How Amazon Bankrupted Toys ‘R’ Us

Toys R Us Amazon Bankrupt
Photo Courtesy of Creative Commons

On September 19, 2017, the popular brick-and-mortar department store Toys ‘R’ Us filed for bankruptcy protection. The retail shop, once on top of the world as one of the most popular and recognized toy stores across the globe, has finally admitted to meeting its match. In a statement released that same day by the Chairman and Chief Officer of the company Dave Brandon, he disclosed, “Today marks the dawn of a new era at Toys ‘R’ Us where we expect that the financial constraints that have held us back will be addressed in a lasting and effective way.”

The store has undoubtedly been struggling to keep up with its fierce online competitor, Amazon, for a long time now. Research shows that 51% of Americans prefer to shop online, a statistic so crippling that Toys ‘R’ Us accumulated a debt of more than $5-billion in trying to compete with its digital opposition. Toys ‘R’ Us does offer their customers an online outlet to purchase merchandise; however, almost all items sold can be found on Amazon as well. Many consumers argue that ordering the bulk of your products from a singular online source is much more convenient, especially when factoring in shipping costs and expected delivery times. Moreover, Amazon represents a one-stop shop to purchase a vast array of items. Not only does it host a wide array of popular toys, but also consumer staples, books, movies, and more.

Due to society’s increasing appetite for technology, it is unsurprising that consumers have been eager to move their shopping online. Having the ability to order items directly to your doorstep is so appealing that more and more people are willing to get on board. Toys ‘R’ Us does not possess the perks of Amazon Prime, free shipping and same day shipping, aspects of Amazon that keep customers coming back for more. The appeal of going into stores and physically picking out items is rapidly disappearing and becoming increasingly uninteresting to those who place value on shopping without leaving the house.

60% of children use touchscreen technology, a category more popular than board games, game consoles, and dolls and action figures.

Not only has Amazon completely taken over the shopping industry, but statistics also show that children prefer touchscreens over toys that are deemed ‘traditional.’ In fact, Michael Cohen Group (MCG) released a survey requesting parents to divulge the habits of children 12 years old and under. It was found that 60% of children use touchscreen technology, a category more popular than board games, game consoles, and dolls and action figures. Unfortunately, Toys ‘R’ Us’ inventory has been plummeting in the demand market for years now.

The online powerhouse of Amazon has wholly reshaped the dynamic of shopping while giving individuals yet another excuse not to get off their couch. However, they are also contributing to the destruction of the excitement factor that used to come with in-store shopping. For decades, going shopping was a social outlet for people to engage in, all the while getting away from the stress of their everyday lives for just a moment. Once-desired social engagements are being replaced with online browsing, and the internet is letting nothing get in the way of this shift. The in-store shopping pastime is dissolving faster than ever, but innovative technology continues to offer uncontested convenience.

Amazon provides internet users with new and exciting ways to get their shopping done without having to deal with dreaded lines or busy malls, something people do their best to avoid. What Amazon and other online platforms really offer people is pure convenience, something society has been waiting a long time for.

There’s little to suggest that consumers will reverse the trend toward online shopping for toys or even any other good.

In the wake of their recent bankruptcy, Toys ‘R’ Us still maintains its retail and online stores and is using more than half of its debt to help in financing new merchandise in order to try and stay afloat. In a time where technology rules the world, it will be interesting to see whether Toys ‘R’ Us will be able to bring new and innovative brand ideas to the table in order to entice back some of Amazon’s technology-bent customers.

However, many question the long-term viability of the Toys ‘R’ Us business model. There’s little to suggest that consumers will reverse the trend toward online shopping for toys or even any other good. Meanwhile, the Toys ‘R’ Us website lags behind the success of Amazon, which took on immense losses in its early years in order to develop the technology that now allows them to dominate the market. As such, without a creative strategy and a realistic understanding of consumer desires, Toys ‘R’ Us will continue on its current path to obsolescence.

 

The views and opinions expressed in this article are the writer’s own, and do not necessarily represent those of the Bull & Bear.

 

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