Toys R Us falls into administration

28.02.2018

Comments by our Head of Retail Consultancy Jonathan De Mello

‘It is very, very sad to see Toys R Us fall into full administration today – an institution for so long that has fallen victim to a lack of investment in stores, issues with key suppliers, and other, leaner, distribution channels such as the internet. Thoughts are with its thousands of staff as the painful deconstruction of the business begins.’

 

‘Toys R Us have struggled to compete with the likes of Amazon and its warehouse style concept was increasingly becoming less relevant in an age where ‘must have’ marquee toys replaced the idea of kids collecting whole ranges of toys. Holding such a range of stock became a big burden for them and the fixed costs from such a sizeable store portfolio meant that they could not hope to compete on price with online operators -and in particular Amazon.’

 

‘Though Toys R Us have been struggling globally and the issues are not just down to the UK, negative consumer sentiment and the depreciation of sterling due to Brexit certainly hasn’t helped; nor has the ‘channel shift’ to online from Black Friday onwards into the key Christmas period – as toy purchases are very much biased towards Christmas vs products in other sectors.’

 

‘Another retailer that only a couple of years ago were performing well – Maplin – also face the threat of administration unless a buyer is urgently found for the business. It would be bad for the retailer sector to see two major multiples fail in quick succession, and thousands more jobs on the line. There is a definite ‘2008’ feeling present currently, and the sooner we have certainty around Brexit negotiations the better. The government’s ineptitude to date in this regard has caused real damage to retailers.’

 

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