North Texas Toys R Us Customers: 'It's A Very Sad Day'
ALLEN, Texas (CBSDFW.COM/AP) - Iconic toy retailer, Toys R Us, is closing its doors for good, shutting down more than 700 U.S. stores in the coming months.
The company was unable to compete as more customers turned to online shopping and mobile games.
Employees at Toys R Us at The Village of Allen on Stacey Road, say they found out Thursday morning that their store was closing. It comes six months after the company filed for bankruptcy.
Toys R Us says customers will have 30 days to use gift cards and rewards dollars.
"We have the grandsons for the week, and they love Legos," says Mary Lou Boardman. "We wanted to get them a Lego set they could work on for the week."
Boardman says she'll miss the nostalgia of browsing toy-filled aisles.
"I kind of felt kind of devastated because I do a lot of online shopping. Amazon is good, but you can't really physically hold the toy and see it and touch it. It's a very sad day," explains Boardman.
Employees say they haven't been told when their store will close. It's the end of an era, which means there will not be a new generation of Toys R Us kids.
"I'll miss it. I feel that it's an experience to really see the toys up close and personal," says Boardman's grandson, Nathan Macy.
The company's troubles have affected toy makers Mattel and Hasbro, which are big suppliers to the chain. But the likely liquidation will have a bigger impact on smaller toy makers that rely more on the chain for sales. Many have been trying to diversify in recent months as they fretted about the chain's survival.
Toys R Us has been hurt by the shift to mobile devices taking up more play time. But steep sales declines over the holidays and thereafter were the deciding factor, said Jim Silver, who is editor-in-chief of toy review site TTPM.com.
The company didn't do enough to emphasize that it was reorganizing but not going out of business, Silver said. That misperception led customers to its stores because they didn't think they would be able to return gifts.
Now, the $11 billion in sales still happening at Toys R Us each year will disperse to other retailers like Amazon and discounters, analysts say. Other chains, seeing that Toys R Us was vulnerable, got more aggressive. J.C. Penney opened toy sections last fall in all 875 stores. Target and Walmart have been expanding their toy selections. Even Party City is building up its toy offerings.
"Amazon may pick up the dollars, but won't deliver the experience needed for a toy retailer to survive and thrive in today's market," said Marc Rosenberg, a toy marketing executive.
Toys R Us had dominated the toy store business in the 1980s and early 1990s, when it was one of the first of the "category killers"— a store totally devoted to one thing. Its scale gave it leverage with toy sellers and it disrupted general merchandise stores and mom-and-pop shops. Children sang along with commercials about "the biggest toy store there is."
But the company lost ground to discounters like Target and Walmart, and then to Amazon, as even nostalgic parents sought deals elsewhere. GlobalData Retail estimates that nearly 14 percent of toy sales were made online in 2016, more than double the level five years ago. Toys R Us still has hundreds of stores, and analysts estimate it still sells about 20 percent of the toys bought in the United States.
It wasn't able to compete with a growing Amazon: The toy seller said in bankruptcy filings that Amazon's low prices were hard to match. And it said its Babies R Us chain lost customers to the online retailer's convenient subscription service, which let parents receive diapers and baby formula at their doorstep automatically. Toys R Us blamed its "old technology" for not offering its own subscriptions.
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.
In filing for bankruptcy protection last fall, Toys R Us pledged to make its stores more interactive. It added demonstrators for the holiday season to show people how toys work, and began opening Play Labs at 42 stores, areas where children can play with different items.
(© Copyright 2018 CBS Broadcasting Inc. All Rights Reserved. The Associated Press contributed to this report.)