After going into bankruptcy in September, burdened by a bunch of corporate debt and under pressure from competitors like Amazon, Toys R Us is planning to shut down 20 percent of its stores in the US. The ominous clouds of the retail apocalypse continue to gather.
Partly what’s happening here is a good, old-fashioned case of what goes around, comes around, the Associated Press reports,with a whole bunch of retail employees paying the price:
Toys R Us reigned supreme in the 1980s and early 1990s, when it was one of the first of the “category killers” — a store totally devoted to one thing: toys. Its scale gave it leverage with toy sellers and it disrupted general merchandise stores and mom-and-pop shops.
Now Toys R Us and other category killers like the now-defunct Sports Authority, Borders and Circuit City, are being upended by a new force: Amazon.com.
GlobalData Retail estimates that about 13.7 percent of toy sales were made online in 2016, up from 6.5 percent five years ago.
But it’s not simply slow sales, though. The company still moves something like 20 percent of toys in America, and the AP notes that, “Toys R Us, based in Wayne, New Jersey, has struggled with debt since private-equity firms Bain Capital, KKR & Co. and Vornado Realty Trust took it private in a $6.6 billion leveraged buyout in 2005. The plan had been to take the company public again, but weak sales have prevented that from happening.”
USA Today has a complete list of closures here.