I, along with the rest of the toy industry, am extremely saddened by the closure of Toys “R” Us’ U.S. stores. Toys “R” Us played an important role in our childhoods and our children’s childhoods; it stood for fun, for play—for being a kid. When I told my dad about the impending closures, he said, “Wow, I remember standing in the aisles, waiting for the pallets of Cabbage Patch Kids to come in so I could get one for you for Christmas.”
Personally, I remember buying my first bike there, buying a sandbox with real sand, and the tremendous moment when my brother and I spent our own money on a brand new Nintendo Entertainment System—with a Power Pad!
I’m not the only one with fond memories. I took my kids to my local Toys “R” Us in Massapequa Park, N.Y. last night—the same one my mom took me to when I was their age—and found it to be much more crowded than usual for a Wednesday evening. The staff was unprepared, and the checkout line was at least 12 customers deep for the hour we spent in the store. I overhead a dad say, “This might be the last time we come here…” and I had to stop the tears from welling up.
But times sure have changed since the ’80s, when Toys “R” Us seemed like the ONLY place to shop for toys. So much of toy retail dollar share now belongs to Walmart, Amazon, and Target. In this day and age, convenience frequently outweighs experience, and new dolls and games are ordered online alongside granola bars and T-shirts and delivered the next day.
But to the toy industry, Toys “R” Us is seemingly irreplaceable. No one wants to see it gone for good. We’ve all been waiting with baited breath for the knight to come riding in on a white stallion and pull the toy store of our youth out of bankruptcy and back into the black.
But hold up. A spokesperson for MGA Entertainment’s CEO Isaac Larian has announced that he, along with a group of investors, has placed a bid for Toys “R” Us Canada, and Toys “R” Us here in the U.S. may be on the table too. After making a plea to the industry and other toymakers to join him in saving the retail chain, he seems to be making moves toward a purchase.
While the future of Toys “R” Us hangs in the balance, I’m left pondering what a vertically integrated Toys “R” Us would look like, and what it would mean for the industry. First of all, it’s not MGA looking to make this purchase, it’s Larian and his “affiliated investors,” who have placed the bid, so I’m not 100-percent sure that’s considered vertical integration, but it seems close enough.
For a manufacturer that is invested in Toys “R” Us as part of Larian’s group, there is a chance they would be risking their relationships with other retailers like Walmart and Target, who will surely realize that marketing and promotions would be focused on Toys R Us, which would now potentially be making much larger margins and would presumably see opportunities for many more exclusive products, first looks, and potentially serve as a test market for new products, leading consumers to see the “new” Toys “R” Us as a place to get the coolest new toys first, and at a lower price than anywhere else.
What would it mean for non-invested manufacturers? Would their shelf space be scaled back? Would their products be buried in less than ideal locations in the store? In other words, would their products be seen as competitors? Mattel has been a huge supplier for Toys “R” Us. Will that relationship suffer under new ownership?
Larian posted that he would like to hire “a great guy or gal to run [Toys “R” Us] independently.” Would that really be the case? Investors typically have at least a say in how their company is run.
I don’t mean to sound skeptical—just considering potential implications for the industry at large. I, for one, am grateful to Larian and his investor group for working hard and quickly to #savetoysrus. I think I’m just one of many who are hoping hard that our industry doesn’t have to lose such an important part of its identity.