Toys R Us’ bankruptcy led to one of the biggest US retail collapses in recent history. It was a brand that had been around for years and had iconic marketing, but it couldn’t keep up with the changing marketplace.
But then the brand was saved! Until it wasn’t! And it’s saved!
Wait a second; I’m getting déjà vu here…
Toys R Us’ First Downfall
Although I kind of provided a quick summary in the opening, let’s have a slightly longer recap. Toys R Us was the largest national toy store chain, no thanks in part to its large lineup of merchandise in its stores. But the fact it was a large specialty store ended up having its drawbacks as mass merchandisers like Walmart began eroding its sales. Toys R Us also relied on Amazon to handle its web store for years, meaning it got a late start to handle its own online sales. Toys R Us was also purchased by a private equity firm, and as a result, it was straddled with huge debt. In 2017, Toys R Us filed for bankruptcy protection, but low holiday sales led the company to closing all of its US stores. Many international versions were also shuttered or sold off.
Just before the name and other intellectual property were to be sold off in the bankruptcy auction, the lenders decided to keep the name and formed Tru Kids to manage it. Originally envisioned as mini-stores within larger retailers, the company teamed up with Kroger to sell its own brand of Toys R Us toys. But Tru Kids pledged a gradual return to traditional brick-and-mortar operations, albeit with a heavier focus on displays and interactives to lure shoppers inside. Two of these stores launched in late 2019, in New Jersey and Texas. Meanwhile, Toys R Us’ website was relaunched with all available items being redirected to Target.com. This deal ended about a year later. Amazon stepped in to replace Target, similar to their old partnership years ago.
The two new locations did not survive, as they closed in January 2021. The reason cited, unsurprisingly, was because of the COVID-19 pandemic. Tru Kids said they weren’t giving up on the brand but would have to do some regrouping.
Toys R Us’ New Owners
Well, one change has happened already. A brand management firm, WHP Global, has become the lead investor of Tru Kids, giving it majority control of Toys R Us and its brands. According to Bloomberg: “WHP Global operates as an investment company. The Company offers acquisition, development, and advisory services. WHP Global serves customers worldwide.”
That may sound like typical professional jargon for a business, but WHP Global’s two brands are…shall we say, not something that would lead to a natural connection for them to acquire Toys R Us. You see, they own and operate fashion lines Anne Klein and Joseph Abboud.
A CNBC article from last March revealed WHP Global had acquired more money to go brand hunting. Its CEO, Yehuda Shmidman, was mainly looking for other clothing brands to join their current two, but home and houseware companies were being considered as well.
Toys R Us and its spin-off Babies R Us did sell clothing at its stores, and at one point it even opened clothing-based locations called Kids R Us. Still, clothing was not Toys R Us’ bread-and-butter, and nor was it a focus after Tru Kids bought them. After all, the initial name for the new Toys R Us was Geoffrey’s Toy Box, not Geoffrey’s Clothing Box.
So the fact WHP Global, who had been looking in the clothing and homegoods sectors, picked up Tru Kids suggests one of the following:
- They really believe in Toys R Us’ future.
- The price was cheap.
While the second may be true, there is a connection that helps explain why WHP Global took control: WHP’s Shmidman has been vice-chair of Tru Kids since 2019. So now he gets to combine those two roles.
Toys R Us’ Re-Relaunch
Does it really matter that Toys R Us’ sister brands are fashion-related? No. After all, a brand management company just promotes its labels. In many cases, it’s these sorts of outside firms that handle boosting another company’s name and products. In other situations, such as with WHP Global, they operate based on promoting its own labels and then ink deals for the making and stocking of their products. So it’s no different than an agent who takes on different kinds of talents versus one who deals with just singers, baseball players, etc.
Certainly Toys R Us’ brick-and-mortar relaunch came at a horrible time. Mall traffic declined due to restrictions and people isolating, and while children may not be the most susceptible for the disease, Toys R Us’ renewed interest in experiences and displays turned out to be a bad bet for 2020. That’s not to mention the lack of a website for a store pickup option, which surged in 2020 and is likely to remain a popular shopping option.
Shmidman is still determined to open stores. That means Toys R Us has to not only woo back customers, but they need to do so in a new retail world. It’s a time where even elementary students have experience doing school online. Toy sales did increase because of the pandemic, but that was after a decrease in the previous year.
If you’ve ever browsed kids’ Christmas lists, you’ve probably noticed a lot of children wanting Switches and iPads and such. And with kids forced to use the Internet for school, a lot of people may soon be shifting computers and tablets from a luxury to a necessity — either as a just in case or because their children have become accustomed to using one. Not to mention the aforementioned love for store pickup and newfound crowd wariness.
I do miss Toys R Us, and it does seem like there would be a market for a national toy chain. Despite the smaller-than-before stores, they could carry collectibles for the young-at-heart. In an interview with Yahoo Finance, an editor for the toy industry’s trade magazine said as much.
Stores like Walmart and Target are carrying merchandise for anime like My Hero Academia and Naruto, so a revised Toys R Us could do the same. Sure, you can find a bigger selection online, but that applies to just about everything. There’s something about actually seeing things in-person, without getting lost in the endlessness of the Web. There are a lot of people – including myself — that want to see WHP Global returning to that. They probably will need a lot of good expert analyses though, as they’re more about promoting clothing rather than running stores, especially ones that have already faced extinction once.