Toys 'R' Us to file bankruptcy

[jeffandnicole]

Saying that online shopping killed Toys R Us is the equivalent of saying a hot day today is due to global warming.  The thinking is short-sighted and reflects the current moment; not the past history leading up to today.

It's been reported for years that Toys R Us was in trouble.  The Bankruptcy has been ongoing for a long period of time.  They disbanded the entire Kids R Us clothing stores.  As mentioned, they didn't update their stores.  When retailers like Walmart and Target consistently discounted their toys and put them on sale, Toys R Us kept their pricing high, as if walking in a Toys R Us was a luxury shopping experience and you will pay for that experience. 

They closed their flagship Times Square store a few years ago.  It was a very popular store, but clearly was a sign of its future demise.

[formulanone]

They also had a terrible return policy: No receipt = too bad, you own it.

Nearly every retailer allows for store credit, at a minimum.

[english si]

Frankly, I'm surprised they lasted as long as they did.  Of all the brick-and-mortar stores to be threatened by online shopping, toy stores seemed one of the most vulnerable.

Their problem wasn't brick-and-mortar, their problem was big out-of-town stores that you had to travel to by car when your market can't drive.

While Amazon definitely did play a big part in killing the mega book store in the form of Borders*, etc, what we Brits call 'High Street' book stores are still happily chugging along here. In the UK, Toys 'R' Us stores were in similar places to where Borders were: retail parks where most of the other units are furniture, carpets, DIY, or garden and thus aren't frequent trips and so you have these vast warehouses with few people in there. Book stores and toy stores in high-traffic retail areas: local High Streets and malls, are doing fine.

Add in jeffandnicole's point about the large supermarkets like Walmart and Target entered the book and toy market and are places you'd visit weekly or more often to get groceries (on top of selling them cheaper) and so have passing trade.

*Which was always it's plan - sell books as a shop window - deliberately making them cheap and under-cutting physical-store competition to generate demand for the fledgling industry of online retail - while the real product was web services, including doing online retail for others.

[kkt]

It wasn't just the online retailers, or even mainly.  Toys R Us had way too much debt.  From the Washington Post:

But the company's biggest albatross was that it struggled with massive 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. Weak sales prevented them from taking the company public again. With such debt levels, Toys R Us did not have the financial flexibility to invest in its business. The company closed its flagship store in Manhattan's Times Square, a huge tourist destination that featured its own Ferris wheel, about two years ago.

[HazMatt]

Shame, I've somewhat frequented Babies R Us since my son was born.  A bit higher priced but usually can find sale prices + coupons + trade-in events that made up for it, and they were conveniently close for me at least.  They also had some good baby classes/events that we took advantage of.  Never went to the place when I was a kid though.

[TXtoNJ]

Frankly, I'm surprised they lasted as long as they did.  Of all the brick-and-mortar stores to be threatened by online shopping, toy stores seemed one of the most vulnerable.

Their problem wasn't brick-and-mortar, their problem was big out-of-town stores that you had to travel to by car when your market can't drive.

Their market could drive, though - it's parents, not kids. The problem is that you've got to make your stores pleasant for those parents to spend time in, and Toys R Us has decidedly not been so for the past 20 years. If you're going to have to shop in a crappy big box to buy toys, you might as well just get it all over with at Walmart in one stroke.

You can't make those upgrades, either, when you're saddled with the kind of debt they had.

[US71]

My 2 pfennigs: someone will buy the name and attempt to reopen a small handful of regional stores. TRU may be gone, but it might be TRU The Next Generation .

[Rothman]

Bain Capital?  Mitt Romney killed Toys R Us?

[briantroutman]

Their problem wasn't brick-and-mortar, their problem was big out-of-town stores that you had to travel to by car when your market can't drive.

Even though adults may be the ones who ultimately hand over the cash and purchase a toy, I think there's some validity in this point. To an extent, children have long used toy stores as kind of a try-before-mom-buys playroom, a place to actually see and touch whatever they've seen hyped on Saturday morning commercials before they plead with their parents to buy it.

Unfortunately in the United States, many if not most children live in utterly car-dependent suburban areas where walking to any kind of business is nearly impossible. But in the suburban shopping mall era, it's notable that Toys "˜R' Us stores typically were not inside or attached to the malls themselves but rather in outparcels, disconnected from the mall and frequently not providing easy pedestrian access from it. In my childhood, it would be common to drive to the mall as a family: Dad would go to Sears to look at hardware, Mom might take Little Sister to JCPenney to buy clothing, and Older Brother would go to Kay Bee to look at/play with toys.

On the other hand, going to Toys "˜R' Us would require a separate trip with a parent accompanying the children–a proposition the parents might entertain only if we were looking for a specific toy for a specific purpose (like a birthday present).

Then again, as the middle-class, middle-of-the-road suburban shopping mall is itself dying, having mall accessibility may have done little to help Toys "˜R' Us in recent years. And in a larger sense, it seems like toys as a whole are becoming increasingly irrelevant to children. Many of them get smartphones and tablets in their hands around age 3-4, and it seems like from that point forward toys are merely a distraction.

[kkt]

Bain Capital?  Mitt Romney killed Toys R Us?

This is an example of an unsuccessful parasite.  Successful parasites don't take more from the host than the host can live without.

[Scott5114]

Frankly, I'm surprised they lasted as long as they did.  Of all the brick-and-mortar stores to be threatened by online shopping, toy stores seemed one of the most vulnerable.

IMHO, online shopping is a bit overrated (Amazon surprisingly doesn't make much of a profit - exactly the kind of business model that led to the dot com bust in 2000-2001).  The prices aren't really much better (I've found better prices at Walmart than Amazon).  It's the massive debt load that did them in (read the articles I linked).

Price isn't the only reason for online shopping–it's a lot easier to find things instead of traipsing about the store trying to guess how it might be categorized, well, it's kind of like Item X that I know is in Aisle Y, no, it's not there, it's kind of like Item Z, I'll check over there...I could try to hunt down someone and hope they know what I'm talking about and where it is...or I could type it into a box on my computer and have my options shown in seconds.

That, and you have options available to you that you would never have in a B&M setup. One of my business's vendors is a guy in Maryland that manufactures playing card boxes. He's working on making a dice tower (a thing you can toss dice into and they bounce around inside and come out all randomized) and I'm pretty excited about it because I like the guy's stuff. Would have no way of getting it if not for online shopping–his products aren't carried in any stores around here.

Price isn't everything.

[english si]

Their market could drive, though - it's parents, not kids.

Which is why all the toy adverts are during the news, or NCIS, or whatever and not all the time on channels like Disney, Nickelodeon, Cartoon Network, etc

Yes the parents pay (especially with younger kids), but the kids are the ones who want to go there, and the parents can much easier say 'no' if it is a specific drive, rather than right next to somewhere else where they go regularly - or even in the same shop (eg Walmart).

[1995hoo]

It was interesting, just before Christmas we went to a Toys R Us in Fort Myers looking for stuff for our relatives' kids. Found some of what we wanted, but in general we were rather dismayed by the el cheapo plasticky nature of most of the merchandise. We later stopped at a small independent toy store in the Bell Tower Shops and it was a totally different experience–better stuff, no focus on noisy violent shoot-em-up merchandise....and the store was pretty crowded, seemed to do a good business. Kind of made me wonder whether the more traditional small stores might make a bit of a comeback.

I remember Toys R Us in the 1980s not being nearly as el cheapo as now, although no doubt part of that is overall market trends.

[RobbieL2415]

They also had a terrible return policy: No receipt = too bad, you own it.

Nearly every retailer allows for store credit, at a minimum.

Work service desk at Kmart. This is also our return policy. No receipt, no help.

[vdeane]

I would think having a receipt would be pretty standard for a return policy.  Otherwise, what's to stop anyone from buying an item at a store that sells it cheaper and then "returning" it for more money?

[1995hoo]

I would think having a receipt would be pretty standard for a return policy.  Otherwise, what's to stop anyone from buying an item at a store that sells it cheaper and then "returning" it for more money?

Yup. My brother once worked "loss prevention"  at a department store and he says the things the "return artists"  tried to pull were bizarre. I believe it because 25 years ago I worked at a computer store and the stunts people pulled to try to return software they'd clearly bought and copied were crazy.

There's a story, probably untrue, that Nordstrom once accepted a return of some car tires, even though they don't sell them, because of their generous return policy. I doubt it's true, but everyone who works at Nordstrom knows the story. I had to exchange some shirts there a few weeks ago (with a receipt) and the salesman said none of them know whether that story is true.

[formulanone]

They also had a terrible return policy: No receipt = too bad, you own it.

Nearly every retailer allows for store credit, at a minimum.

Work service desk at Kmart. This is also our return policy. No receipt, no help.

...Kmart has also been swirling around the bowl for the best part of a decade now.

I would think having a receipt would be pretty standard for a return policy.  Otherwise, what's to stop anyone from buying an item at a store that sells it cheaper and then "returning" it for more money?

Thanks to advanced POS systems, they typically give you back the lowest advertised price for any item.

To be honest, this might happen to me once a year. If the kids get multiple of something as a gift, and don't give us the gift receipt, might as well let them exchange it. Most of the major big-box retail players in the past two decades have given store credit for items they keep in stock, although they usually have restrictions on certain items (produce, electronics, software, gift cards, inflatable mattresses, et al). It's probably been a decent cornerstone of their business: so what if you average 5% shrink of these kinds of things, the other 95% gives the benefit of the doubt to the consumer, who line corporate pockets one way or another. The clerk making $8-15 doesn't care; they know a noisy, fussy customer makes more people upset.

I was once told by The Home Depot and Lowe's employees that the one physical item - excluding gift cards - that they didn't accept returns without a receipt were tape measures, since every other customer seemed to own one and they were very easy to steal. I'm sure they've changed their policies since then.

There's a story, probably untrue, that Nordstrom once accepted a return of some car tires, even though they don't sell them, because of their generous return policy. I doubt it's true, but everyone who works at Nordstrom knows the story. I had to exchange some shirts there a few weeks ago (with a receipt) and the salesman said none of them know whether that story is true.

Like Nordstrom's, Publix Supermarkets had a no-questions-asked policy. Their guarantee of "satisfaction guaranteed until the food is eaten and enjoyed" was iron-clad; on rare occasions, people would literally return half-eaten food or empty containers and successfully get a refund. People would also clean out their pantries and return old/expired canned or boxed goods for a refund, and they'd do the same. If the item's bar code scanned, you could return it. Having been away from them for over 20 years, I couldn't tell you if they still do it.

The only exception was when folks tried to return Winn-Dixie private label items at the store, and they didn't scan...

[1995hoo]

There are certainly some items that are usually not returnable, receipt or no; the most obvious one is that many hardware stores won't allow returns of toilet plungers for rather obvious reasons! (Our plunger had a sticker on it when we bought it emphasizing that it was non-returnable.)

[RobbieL2415]

Some states have very strict consumer protection laws. For instance, CT state law requires retailers to accept returns on most items unless the store clearly posts a return policy.  Retailers are also required to:

-Display the price of each item as it is scanned (unless the items are NOT commodities AND the customer is provided a receipt for their purchase)

-Disclose the unit price of all commodities

-Give the customer a quantity of one commodity item for free (up to a value of $20) should it ring up higher than labeled.

[vdeane]

Thanks to advanced POS systems, they typically give you back the lowest advertised price for any item.

To be honest, this might happen to me once a year. If the kids get multiple of something as a gift, and don't give us the gift receipt, might as well let them exchange it. Most of the major big-box retail players in the past two decades have given store credit for items they keep in stock, although they usually have restrictions on certain items (produce, electronics, software, gift cards, inflatable mattresses, et al). It's probably been a decent cornerstone of their business: so what if you average 5% shrink of these kinds of things, the other 95% gives the benefit of the doubt to the consumer, who line corporate pockets one way or another. The clerk making $8-15 doesn't care; they know a noisy, fussy customer makes more people upset.

So if you bought something at a store selling items at full retail price, but WalMart sells it for half that, when you go to return it, you'd only get WalMart's price?

I wouldn't be surprised if return policies are more permissive if customers only get back "store credit" rather than real money.

[tchafe1978]

I work at Walmart and if you return an item without a receipt, you get the price the item currently scans at. So if the item has gone on clearance, but you bought it at full price, you get the clearance price back, most likely on a gift card. Walmart no longer gives cash back for no receipt returns. If you had your receipt you'd get back the price you paid and would have the option of getting cash or a refund to the original method of payment. Too many people try to get away with stuff. All electronics items get checked by an associate from the department to make sure all parts are there, especially if the box has been opened. If all the parts aren't there the return is typically denied.

[hotdogPi]

I work at Walmart and if you return an item without a receipt, you get the price the item currently scans at. So if the item has gone on clearance, but you bought it at full price, you get the clearance price back, most likely on a gift card. Walmart no longer gives cash back for no receipt returns. If you had your receipt you'd get back the price you paid and would have the option of getting cash or a refund to the original method of payment. Too many people try to get away with stuff. All electronics items get checked by an associate from the department to make sure all parts are there, especially if the box has been opened. If all the parts aren't there the return is typically denied.

And if you buy it on sale and then return it when the sale is over, do you get back more than what you paid for?

[tchafe1978]

I work at Walmart and if you return an item without a receipt, you get the price the item currently scans at. So if the item has gone on clearance, but you bought it at full price, you get the clearance price back, most likely on a gift card. Walmart no longer gives cash back for no receipt returns. If you had your receipt you'd get back the price you paid and would have the option of getting cash or a refund to the original method of payment. Too many people try to get away with stuff. All electronics items get checked by an associate from the department to make sure all parts are there, especially if the box has been opened. If all the parts aren't there the return is typically denied.

And if you buy it on sale and then return it when the sale is over, do you get back more than what you paid for?

If with a receipt you get the price you paid. If without a receipt you get what it currently scans at, on a gift card, so technically yes.

[Takumi]

CVS does lowest price in the last 60 days, store credit, and ID tracking.

[jeffandnicole]

Most places give you the lowest price it's been for the past 60/90 days or whatever without a receipt. I thought Wal-Mart did the same based on something I returned a while back.