Why Did Toys R Us Close? What Were the Contributing Factors?

Why Did Toys R Us Close? Toys R Us was a lovely place where many of our childhood fantasies came true for many of us. From the famed Geoffrey the Giraffe to the endless rows of toys, it was a nirvana for both children and adults.

However, the once-loved toy business has faltered in recent years, with outlets closing all across the world. What happened? We will look at the rise and collapse of Toys R Us and try to figure out what caused the company to close.

What Was Toys R Us?

Toys R Us was a toy, baby, and clothes retail business founded in 1957 in Rockville, Maryland by Charles P. Lazarus. Toys R Us, the company’s trademarked name, is a stylized version of the phrase “toys are us.”

Toys R Us was a huge success for several decades as children’s toys and the technology that powered them boomed in the 1960s, 1970s, 1980s, and 1990s. Toys R Us had 739 locations in the United States and another 750 in other markets at its peak.

However, Toys R Us began to struggle in the early 2000s, eventually leading to the firm selling and liquidating all of its physical locations, as we’ll discuss further below.

Why Did Toys R Us Close?

Toys R Us closed down due to its massive debt and inability to make the necessary investments to stay competitive. As a result, the business eventually had to file for bankruptcy and sell or close its last few locations.

Toward the end of the 1990s, Toys R Us began to face a series of challenges, primarily due to market competition. Although many people question if Amazon killed Toys R Us, the first major competition it faced came from low-cost “big box” stores like Walmart, Kmart, Target, and Costco.

This rivalry progressively eroded Toys R Us’s sales, and the firm began amassing billions of dollars in debt to keep its shops and operations open.

If it hadn’t been for the tremendous debt that Toys R Us had accumulated by the early to mid-2000s, the company would have been able to compete, but so much of their earnings was spent on debt repayment that Toys R Us continued to decline.

Toys R Us’ debt had been lowered to junk bond status by the beginning of 2005, indicating that the company was likely to default and was assigned a poor credit rating.

Customers’ shopping experiences deteriorated as a result of a lack of revenue to reinvest in their stores and operations, and businesses became understaffed and undermaintained.

Did Toys R Us Come Back?

So you know what happened to Toys R Us and why the firm decided to close all of its shops by 2021, but the popular toy store isn’t out of the woods yet.

Toys R Us is making a comeback with new product launches in the US and UK markets, following a substantial restructure of the company. After declaring bankruptcy, Toys R Us focused on developing new business models under the umbrella of Tru Kids, a new parent company.

In 2019, Tru Kids relaunched the Toys R Us website in collaboration with major competitor Target as a fulfillment partner. The contract, however, fell through, and Tru Kids subsequently collaborated with Amazon for delivery.

Then, in early 2020, the COVID-19 pandemic struck, creating additional financial losses for Toys R Us, and it was revealed in March 2021 that brand management business WHP Global had bought the brand.

WHP Global established a brand collaboration with Macy’s in August 2021, allowing Toys R Us to sell goods through the Macy’s website and in-store locations at the approximately 400 Macy’s stores.

Toys R Us had opened outlets inside different Macy’s in nine states as of August 2022. The company revealed plans to open stores in every Macy’s by mid-October, just in time for the busy holiday shopping season.

Final Words

Toys R Us, like many other retail firms, faced numerous issues linked to competitiveness and the changing retail landscape, owing partly to the introduction of internet shopping and digital entertainment.

Toys R Us is still in business despite massive debt, bankruptcy, and the closure or sale of 1500+ global retail stores.

Those who enjoy the nostalgia of the Toys R Us brand will be pleased to learn that it can now be found within Macy’s stores across the United States, as well as online in the United States, the United Kingdom, and other international markets.