Well, this is depressing: After 70 years in business, Toys “R” Us is closing all of its U.S. stores, which is bringing a tear to the eyes of an entire generation. For those of us who grew up begging our parents for a trip to Toys “R” Us, excitedly making note of what we wanted to put on our gift wish lists, the store was something of a paradise.
We’re pretty devastated to see something so big in our memories fail. And while it’s easy to play the blame game when looking for the reason this is happening…you might not want to blame Amazon just yet.
It definitely seems like Amazon could be the biggest reason Toys “R” Us is going out of business: Amazon sells almost all of the same items Toys “R” Us does, except they’re cheaper on Amazon. People find shopping more convenient on Amazon, thanks to features like the Prime membership. It’s easy to believe that this major online retailer is what put our precious toy store out of business. But according to CNN Money, this isn’t the case.
While online shopping sites like Amazon definitely contributed to this loss, Toys “R” Us itself is also to blame.
The company has been billions of dollars in debt for years, which meant that it couldn’t make the upgrades or investments that were desperately needed in stores. Toys “R” Us CEO David Brandon admitted in an SEC filing last fall that the company had fallen behind “on various fronts, including with regard to general upkeep and the condition of our stores.”
The debt isn’t just because people started shopping on Amazon — it started a long time ago, before 2005. In 2006, the company was made private by KKR, Bain Capital, and real estate firm Vornado. This was a $6.6 billion purchase that left it with $5.3 billion in debt. The company never recovered.
On top of that, Amazon is far from the toy store’s only competitor. There’s Walmart, which sells similar, if not the same, items for much cheaper, that took over in terms of toy sales. Target is another major competitor.
So the fact that all of the stores are closing isn’t too surprising. Toys “R” Us filed for bankruptcy in September 2017, when it revealed it was $5 billion in debt. That debt didn’t allow it to update its stores or even compensate employees fairly. In January, Toys “R” Us announced that it would be closing many stores.
While this is really sad for nostalgia reasons, it’s also sad for employees who are losing their jobs, and realtors who are going to need to fill giant spaces left behind. Not to mention all the toy manufacturers that depend on Toys “R” Us‘s business. The company is shopping around a plan that could save about 200 stores, but who knows if that will work out.
It’s definitely upsetting to see something like Toys “R” Us end, especially if it was a big part of your childhood. We’re hoping for the best for everyone affected.