might stock one item in that category in store (though I don't think I've ever seen one in a Target). It's Amazon and friends, not brick and mortar stores with smaller but discounted toy sections that killed the advantage of having floor space and variety in stock to browse, since people would use the store for discovery and then order from a discount online channel that didn't have the overhead of brick and mortar showrooms.
randomdata 8y ago
Has it died? The sale of the Canada arm was finalized only a few days ago[1]. There is no indication that they plan to shut down any time soon. [1] https://www.thestar.com/business/2018/06/01/fairfax-completes-purchase-of-toys-r-us-in-canada.html https://www.thestar.com/business/2018/06/01/fairfax-complete...
- dingo_bat 8y ago
  The original US business is dead. The article is about that. It says that operations in Asia are also fine.
  - a_bonobo 8y ago
    The ones here in Australia aren't independent and are currently in voluntary administration. For example they stopped accepting their customer loyalty cards, the one next to me seems to have stopped restocking as well. There are however some bidders to take over the entire Asian arm so it could be fine.
- ChrisArchitect 8y ago
  yeah I heard an odd radio ad in Canada last week where Toys R Us straight out said we're not going anywhere!
gkoberger 8y ago
I read the whole article, and I didn't really see a convincing argument that it didn't have to die. Sure, it could have eked out a few more years... but it was living on borrowed time. Not only do most people shop online now, most toys are also online. I imagine most parents put money into TV shows, video games, iPhone apps, etc.
- ryanisnan 8y ago
  I agree. Other than manage its debt more effectively, the authors don't really expound on what Toys R Us could have done differently to right the ship. Was it moving more effectively into online sales? Or alternate business lines altogether?
- joe_the_user 8y ago
  The company had been paying an unsustainable $400 million a year in interest. Normal intuition would say that maybe the company could enter bankruptcy, wipe out that debt, turn the bond holders into the new owners, have the owners issue stock for a debt free company and sell the stock to pay off a fraction of the money they owed. That would seem like a rational approach that would maximize utility for at least owners and employees. The problem apparently was that bargaining and brinksmanship destroyed the company before such a result could be considered.
  - jandrese 8y ago
    Wasn't that debt dumped on the company by the firm that bought them out?
- jaysonelliot 8y ago
  There's nothing about the brick & mortar toy space that's inherently living on borrowed time. It was Toys 'R' Us' own mismanagement that doomed it. Toy stores can be a destination. Provide a compelling experience for parents and kids alike. It's easy to imagine a space where kids get to play with toys hands-on, and parents get to judge for themselves whether they think they're appropriate in terms of fun and quality—something you can't do online. Make the adult experience a mixture of café and Apple store, and give the kids a safe "penned in" experience like IKEA does in their kids' section. Parents will enjoy the respite, and kids will beg to go. And of course, once they get there, they'll cajole their parents to spend more money. Never underestimate the power of a child in a store. IKEA has nailed the brick & mortar experience, even though most of their products could easily be purchased online. Toys 'R' Us merely had to abandon their hubris and old thinking, and they could have killed it. Instead, they languished with a chain of dirty, disorganized, depressing stores, ill-treated and unmotivated employees, and no vision. They didn't have to die, but their leadership and strategy did.
voidmain 8y ago
Despite the title and the focus on the form of financing, none of the facts in the article even suggested to me that the company would be in any better shape if it had used equity financing rather than debt. It sounds, rather, like an unprofitable business that no one in their right mind would give any more money. If someone thinks they can figure out how to make a workable business out of big box toy stores, it sounds like the name is for sale.
- hn_throwaway_99 8y ago
  It at least sounds plausible to me that you could make a toy store a "destination" business if you did something to differentiate it from Amazon: kids parties, video game tournaments, something. You'd have to transform what it means to be a "toy store". Of course, that takes a lot of money, and with Toys-R-Us' debt load there was no way they could have afforded that.
  - Analemma_ 8y ago
    I don't know if it scales up to big box stores, but this– plus adding food/café– is what a lot of game and hobby stores have been doing, and it seems to be working. There at least five stores like this in the Seattle area (2 of Café Mox, Meeples, etc.) and they seem to do good business.
    - yourapostasy 8y ago
      Of more interest is will this scale up culturally. Going in this direction at scale means monetizing physical socialization. I've observed this while touring Tokyo, where the society and culture has accepted eye watering residential real estate prices with accompanying micro-sized residences by American standards, in exchange for scads of commercially-run spaces used for social activities. Socialization there seems to take place outside of people's homes, and in restaurants, bars, and other commercial venues. These venues seem predominantly mom and pop sized and run in the non-tourist areas, small, and affordable. I have no idea if that will translate into American urban culture; I can see cases made for Millennials and post-Millennials embracing this model and rejecting it. I don't see it happening in the suburbs, much less exurbs. For this business model to work at scale, it would have to be embraced ubiquitously, but I'm not convinced there is a lot of space left to scale into after Starbucks got there first in so many locations.
thisisit 8y ago
Retailing seems to be dying in US irrespective of the company: https://www.bloomberg.com/news/articles/2018-04-17/retail-store-closures-in-u-s-set-for-record https://www.bloomberg.com/news/articles/2018-04-17/retail-st... Couple of years ago, one of my friends bought a store at a strip mall. The store was making a loss. And the previously owners were an elderly couple. So my friends thesis was that they weren't exactly tuned into the digital presence business and it was still entirely possible to run a store in US. Two years later footfall in the mall has decreased a lot. And in spite of the digital strategy etc my friend's store hasn't worked well. Now he is not only in debt but he is also trying to sell the store. But there are no buyers.
- rorykoehler 8y ago
  The same is happening in Singapore. The maps have re-strategized to focus on food and drink experiences. Now people go out to make to hang out mainly
- pouetpouet 8y ago
  The US have too much retail space. Retail is not really dying there is too much of it. https://www.statista.com/chart/9454/retail-space-per-1000-people/ https://www.statista.com/chart/9454/retail-space-per-1000-pe... https://qz.com/1032723/theres-much-more-empty-retail-space-in-the-us-than-in-other-countries-on-a-per-capita-level/ https://qz.com/1032723/theres-much-more-empty-retail-space-i... https://www.theatlantic.com/business/archive/2017/04/retail-meltdown-of-2017/522384/ https://www.theatlantic.com/business/archive/2017/04/retail-...
  - bunderbunder 8y ago
    I wonder if it's also a case of there being too much of the wrong kinds of retail space. If there's a retail store within a mile of our house, I'll happily walk to it and do my shopping there. Especially when it's a pleasant day outside, that's an enjoyable way to get out of the house and get a little light exercise. If the only kind of store left that sells what I need is one of the big box stores, so that going there means having to get in the car and deal with traffic and haul myself halfway across town and, seriously, ugh, that is enough of a chore that I'm already feeling vaguely annoyed just thinking about it. No thanks; I'll happily order online. And I would rather starve in the woods than drive all the way out to the nearest shopping mall.
Areading314 8y ago
https://www.bloomberg.com/features/american-mall-game/ https://www.bloomberg.com/features/american-mall-game/
ggg9990 8y ago
Toys R' Us was dead so many years ago. I went there once to buy a present for a kid and it was just so depressing and not at all a fun or cheerful place. When I had a kid of my own I never took her there. I regret it not being what it was when I was a kid but I don't regret it going from its state ~10 years ago to dead.
- PhasmaFelis 8y ago
  I wonder if what you're actually describing is the change in your adult perspective, not in the store. As a kid, and as an adult who likes toys, shelves piled high with toys are "fun and cheerful" all by themselves. I'm not sure what else you felt was lacking.
  - ggg9990 8y ago
    The kids in the store weren't happy or excited to be there, that's what was different from when I was a kid.
PhasmaFelis 8y ago
The thing that's really lacking to me in online toy stores is, I guess, discoverability. Amazon can give you a list of all the Transformers, or all the Legos, in an instant, and with a bit of prodding it does an acceptable job of showing you the current top-selling toys, but it's impossible to walk down an aisle at Amazon and see something awesome that you've never heard of.
- spockz 8y ago
  VR could en a thing here for Amazon. Instead of seeing endless lists, just walk down the isles virtually. Maybe accompanied by some cheerful sounds of kids playing in the background to set the mood and incentive to buy.
- sitepodmatt 8y ago
  At least with books, Goodreads takes care of that.
- krallja 8y ago
  I went to our neighborhood Toys-R-Us to be a vulture, and discovered quite a few toys I wouldn’t have considered purchasing otherwise. Of course, the 40-70% discounts helped a lot.
  - amyjess 8y ago
    Same here. I went there to soak in childhood nostalgia one last time before it closed, and I was surprised by a) all the things I saw there that I would have never heard of otherwise and B) all the random things I have vague memories from when I was a kid that are still around. And it made me feel profoundly sad that that experience will be gone forever soon. Soon, it'll just be the top brand names that anyone will have ever heard of and the random weird stuff will all be gone. I'm talking about the toys that you had growing up that you never knew what they were called but you had because your parents passed by it at random and went "ooh, that looks interesting, I bet [kid's name] will like this".
- suresk 8y ago
  Yeah, my wife and I are definitely disappointed they could find a way to make it work, largely because of discoverability. It definitely made it easy to find new toys, see how they would look/feel in person, etc. Others stores just don't have the selection they did and the experience on Amazon isn't as easy. Another thing is knowing the quality of stuff you are getting. Of course, plenty of cheap crap gets sold at Toys-R-Us and elsewhere, but some of the stuff on Amazon is in a league of its own in terms of poor quality and I suspect it will continue to get worse.
triviatise 8y ago
I dont know the economics of our local toy stores, but the ones that seem to thrive allow you to actually play with the toys. If it was more like a theme park or a playground you would get parents to bring their kids in just to play. For example, let kids drive power wheels around a track. Have playscapes that they can play on and buy. And sample toys that kids can play with.
- benjaminwootton 8y ago
  I remember reading 20 years ago how retail stores need to turn into experience destinations. I think the perceived risk at the time was mail order rather than the internet. However, even with Apple and the Apple Store there for all to see, few retailers still seem to get this. Without the hands on element, they are really fighting a losing battle vs ecommerce.
  - suresk 8y ago
    Apple sells high-margin products that are typically priced the same (or roughly so) everywhere - I don't know that there are interesting lessons for all industries to learn here. Wasn't Ron Johnson's attempt to take some of those lessons to JC Penney pretty disastrous? Everyone always has the same ideas when retailer struggles come up, and a lot of the ideas would undoubtedly make many stores more pleasant to visit. But people still buy based on cost, and that makes it hard to compete with a company who has a much lower cost model than a physical retail store and has much larger scale. I don't think retailers will stop the bleeding and start implementing some of these ideas until they can figure out how to solve the showrooming problem. They may never do so, and physical retail in most categories will be a distant memory for most of us.
    - ghaff 8y ago
      I’m a bit surprised that we haven’t ended up with some formal manufacturers showrooms fronting Amazon or whatever. But I guess as long as some big box retailers hang on there isn’t the incentive
wgerard 8y ago
What a trip. I used to go to the Times Square location with people who came in from out of town, as an attraction for when they inevitably wanted to check out Times Square. The article doesn't really do justice to what a spectacle it was (which is saying something, since the article calls it out repeatedly). The person-sized Lego Hulk they built for that store is still my phone background. Made this even more shocking to read, since it was always packed: > In late 2001, Eyler oversaw the opening of a flagship store in New York’s Times Square, with a 60-foot Ferris wheel, a life-size Tyrannosaurus rex, and a Barbie dollhouse bigger than many Manhattan apartments. Eyler promised that 20 million people a year would visit, and maybe they did, but the store never made money. Of course, thinking back on it, I went several times but rarely bought anything from the store. Maybe that's the (21st century) story of Toys "R" Us, summarized into a sentence.
- beedogunami 8y ago
  Idono, I think my sentence would be 'vulture capitalism takes another scalp.'
- walru 8y ago
  Flagship stores are a form of advertising. Many many retailers embark on this journey. Does advertising work? Or, more importantly, which is the case here, does selling your store shelves to specific brands hurt? (rather than stocking what's selling?) Some youtubers have done in length videos on Star Wars toys that sat on shelves for years.
- 0xcafecafe 8y ago
  Yes, visiting the times square location always used to be the highlight of my NYC visit. It reminded me of the toy store showed in home alone 2 (which I watched a lot growing up). Another one which I will miss is the FAO Schwarz store in NYC (which was also owned by Toys R Us). I feel sad thinking that my son will never experience that joy of going to these huge Toy stores. At best, his experience will be limited to the kids section at Target/Walmart (if they are still around by the time he is old enough to visit them).
  - 8y ago
proee 8y ago
Do anyone know how FAO Schwarz is doing? This is also a huge destination-location in New York that sells toys.
- proee 8y ago
  Some research suggesting that it's coming back to NYC in 2018 https://www.cntraveler.com/story/fao-schwarz-is-finally-coming-back-to-new-york-city https://www.cntraveler.com/story/fao-schwarz-is-finally-comi...
- lotsofpulp 8y ago
  Manhattan location closed a few years ago.
deleted 8y ago
[deleted]
stealthmodeclan 8y ago
My kids love video games, I thought toys don't give them enough kick.
- crummy 8y ago
  Toy's R Us sold a lot of video games.
toufique 8y ago
Begs the question, what kinds of local businesses are structurally safe from being disrupted by Amazon? Some that come to mind: * Food - restaurants, fast food, pizza, takeout * Social experiences - bars, cafes, arcades, comedy clubs * Things that can't be shipped - gas stations, perishables * Things you want right away - milk, delis, convenience stores * Things that can't be commoditized - Copying keys * Services - Barber shops, mechanics Other ideas?
- arkitaip 8y ago
  Every single one of those industries can be disrupted by Amazon given the right setup with partners.
  - stevehawk 8y ago
    And any of them thinking they can't be all be the first ones to fall.
- owie829 8y ago
  perishables - Amazon ships goods including PrimeNow delivery and leveraging their acquisition of Whole Foods to ships fresh food things you want right away - Prime Now, 2 hr delivery in select markets services - Amazon has an entire section of services, from auto detailing to household cleaning
- scarface74 8y ago
  Copying keys... https://www.gokeyless.com/blog/new-website-allows-users-to-copy-keys-using-their-smartphone/ https://www.gokeyless.com/blog/new-website-allows-users-to-c...
- mathiasben 8y ago
  * Things that can't be shipped - gas stations https://www.trybooster.com/ https://www.trybooster.com/ https://filld.com/ https://filld.com/ http://www.startyoshi.com/ http://www.startyoshi.com/ https://www.gasrevolution.net/ https://www.gasrevolution.net/ http://www.fuelmeapp.com/ http://www.fuelmeapp.com/
- 8y ago
dirktheman 8y ago
Bloomberg made a really nice 80-esque adventure game where you're the manager of a mall: https://www.bloomberg.com/features/american-mall-game/ https://www.bloomberg.com/features/american-mall-game/
timwaagh 8y ago
and the morale of the story is, dont let your business get taken over by a bunch of vultures fueled by a lot of debt. unless you like seeing it die a slow death, that is.
nikanj 8y ago
One of the more interesting theories I've heard is the link between the housing crisis and the retail crisis. When you live in a tiny shoebox, the last thing you need is more stuff. Back in the days people had comparatively huge houses all to themselves, and could buy crap to their heart's content.
- rashomon 8y ago
  Any source on that theory? I think you have something solid there. George Carlin put it quite eloquently: https://www.youtube.com/watch?v=MvgN5gCuLac https://www.youtube.com/watch?v=MvgN5gCuLac We're definitely seeing a resurgence to simplicity after advertisers had performed scorched-earth on frontal cortex lobes.
DoubleGlazing 8y ago
The article mentioned the Irish chain Smyths. This is a company that has grown from one store in a small Irish city to expanding in to and dominating the UK market in just over 30 years. Having shopped in both I can see the difference. Toys 'R' Us felt like it wanted to be part of the toy experience with their whimsical logo, mascot, jingle and colourful in-store decoration. Smyths on the other hand is just a toy warehouse. They forego the mascot, jingle and colorful stores instead focusing on making sure they always have what the children want. In other words Smyths knows that the toy is the experience, not the store.
- CalRobert 8y ago
  Smyths also: * Tends to be reasonably priced (I've gotten things there the same or cheaper than Argos) * Is a quick walk from my flat in city centre Though so far I've only bought baby things there (pram, etc.) not actual toys. Neither of which applied to any ToysRUs in cities I've lived in.
zer0faith 8y ago
I worked for a home improvement retailer for a long time, around 2008 they stopped building 120k sq ft stores and moved down to 80k sq ft, Then staff was cut (2010), a few years later (2012) more staff was cut, now they are talking about replacing some staff members with self help robots that have video conferencing to help customers(2014). These traditional retailers are trying hard to stay in the game but i just don't think they can compete and Toys 'R' Us is just another name on the long list of the dead.
- mkirklions 8y ago
  Things that make me go to a store >Instant >Helpful employees Prices didnt matter if I showed up to the store, but it should be cheaper than shipping to your home. Employees should be knowledgeable and helpful. Instead most stores have the exact products or fewer online, higher prices, and an empty store.
  - zer0faith 8y ago
    I once tried to stock up on some generator connectors and like electrical items in my department before Hurricane Sandy. My orders were denied because last year sales and previous three week trends weren't enough to justify the order. The shelves stayed empty for almost 2 months.
    - slfnflctd 8y ago
      Modern logistics algorithms have massively increased supply chain efficiency, but there should always be a human override for cases like this. The models cannot and will not ever be able to account for everything.
      - downrightmike 8y ago
        But then someone has to be thinking, and doing it before it is reactive. Good luck.
scarface74 8y ago
What types of toys are kids buying these days? I’ve never been a parent of a really young child, my experience with parenting are with my stepsons - the youngest was 9 in 2010. Besides a bike, the only toys he was interested in were video games, he collected action figures for awhile, and water guns. All of which could be served better by Amazon or for video games by GameStop - a store with a much smaller footprint. Even when I was growing up in the 80s by nine, I remember most kids being interested in video games, bikes and sports equipment. All of which were available at Walmart either at the same price or cheaper. With video game downloads becoming more popular, I don’t see how GameStop is going to survive after this round of the console generation.
brownbat 8y ago
"Bain, KKR, and Vornado... will end up losing well over a billion dollars combined." A lot of retail debt will be renegotiated in 2019 as underlying interest rates are increasing, so the pace of these might be set to increase dramatically as delaying reckonings like TRU did becomes steadily more costly.[1] The article points out that the collapse of this one big name was pretty expensive to lenders, even if lawyers made some money during the unraveling. I'm curious about the prospects for another financial crisis. How many billion dollar losses happening all at the same time are we looking at? How many can retail financing divisions endure without undermining the stability of larger banks? It's not my main area of expertise, so I genuinely don't know if there's a serious contagion risk, but Google alerts for retail apocalypse have been a fun ride. [1] https://www.bloomberg.com/graphics/2017-retail-debt/ https://www.bloomberg.com/graphics/2017-retail-debt/

165 points by petethomas 8y ago

They would have survived if they hadn't filled all their aisles with stupid star wars and disney princess stuff. There was a severe lack of creative toys.

trumped 8y ago

Even with 20% off coupons, Toysrus was often more expensive then Walmart and Amazon...

amriksohata 8y ago

If you are a parent you will feel it did need to die. I went in there years after being a kid and nothings changed, that old warehousey look,the same toys, nothings changed since I was a kid. Worse, is they are all overpriced compared to even other stores let alone internet stores.

WhiteSource1 8y ago
That's the key. It's not just online or competition lost to Amazon. The same toys were available at Target for a lot less money.
- dragonwriter 8y ago
  > The same toys were available at Target for a lot less money. True for a relative handful of the most popular toys, but Target doesn't have the floorspace dedicated to toys to cover any but a small fraction of what a Toys R Us would carry. Last time I was in a Toys R Us, the section dedicated to play houses was, no kidding, the size of an entire Target toy section. Target might stock one item in that category in store (though I don't think I've ever seen one in a Target). It's Amazon and friends, not brick and mortar stores with smaller but discounted toy sections that killed the advantage of having floor space and variety in stock to browse, since people would use the store for discovery and then order from a discount online channel that didn't have the overhead of brick and mortar showrooms.

randomdata 8y ago

Has it died? The sale of the Canada arm was finalized only a few days ago[1]. There is no indication that they plan to shut down any time soon. [1] https://www.thestar.com/business/2018/06/01/fairfax-completes-purchase-of-toys-r-us-in-canada.html https://www.thestar.com/business/2018/06/01/fairfax-complete...

dingo_bat 8y ago
The original US business is dead. The article is about that. It says that operations in Asia are also fine.
- a_bonobo 8y ago
  The ones here in Australia aren't independent and are currently in voluntary administration. For example they stopped accepting their customer loyalty cards, the one next to me seems to have stopped restocking as well. There are however some bidders to take over the entire Asian arm so it could be fine.
ChrisArchitect 8y ago
yeah I heard an odd radio ad in Canada last week where Toys R Us straight out said we're not going anywhere!

gkoberger 8y ago

I read the whole article, and I didn't really see a convincing argument that it didn't have to die. Sure, it could have eked out a few more years... but it was living on borrowed time. Not only do most people shop online now, most toys are also online. I imagine most parents put money into TV shows, video games, iPhone apps, etc.

ryanisnan 8y ago
I agree. Other than manage its debt more effectively, the authors don't really expound on what Toys R Us could have done differently to right the ship. Was it moving more effectively into online sales? Or alternate business lines altogether?
joe_the_user 8y ago
The company had been paying an unsustainable $400 million a year in interest. Normal intuition would say that maybe the company could enter bankruptcy, wipe out that debt, turn the bond holders into the new owners, have the owners issue stock for a debt free company and sell the stock to pay off a fraction of the money they owed. That would seem like a rational approach that would maximize utility for at least owners and employees. The problem apparently was that bargaining and brinksmanship destroyed the company before such a result could be considered.
- jandrese 8y ago
  Wasn't that debt dumped on the company by the firm that bought them out?
jaysonelliot 8y ago
There's nothing about the brick & mortar toy space that's inherently living on borrowed time. It was Toys 'R' Us' own mismanagement that doomed it. Toy stores can be a destination. Provide a compelling experience for parents and kids alike. It's easy to imagine a space where kids get to play with toys hands-on, and parents get to judge for themselves whether they think they're appropriate in terms of fun and quality—something you can't do online. Make the adult experience a mixture of café and Apple store, and give the kids a safe "penned in" experience like IKEA does in their kids' section. Parents will enjoy the respite, and kids will beg to go. And of course, once they get there, they'll cajole their parents to spend more money. Never underestimate the power of a child in a store. IKEA has nailed the brick & mortar experience, even though most of their products could easily be purchased online. Toys 'R' Us merely had to abandon their hubris and old thinking, and they could have killed it. Instead, they languished with a chain of dirty, disorganized, depressing stores, ill-treated and unmotivated employees, and no vision. They didn't have to die, but their leadership and strategy did.

voidmain 8y ago

Despite the title and the focus on the form of financing, none of the facts in the article even suggested to me that the company would be in any better shape if it had used equity financing rather than debt. It sounds, rather, like an unprofitable business that no one in their right mind would give any more money. If someone thinks they can figure out how to make a workable business out of big box toy stores, it sounds like the name is for sale.

hn_throwaway_99 8y ago
It at least sounds plausible to me that you could make a toy store a "destination" business if you did something to differentiate it from Amazon: kids parties, video game tournaments, something. You'd have to transform what it means to be a "toy store". Of course, that takes a lot of money, and with Toys-R-Us' debt load there was no way they could have afforded that.
- Analemma_ 8y ago
  I don't know if it scales up to big box stores, but this– plus adding food/café– is what a lot of game and hobby stores have been doing, and it seems to be working. There at least five stores like this in the Seattle area (2 of Café Mox, Meeples, etc.) and they seem to do good business.
  - yourapostasy 8y ago
    Of more interest is will this scale up culturally. Going in this direction at scale means monetizing physical socialization. I've observed this while touring Tokyo, where the society and culture has accepted eye watering residential real estate prices with accompanying micro-sized residences by American standards, in exchange for scads of commercially-run spaces used for social activities. Socialization there seems to take place outside of people's homes, and in restaurants, bars, and other commercial venues. These venues seem predominantly mom and pop sized and run in the non-tourist areas, small, and affordable. I have no idea if that will translate into American urban culture; I can see cases made for Millennials and post-Millennials embracing this model and rejecting it. I don't see it happening in the suburbs, much less exurbs. For this business model to work at scale, it would have to be embraced ubiquitously, but I'm not convinced there is a lot of space left to scale into after Starbucks got there first in so many locations.

thisisit 8y ago

Retailing seems to be dying in US irrespective of the company: https://www.bloomberg.com/news/articles/2018-04-17/retail-store-closures-in-u-s-set-for-record https://www.bloomberg.com/news/articles/2018-04-17/retail-st... Couple of years ago, one of my friends bought a store at a strip mall. The store was making a loss. And the previously owners were an elderly couple. So my friends thesis was that they weren't exactly tuned into the digital presence business and it was still entirely possible to run a store in US. Two years later footfall in the mall has decreased a lot. And in spite of the digital strategy etc my friend's store hasn't worked well. Now he is not only in debt but he is also trying to sell the store. But there are no buyers.

rorykoehler 8y ago
The same is happening in Singapore. The maps have re-strategized to focus on food and drink experiences. Now people go out to make to hang out mainly
pouetpouet 8y ago
The US have too much retail space. Retail is not really dying there is too much of it. https://www.statista.com/chart/9454/retail-space-per-1000-people/ https://www.statista.com/chart/9454/retail-space-per-1000-pe... https://qz.com/1032723/theres-much-more-empty-retail-space-in-the-us-than-in-other-countries-on-a-per-capita-level/ https://qz.com/1032723/theres-much-more-empty-retail-space-i... https://www.theatlantic.com/business/archive/2017/04/retail-meltdown-of-2017/522384/ https://www.theatlantic.com/business/archive/2017/04/retail-...
- bunderbunder 8y ago
  I wonder if it's also a case of there being too much of the wrong kinds of retail space. If there's a retail store within a mile of our house, I'll happily walk to it and do my shopping there. Especially when it's a pleasant day outside, that's an enjoyable way to get out of the house and get a little light exercise. If the only kind of store left that sells what I need is one of the big box stores, so that going there means having to get in the car and deal with traffic and haul myself halfway across town and, seriously, ugh, that is enough of a chore that I'm already feeling vaguely annoyed just thinking about it. No thanks; I'll happily order online. And I would rather starve in the woods than drive all the way out to the nearest shopping mall.

Areading314 8y ago

https://www.bloomberg.com/features/american-mall-game/ https://www.bloomberg.com/features/american-mall-game/

ggg9990 8y ago

Toys R' Us was dead so many years ago. I went there once to buy a present for a kid and it was just so depressing and not at all a fun or cheerful place. When I had a kid of my own I never took her there. I regret it not being what it was when I was a kid but I don't regret it going from its state ~10 years ago to dead.

PhasmaFelis 8y ago
I wonder if what you're actually describing is the change in your adult perspective, not in the store. As a kid, and as an adult who likes toys, shelves piled high with toys are "fun and cheerful" all by themselves. I'm not sure what else you felt was lacking.
- ggg9990 8y ago
  The kids in the store weren't happy or excited to be there, that's what was different from when I was a kid.

PhasmaFelis 8y ago

The thing that's really lacking to me in online toy stores is, I guess, discoverability. Amazon can give you a list of all the Transformers, or all the Legos, in an instant, and with a bit of prodding it does an acceptable job of showing you the current top-selling toys, but it's impossible to walk down an aisle at Amazon and see something awesome that you've never heard of.

spockz 8y ago
VR could en a thing here for Amazon. Instead of seeing endless lists, just walk down the isles virtually. Maybe accompanied by some cheerful sounds of kids playing in the background to set the mood and incentive to buy.
sitepodmatt 8y ago
At least with books, Goodreads takes care of that.
krallja 8y ago
I went to our neighborhood Toys-R-Us to be a vulture, and discovered quite a few toys I wouldn’t have considered purchasing otherwise. Of course, the 40-70% discounts helped a lot.
- amyjess 8y ago
  Same here. I went there to soak in childhood nostalgia one last time before it closed, and I was surprised by a) all the things I saw there that I would have never heard of otherwise and B) all the random things I have vague memories from when I was a kid that are still around. And it made me feel profoundly sad that that experience will be gone forever soon. Soon, it'll just be the top brand names that anyone will have ever heard of and the random weird stuff will all be gone. I'm talking about the toys that you had growing up that you never knew what they were called but you had because your parents passed by it at random and went "ooh, that looks interesting, I bet [kid's name] will like this".
suresk 8y ago
Yeah, my wife and I are definitely disappointed they could find a way to make it work, largely because of discoverability. It definitely made it easy to find new toys, see how they would look/feel in person, etc. Others stores just don't have the selection they did and the experience on Amazon isn't as easy. Another thing is knowing the quality of stuff you are getting. Of course, plenty of cheap crap gets sold at Toys-R-Us and elsewhere, but some of the stuff on Amazon is in a league of its own in terms of poor quality and I suspect it will continue to get worse.

triviatise 8y ago

I dont know the economics of our local toy stores, but the ones that seem to thrive allow you to actually play with the toys. If it was more like a theme park or a playground you would get parents to bring their kids in just to play. For example, let kids drive power wheels around a track. Have playscapes that they can play on and buy. And sample toys that kids can play with.

benjaminwootton 8y ago
I remember reading 20 years ago how retail stores need to turn into experience destinations. I think the perceived risk at the time was mail order rather than the internet. However, even with Apple and the Apple Store there for all to see, few retailers still seem to get this. Without the hands on element, they are really fighting a losing battle vs ecommerce.
- suresk 8y ago
  Apple sells high-margin products that are typically priced the same (or roughly so) everywhere - I don't know that there are interesting lessons for all industries to learn here. Wasn't Ron Johnson's attempt to take some of those lessons to JC Penney pretty disastrous? Everyone always has the same ideas when retailer struggles come up, and a lot of the ideas would undoubtedly make many stores more pleasant to visit. But people still buy based on cost, and that makes it hard to compete with a company who has a much lower cost model than a physical retail store and has much larger scale. I don't think retailers will stop the bleeding and start implementing some of these ideas until they can figure out how to solve the showrooming problem. They may never do so, and physical retail in most categories will be a distant memory for most of us.
  - ghaff 8y ago
    I’m a bit surprised that we haven’t ended up with some formal manufacturers showrooms fronting Amazon or whatever. But I guess as long as some big box retailers hang on there isn’t the incentive

wgerard 8y ago

What a trip. I used to go to the Times Square location with people who came in from out of town, as an attraction for when they inevitably wanted to check out Times Square. The article doesn't really do justice to what a spectacle it was (which is saying something, since the article calls it out repeatedly). The person-sized Lego Hulk they built for that store is still my phone background. Made this even more shocking to read, since it was always packed: > In late 2001, Eyler oversaw the opening of a flagship store in New York’s Times Square, with a 60-foot Ferris wheel, a life-size Tyrannosaurus rex, and a Barbie dollhouse bigger than many Manhattan apartments. Eyler promised that 20 million people a year would visit, and maybe they did, but the store never made money. Of course, thinking back on it, I went several times but rarely bought anything from the store. Maybe that's the (21st century) story of Toys "R" Us, summarized into a sentence.

beedogunami 8y ago
Idono, I think my sentence would be 'vulture capitalism takes another scalp.'
walru 8y ago
Flagship stores are a form of advertising. Many many retailers embark on this journey. Does advertising work? Or, more importantly, which is the case here, does selling your store shelves to specific brands hurt? (rather than stocking what's selling?) Some youtubers have done in length videos on Star Wars toys that sat on shelves for years.
0xcafecafe 8y ago
Yes, visiting the times square location always used to be the highlight of my NYC visit. It reminded me of the toy store showed in home alone 2 (which I watched a lot growing up). Another one which I will miss is the FAO Schwarz store in NYC (which was also owned by Toys R Us). I feel sad thinking that my son will never experience that joy of going to these huge Toy stores. At best, his experience will be limited to the kids section at Target/Walmart (if they are still around by the time he is old enough to visit them).
- 8y ago

proee 8y ago

Do anyone know how FAO Schwarz is doing? This is also a huge destination-location in New York that sells toys.

proee 8y ago
Some research suggesting that it's coming back to NYC in 2018 https://www.cntraveler.com/story/fao-schwarz-is-finally-coming-back-to-new-york-city https://www.cntraveler.com/story/fao-schwarz-is-finally-comi...
lotsofpulp 8y ago
Manhattan location closed a few years ago.

deleted 8y ago

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stealthmodeclan 8y ago

My kids love video games, I thought toys don't give them enough kick.

crummy 8y ago
Toy's R Us sold a lot of video games.

toufique 8y ago

Begs the question, what kinds of local businesses are structurally safe from being disrupted by Amazon? Some that come to mind: * Food - restaurants, fast food, pizza, takeout * Social experiences - bars, cafes, arcades, comedy clubs * Things that can't be shipped - gas stations, perishables * Things you want right away - milk, delis, convenience stores * Things that can't be commoditized - Copying keys * Services - Barber shops, mechanics Other ideas?

arkitaip 8y ago
Every single one of those industries can be disrupted by Amazon given the right setup with partners.
- stevehawk 8y ago
  And any of them thinking they can't be all be the first ones to fall.
owie829 8y ago
perishables - Amazon ships goods including PrimeNow delivery and leveraging their acquisition of Whole Foods to ships fresh food things you want right away - Prime Now, 2 hr delivery in select markets services - Amazon has an entire section of services, from auto detailing to household cleaning
scarface74 8y ago
Copying keys... https://www.gokeyless.com/blog/new-website-allows-users-to-copy-keys-using-their-smartphone/ https://www.gokeyless.com/blog/new-website-allows-users-to-c...
mathiasben 8y ago
* Things that can't be shipped - gas stations https://www.trybooster.com/ https://www.trybooster.com/ https://filld.com/ https://filld.com/ http://www.startyoshi.com/ http://www.startyoshi.com/ https://www.gasrevolution.net/ https://www.gasrevolution.net/ http://www.fuelmeapp.com/ http://www.fuelmeapp.com/
8y ago

dirktheman 8y ago

Bloomberg made a really nice 80-esque adventure game where you're the manager of a mall: https://www.bloomberg.com/features/american-mall-game/ https://www.bloomberg.com/features/american-mall-game/

timwaagh 8y ago

and the morale of the story is, dont let your business get taken over by a bunch of vultures fueled by a lot of debt. unless you like seeing it die a slow death, that is.

nikanj 8y ago

One of the more interesting theories I've heard is the link between the housing crisis and the retail crisis. When you live in a tiny shoebox, the last thing you need is more stuff. Back in the days people had comparatively huge houses all to themselves, and could buy crap to their heart's content.

rashomon 8y ago
Any source on that theory? I think you have something solid there. George Carlin put it quite eloquently: https://www.youtube.com/watch?v=MvgN5gCuLac https://www.youtube.com/watch?v=MvgN5gCuLac We're definitely seeing a resurgence to simplicity after advertisers had performed scorched-earth on frontal cortex lobes.

DoubleGlazing 8y ago

The article mentioned the Irish chain Smyths. This is a company that has grown from one store in a small Irish city to expanding in to and dominating the UK market in just over 30 years. Having shopped in both I can see the difference. Toys 'R' Us felt like it wanted to be part of the toy experience with their whimsical logo, mascot, jingle and colourful in-store decoration. Smyths on the other hand is just a toy warehouse. They forego the mascot, jingle and colorful stores instead focusing on making sure they always have what the children want. In other words Smyths knows that the toy is the experience, not the store.

CalRobert 8y ago
Smyths also: * Tends to be reasonably priced (I've gotten things there the same or cheaper than Argos) * Is a quick walk from my flat in city centre Though so far I've only bought baby things there (pram, etc.) not actual toys. Neither of which applied to any ToysRUs in cities I've lived in.

zer0faith 8y ago

I worked for a home improvement retailer for a long time, around 2008 they stopped building 120k sq ft stores and moved down to 80k sq ft, Then staff was cut (2010), a few years later (2012) more staff was cut, now they are talking about replacing some staff members with self help robots that have video conferencing to help customers(2014). These traditional retailers are trying hard to stay in the game but i just don't think they can compete and Toys 'R' Us is just another name on the long list of the dead.

mkirklions 8y ago
Things that make me go to a store >Instant >Helpful employees Prices didnt matter if I showed up to the store, but it should be cheaper than shipping to your home. Employees should be knowledgeable and helpful. Instead most stores have the exact products or fewer online, higher prices, and an empty store.
- zer0faith 8y ago
  I once tried to stock up on some generator connectors and like electrical items in my department before Hurricane Sandy. My orders were denied because last year sales and previous three week trends weren't enough to justify the order. The shelves stayed empty for almost 2 months.
  - slfnflctd 8y ago
    Modern logistics algorithms have massively increased supply chain efficiency, but there should always be a human override for cases like this. The models cannot and will not ever be able to account for everything.
    - downrightmike 8y ago
      But then someone has to be thinking, and doing it before it is reactive. Good luck.

scarface74 8y ago

What types of toys are kids buying these days? I’ve never been a parent of a really young child, my experience with parenting are with my stepsons - the youngest was 9 in 2010. Besides a bike, the only toys he was interested in were video games, he collected action figures for awhile, and water guns. All of which could be served better by Amazon or for video games by GameStop - a store with a much smaller footprint. Even when I was growing up in the 80s by nine, I remember most kids being interested in video games, bikes and sports equipment. All of which were available at Walmart either at the same price or cheaper. With video game downloads becoming more popular, I don’t see how GameStop is going to survive after this round of the console generation.

brownbat 8y ago

"Bain, KKR, and Vornado... will end up losing well over a billion dollars combined." A lot of retail debt will be renegotiated in 2019 as underlying interest rates are increasing, so the pace of these might be set to increase dramatically as delaying reckonings like TRU did becomes steadily more costly.[1] The article points out that the collapse of this one big name was pretty expensive to lenders, even if lawyers made some money during the unraveling. I'm curious about the prospects for another financial crisis. How many billion dollar losses happening all at the same time are we looking at? How many can retail financing divisions endure without undermining the stability of larger banks? It's not my main area of expertise, so I genuinely don't know if there's a serious contagion risk, but Google alerts for retail apocalypse have been a fun ride. [1] https://www.bloomberg.com/graphics/2017-retail-debt/ https://www.bloomberg.com/graphics/2017-retail-debt/