Toys “R” Us announced on Wednesday that it will close about 180 stores in the U.S., or about one-fifth of its domestic locations, as the company emerges from bankruptcy proceedings to restructure $5 billion in debt.
On one level, this is just the latest chapter in the never-ending saga of brick-and-mortar calamity as the retail industry focuses more on online sales. The first half of 2017 was among the worst periods for retail stores on record, and the pain isn’t nearly over. In the last four months, Sears and Kmart have announced 63 imminent store closings (after shuttering 350 locations in 2017), Gap announced plans to close 200 locations in the next three years, and Walmart announced that it would close 63 Sam’s Club stores and lay off thousands of workers.
But while Toys “R” Us has suffered from some predictable brick-and-mortar burdens, its story is a complicated one that touches on family economics, modern leisure, and private-equity mismanagement. There are the three main culprits of the sad demise of America’s erstwhile titan of toys.
1. It’s the e-retailers.
This story begins—as all modern retail stories must—with Amazon. The “everything store” sells toys now—billions of dollars of toys, in fact. Between 2015 and 2017, Amazon toy sales grew 24 percent, to $4 billion. Toys “R” Us, whose revenue declined in those years by a similar sum, simply doesn’t have the same facility with digital shoppers. Last June, the company’s CEO criticized the store’s own website, including its kludgy baby-gift registry tool, acknowledging that the store had simply fallen behind contemporary shopping habits.