In a plot twist to what most of us know as our fondest childhood memories, toys and games retailer giant Toys "R" Us filed for Chapter 11 Bankruptcy on Monday, September 18. Despite the perceived financial well being of Toys "R" Us, it turns out the retailer owes around $5 billion in debt due to a leveraged buyout in 2005, which requires a staggering $400 million each year to service.
The announcement comes as little surprise to those who have seen the toy retailer declining in sales performance--especially during the crucial holiday shopping season, a time toy and gift retailers make a large portion of their overall sales.
So, what could explain Toys "R" Us road to decline?
Well, the Internet, maybe.
Even though there's a greater need to stimulate children now more than ever, the kids of today find their amusement far from the choices of many baby boomers' memories of action figures and Barbie dolls. In fact, a number of parents have even begun to grow concerned about their children's exposure to smartphones or other handheld technology--when should kids be introduced to tablets? How often should they use them? And what for?
As children's attention shifts from real, tangible play things to virtual ones, it feels almost inevitable that Toys "R" Us would see a decrease in sales. What's more, however, is that even when it comes to purchasing these goods--Toys "R" Us is also struggling to compete with online retailers like Amazon in their sales of baby goods and toys, the retailer's two main lines of business.
So, as much as we appreciate the handheld toy or game, it looks like the online universe is taking over the long-heralded children's entertainment industry. And, while it may be tempting to think that whatever business we are a part of is ahead of the times, Toys "R" Us actually filing for bankruptcy teaches us that we have to be constantly innovating.
Times are changing at lightning speed. If we don't keep looking for ways to stay ahead of the curve--we might find that it'll engulf us as well. Walmart has figured that out, keeping its toy prices super low and effectively competing against Amazon.
As Bloomberg reported, however, Toys "R" Us CEO Dave Brandon hasn't completely lost his sense of humor during these goings-on. In his court filing, Brandon recounted the retail chain's old 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."
I guess it's finally time for Toys "R" Us to grow up.