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September 2017 Retro Gaming Article


September 18, 2017 Retro Gaming Blog Post:

I hope Chapter 11 will enable Toys R Us to regroup and service their debt without liquidation

Toys R Us storefront
As the internet goes off the rails with speculation, let's remember Chapter 11 is a protection to help companies make changes and return to viability.
Ever since March, I wondered why Best Buy and GameStop were selling Nintendo's new game console while Toys R Us never had any inventory. News of pending Toys R Us bankruptcy may be the reason. Stories are already circulating about manufacturers tightening and restricting shipments to this renown toy reseller.

Headlines are appearing rapidly with maximized doom & gloom emphasis. We all know the phrase "sex sells", but this is a toy store, so news outlets will boost the story with as much negativity as possible. It seems these journalists may not know what chapter 11 bankruptcy really is.

Bankruptcy isn't a death sentence. It may well save Toys R Us.
Certainly, bankruptcy is not a good thing, but it's a preferable option to liquidation. Bankruptcy does not mean Toys R Us will go out of business in a matter of weeks or months. Chapter 11 bankruptcy is a protection allowing the company to shift gears, regroup, and make necessary changes to stay in business.

there's no guarantee that TRU can turn things around, but a pre-holiday liquidation would be a nightmare for everyone from consumers and employees to manufacturers and creditors. I love Toys R Us and grew up in their G.I. Joe aisle. Not long after, i was flipping those wall-mounted video game box covers trying to discern NES game info from the info on the backside. Everyone wants to see TRU continue.

Toys R Us Geoffrey If they went out of business, I'd be heartbroken. WalMart is NOT a toy store - no one has the variety of TRU! If they went under, creditors would be relegated to receiving pennies-on-the-dollar for any owed money. That scenario benefits no one. It's in everyone's best interests for TRU to become viable.

The timing of this announcement is interesting since the holiday season makes up for about 40% of yearly earnings. Some speculate that many holiday items have already been delivered to TRU, but there must be more to come as Black Friday and Christmas week loom. This news could have a devastating effect on their prime season. Time will tell.

Neither Amazon nor WalMart Have Ruined Toys R Us

Many like to preach the low prices of box-store giants like WalMart and the ease of online shopping as the demise of modern brick and mortar retail. These are certainly factors, but the numbers don't add up. In short, retailers like Toys R Us have not modernized properly to compete with newer business models. Look at TRU, Sears, K-Mart and other flailing retailers. None of them have changed much in the last few decades. Their offerings and shopping experience are almost identical to shopping in the 1970s!

Toys R Us is in a precarious position due to some high risk financing that enabled them to revert to being a private company. This saddled them with so much debt, they haven't been able to modernize properly. With this in mind, I think TRU will be more likely than other retailers to right the ship and perhaps operate far into the future.

Kids will always love toys (a few adults too), so I don't think demand will diminish unless it's population related. I loved TRU as a kid and my son is the same way. No kid wants to shop online! They want to go to the toy store and touch everything! Shopping in stores is boring. It hasn't changed much in decades. Malls need to become destinations again, but it won't be through traditional retail.

Stores need to deliver unique experiences. Sales can be shifted to easy online transactions, but physical stores myst adapt to deliver relevant experiences to bolster those online sales. I think the two need to be combined to be very successful. I don't see one without the other.

A funky cool giraffe may not be enough to lure shoppers into stores. Stores need to become destinations. A local mall just revamped itself with several arcades, laser tag, go karts, an escape room, and trampolines. It used to be a defunct mall, now it's quite vibrant. Now the retailers surrounding all these amenities need to bring people into their stores with unique demos, experiences and trials. Be inventive! the 70s were swell, but the swelling's gone!



UPDATE - Sept. 19, 2017

Toys R Us has filed for chapter 11 bankruptcy and secured $3 billion to remain open while working to restructure their outstanding debt. I guess we can still line up next week for the SNES Classic Edition and perhaps pick up a Switch for Christmas. We hope they can turn things around and get their finances in order.

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