Toys R Us announced plans to close 182 stores nationwide, creating new opportunities for big-box stores, online retailers and mom-and-pop shops to pick up a larger share of the toy business.
The retail chain, which filed for bankruptcy protection in September, has been fighting an uphill battle to stay relevant amid growing competition from the likes of Target, Walmart and Amazon.com. It’s woes only seemed to magnify in recent months: The retail industry enjoyed its best holiday season in years, but Toys R Us struggled to find its footing.
“Target, Walmart, Amazon — they’ve smelled weakness for some time, so they’ve stepped it up in their toy selection,” said Kelly O’Keefe, a professor of brand management at Virginia Commonwealth University. “There’s no question that they’re going to benefit from Toys R Us’ failure. I mean, think about it: Why would anyone go to Toys R Us, when they can go to Target and Walmart and buy toys at the same time they buy pantyhose and celery?”
Online sales of toys have also picked up in recent years, as Amazon.com, Walmart and others have expanded their selections. Roughly 14 percent of toy purchases were made online in 2016, up from about 7 percent in 2011, according to research firm GlobalData Retail. Toys R Us, meanwhile, has been slow to adapt. The retailer offers free shipping on orders over $29, but analysts say the site feels dated and clunky.
“Toys R Us is coming off a very bad year: They did badly in stores, and they did badly on the web,” said Jim Silver, chief executive of toy review website TTPM. “If they have another year like 2017, it’ll be very tough for them to survive.”
In all, Toys R Us says it will close about one-fifth of its 880 U.S. locations.