So you thought Toys "R" Us was dead? You thought wrong; a brand that has touched so many people's lives will not vanish into oblivion so easily. This goes to show, once again, how a brand that connects with consumers at an emotional level, specially children, survives despite going against all odds of a commercially changing world.
The news release in late 2017, that the retail toy store chain was going under, was received with great sadness by millions of long-time customers and fans, that grew up visiting its stores in the US. In fact, there has been a notorious outpoor of public melancholy about the news — everyone from TV personalities, to your next door neighbor has lamented the closing of the chain. They all seemed to have something in common, an emotional connection to the brand. Everyone one of them seems to have some fond childhood memory or story, about visiting the Toys R Us stores.
Most have placed the blame of the toy chain downfall, on the E-Commerce boom, particularly on Amazon; however this played only a small role, if any, in this outcome.
Toys R Us was in deep in debt and in financial hot waters way before Amazon even came into the picture. In the late 90s - early 2000s, amounting competition from other retailers with lower prices like Wal-Mart and Target, was taking a toll on their sales. Later in 2005, the company had gone private, and bought out by KKR, Bain Capital, and Vornado real estate. The $6.6 billion purchase left it with $5.3 billion in debt. This proved to be a crucial mistake; at this point competition was coming from all angles — cheaper retailers and E-Commerce. The financial burden of the debt, plus decreasing sales due to competitors, left it unable to even upkeep their stores, let alone invest in anything innovative to boost their sales. Finally, disappointing holiday season sales numbers in 2016, left Toys R Us with no choice then to close down all its US retail stores and file chapter 11 bankruptcy in September 2017.
The company’s top lenders had scheduled an auction in September 2018, to sale the Toys R Us and Babies R Us brand names as well all the rights and licensing agreements that went along with them ...but wait!
In early October, they decided that the brand names were too valuable to let go of, and instead canceled the auction and decided to regroup, restructure, and return... Geoffrey LIVES! Indeed, the investors plan to open a new Toys 'R' Us and Babies 'R' Us branding company that maintains existing global license agreements and can invest and develop new retail shops. Additionally, they plan to expand its international presence and further develop its private brands business.
You see that’s the power of strong branding. A brand that makes a lasting emotional connection with consumers, does not go under very easily, if ever. So many of us, are thrilled that Toys R Us is not going away after all, but instead is coming back leaner, smarter, and in tune with consumption shifts. Once the new retail stores open, our childhood memories can still be re-lived all over again, as well as creating new memories with our own children, for those of us that have kids.
What about you? What is your favorite childhood memory at Toy R Us or Babies R Us?
Comments