Toys R Us Sold

easy8 · Post by **easy8** » Thu Mar 17, 2005 9:00 am

Thought is might be interesting to those of you who collect the 1/32 and 1/18 stuff...not sure how it will effect your collecting, if at all, but you never know.

http://www.msnbc.msn.com/id/7205080/

easy8

Post by **aferguson** » Thu Mar 17, 2005 9:37 am

I wonder what the long term effects will be on the toy biz. Apparently many of the TRU store locations are worth more for real estate development than as stores. So we may see many TRU outlets closing down, at the very least.

A lot of the major toy retailers have been eyeing this purchase with concern. As the number of toy retailers steadily shrinks WM has more and more clout as to what is made, when and for how much. I see a possible trend towards cheaper and cheaper toys, both in price and quality. But WM has embraced XD so maybe that won't be the case.

Interestingly, TRU here in Canada is completely unaffected by this sale as it is a seperate entity entirely from the US chain. The sale of the US TRU will no doubt mean less exclusives made by the various toy makers, which will affect what products are sold up here no doubt...

bhallg2k · Post by **bhallg2k** » Thu Mar 17, 2005 1:58 pm

If you've read or seen "Barbarians At The Gate," you'll recognize the name of one of the firms that bought Toys R Us, Kohlberg, Kravis, Roberts & Co.

Henry Kravis practically invented the leveraged buyout; and part of his plan (usually) is to buy a company that isn't performing well financially and liquidate its assets at a profit.

Babies R Us, which was included in the sale, will probably stick around. And even though KKR said they don't plan to do so, look for them to dismantle the Toys R Us unit, being that most analysts think the real estate value of the stores is worth more than operating them.

Website · Post by **Teamski** » Thu Mar 17, 2005 2:15 pm

I think the end is coming soon for the TRU's that many of us frequent, including mine, unfortunately........

-Ski

immeww2 · Post by **immeww2** » Thu Mar 17, 2005 9:13 pm

If TRU disappears from the retail scene wouldn't that give WM a sort of monopoly over the toy world? Who would or could compete with WM with TRU no longer around?

tmanthegreat · Post by **tmanthegreat** » Thu Mar 17, 2005 9:42 pm

The purchase could either be a life-saver or a death knell. On a much smaller example, I remember a furniture store in Fresno, CA that wasn't doing too well. The land was arguably worth more than the store, and was purchased by someone else with more clout. The store was closed, buldozed, and turned into large Cheveron gas station.

Then again, the TRU purchasers may be doing this to keep the market alive and out of the hands of a single entity.

Post by **aferguson** » Thu Mar 17, 2005 9:51 pm

i was watching the business report and the plan seems to be to close about 200 of the 600 or so TRU's. The land on the ones sold being developed, the others are going to be revamped, modernized, cleaned up and are still, supposedly, to sell toys.

tmanthegreat · Post by **tmanthegreat** » Thu Mar 17, 2005 11:44 pm

...but not only toys, however. You will also be able to purchase real-estate! Look out for the new store chain in the TRU family, Real-Estate 'R US! The mascot is the Giraffe dressed like a successful real-estate agent, complete with briefcase

nomo4me · Post by **nomo4me** » Fri Mar 18, 2005 1:10 am

Sorry to rain on the parade here amidst this heartfelt angst, but I hate friggen TRU, never go into the stores and won't be sad to see them go.
You may disagree with me, but I fit the age/income bracket that the TRU folks would like to lure and I think they just plain stink at servicing the public.
12 or so years ago when we bought for our young daughters TRU was ok, but now the stores just reek of indifferent product lines and truley disinterested floor personnel.
Good riddence to them.

Nomo

lightning2000 · Post by **lightning2000** » Fri Mar 18, 2005 4:55 am

The toy business has been and will always be a cyclical business with its peak period occurring in the fourth quarter. Sure they sell some summer toys and games for birthday presents, but much of the business has gravitiated towards the video game business. Kids are just less interested in toys when they can explore their fantasies online or via a game console.

Anytime a real estate developer is involved in a purchase that means one thing -- wholesale divestiture of underperforming units to sell them off for their real estate value. My guess is that many underperforming units will be closed after Xmas with incredible in-store sales to liquidate inventory. Next year, they'll take stock of the rest of the stores to see which are underperforming vis a vis their real estate value and the cycle will continue until they're left with highly trafficked stores in major metropolitan areas. I'm sure they'll also promote their online business more and more since the overhead costs associated with running them are far less that the traditional brick-and-mortar units. Expect them to breakaway from Amazon to increase yields although their complete SKU list will continue to shrink dramatically. That means more and more manufacturers will either have to revamp their product offerings or seek other retail venues.

What it could mean is some manufacturers will enter the hobby and collectible business since its less susceptible to market-driven high volume selling periods. People tend to purchase a tank, plane, doll, etc. at any time of the year since its for themselves as opposed to a traditional gift.

Cordially,

Lightning2000

Gunner · Post by **Gunner** » Fri Mar 18, 2005 7:41 am

immeww2 wrote:If TRU disappears from the retail scene wouldn't that give WM a sort of monopoly over the toy world? Who would or could compete with WM with TRU no longer around?

Well, first of all, I don't think TRU will disappear. They will shrink, proabably dramatically, but I don't think they will disappear. For example, the store closest to my house (Bailey's Crossroad, VA) is probably a goner in the next few years, given how much the land is probably worth (I think the store has been there 10+ years, so the land value is probably 3-4 times what they paid for it). But there are two others, both near Wal-Marts, that are competing quite well.

Yes, as TRU shrinks, WM will have more of a monopoly for brick and mortar store sales. But they ALREADY have a monopoly in many locations.

However, I think that BCA, SBP, etc. will continue to compete quite effectively against WM online. Remeber that WM succeeds on high volume. Therefore, items that wouldn't have enough sales to go on the shelf at WM will HAVE to go somewhere else. That "somewhere else" will be determined, largely, by us, the consumers.

Magilla1973 · Post by **Magilla1973** » Fri Mar 18, 2005 8:26 am

Closures could be a great opportunity for the return of the independent neighborhood Toy Store - differentiated / specialized product offerings -

One of the problems with KB and TRU was that they had the same product as Walmart / Target / Kmart - basically the battle coming down to price and convenience rather than product. Economies of scale are great for price, but terrible for specialization.

20july1944 · Post by **20july1944** » Fri Mar 18, 2005 9:29 am

It had totally morphed away from its original market (really cheap and really big selection) so I'm glad they're sold.

Perhaps the new owners will return to what made them the dominant force in the toy market.

lightning2000 · Post by **lightning2000** » Fri Mar 18, 2005 10:23 am

I'm not so sure you'll see the rise of the boutique toy shop anytime soon. You might see a couple spring up here and there but again the toy business is a cyclical business that generates the bulk of its profits in the fourth quarter. Rents for most storefronts in malls have gone up dramatically and stores sprouting up along Main Street just dont generate the kind of foot traffic you need to pay the bills. Look at how Kay-Bee Toys got killed the last couple of years. I see the potential rise of more online retailers in the toy sector due to lower overhead and the ability to cater to the global marketplace. You'll probably see some wholesale liquidators getting into the business but once supply dries up they'll return to selling other wares.

Lightning2000

digger · Post by **digger** » Fri Mar 18, 2005 10:33 am

There will be small retailers - they will be online. With easy and affordable web designs, plus easy access to secure payment systems (paypal), pretty much anybody can be a toy retailer. Hell, you could only operate around Xmas to maximize profits and limit expenses. This flexibility is not available to brick & mortar stores with full-time staff and rent to pay.
I think this was a natural progression - either you have the best prices/selection (WM, Target....) or you close up shop. I have a feeling we will be no worse off....

cruizin2000 · Post by **cruizin2000** » Fri Mar 18, 2005 11:30 am

I noticed that after the PC police had the 21st line/German soldiers pulled that their selection of toys went waaaaaay down. Even the size of the toy department was smaller.

I can remember back in the late 80s/early 90s that the aisles were long and that there was even a toy soldier aisle. They carried the BMC sets and they sold for $15-$20 each. Now they just carry cheap, low quality sets.

They slowly but surely became "Toys Were Us".

I hope that the new owners do a major rehab to what they carry and keep'em going. Wouldn't it be nice to go in there and make a trip to the 21st aisle and get whatever plane, tank, etc that you've been looking for at Wally's that just never showed up due to their f'ed distribution???

I recall going into We Be Toys and them having a ton of 21st 32X toys. I'll keep my fingers crossed...

C2000

pokeyjtc · Post by **pokeyjtc** » Sun Mar 20, 2005 1:26 am

I am not sad to see TRU being sold, the ones in my part of town have just about nothing for the product lines that I like. I too remember the 80s and early 90s when I was a kid and TRU had all of the newest GI Joe stuff in its own aisle. I could pretty much spend all day in that place because it was jam packed with tons of toys and they had like 20 aisles worth. I do think a large part of the problem is video games. It seems to me that kids now just want to play video games and have no real interest in toys that are powered by the imagination.

It would be nice if the new owners put some money back into it and start carrying more of the BBI stuff and pick the 21C line back up and carry a much larger selection this time around. Unfortunately, I don't think this will happen.

DocTodd · Post by **DocTodd** » Mon Mar 21, 2005 9:08 pm

Some good points of discussion, and I agree that online retailers will benefit the most. Especially the speciallty ones that deal in certain collectibles like Badcat and SBP. With time we will see how this evolves. It does seem that the interest in toys from the general public has decreased hence the failing of several toy chains. WM has definitely had an impact which at first seems too bad and could decrease the selection available but likely the online retailers will pick up the slack and continue to offer all of the interesting items.
Todd

fredricchio · Post by **fredricchio** » Mon Mar 21, 2005 10:59 pm

What I'm really worried about is BBI; TRU is the only brick and mortar retailer that carries their product, and if they scale back, given the recent clearances on the armor and helos, I'm afraid that BBI might be the first to go. They've already stopped carring XD, and now that Hasbro is abandoning the 3 3/4" Joes, I could see some TRU execs deciding that they don't need a 1:18 military section anymore. I don't know much about BBI as a company but I hope they're stable enough that they could survive on e-tailers alone.

Anyway I'm of the opinion that if they're going to survive against Wal-Mart and Target, they really need to offer alternative products. Bikes and baby products have been their traditional big sellers, so I wouldn't expect to see them go away, and I'm sure the R-Zone will stick around (though if I were them I'd stop carrying movies, or at least new releases that are easily found elsewhere and at cheaper prices; stick to children-oriented titles).

But as long as the situation doesn't adversely affect any of my favorite manufacturers, I'll get used to it I suppose. Probably just means I'll do more purchasing online.

luftpanzer · Post by **luftpanzer** » Wed Mar 30, 2005 4:42 pm

Wow 1st KB toys is out of business now TRU might be out. That could be good news for us small online Dealers. Even thoe we have to compete with WM they don,t carry the whole line at one time. Gues I better stock up on as much 21stC products that I can get my hands on.

Sentinel · Post by **Sentinel** » Thu Mar 31, 2005 11:22 pm

Business aspects aside, and as far as user-friendly goes, I have a major dislike for TRU ever since they said bye-bye to those long and beautiful aisles.

IMO, the current floor plan doesn't even allow for very comforable browsing, especially if anyone else is close by.

Also, while it's probably not true, these days they seem to have about half of the neat stuff they used to.

Small Scale Military Headquarters

Toys R Us Sold

Toys R Us Sold

Toys Were Us?

I'm glad TRU was sold

Boutique Toy Shops

Se la vie

Good bye...