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Toys R Us, which according to Euromonitor International is the leading traditional toys and games retailer in the world, announced it will close or sell all its US and UK stores. 

 

Matthew Hudak, Toys and Games Consultant, Euromonitor International commented:

“Toys R Us’s announcement that it will be closing US and UK stores, while not wholly unexpected given the retailers many years of declining sales, will have a major impact across the toys and games landscape. Toy makers, while they have been slowly moving to other channels for sales over the years, will quickly lose a major avenue to get their product to consumers. Larger toy companies like Lego, Hasbro, and Mattel will likely see a greater impact, as they were a sizeable portion of the Toys R Us store offering. Smaller players, especially for areas like games and puzzles that get a lot of niche new products each year, can typically rely more on specialty shops and online channels and therefore might not see as immediate an impact. Long term, however, large players will likely get even more competitive for remaining in-store shelf space, especially in hypermarkets like Walmart, which ultimately could limit the national path to consumer for many new toys from smaller players. In addition, it would not be surprising that in this new environment with less shelf space to work with, smaller or mid-size toy companies consolidate faster to help their bargaining position.”

 

Tim Barrett, Retailing Consultant, Euromonitor International, added:

“While the news is a gut check to legacy retailers that are struggling to adapt to modern retail realities, this is not a development that comes as a surprise. In an age where shopping for toys is more efficient online or at Walmart, a big-box toy retailer with next to nothing in terms of service or experience doesn’t make a lot of sense. Had the chain embraced e-commerce earlier instead of outsourcing it to Amazon from 2000-2010 things might have gone differently. Had the chain made a bold move to reimagine stores, perhaps by adding in daycare centers, things might have improved. But Toys R Us did none of these things. Spread thin across too many countries, with too many stores and too much debt, it boxed itself into its current fate.

One interesting wrinkle to consider will be the impact on the rest of the market. Amazon, Walmart, and Target are clear winners, possibly along with friendly local toy and game stores, but that is fairly obvious. In the next year, it will be interesting to see if the release of Toys ‘R’ Us’ inventory into the market depresses toy sales for other retailers. This is likely good timing for them due to the distance from Christmas, but the demand for off-price items and discounts is pervasive, and it’s this sort of mass disbursement that third party online sellers will take advantage of, much to the chagrin of larger retailers that try to abide by a MAP.”

 

For more information about Toys and Games in the US, please visit http://www.euromonitor.com/toys-and-games-in-the-us/report

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