“I don’t want to grow up, I’m a Toys “R” Us kid” is a jingle that many people remember from the popular advertising jingle from the giant kids toy retailer Toys “R” Us. With stores once spanning across the entire country, Toys “R” Us was a destination for many of the children and parents across the nation on the holidays, birthdays or any other special occasions. But on March 14, 2018, the chief executive officer of the retailer announced that the retailers would be closing their doors due to filing for Chapter 11 bankruptcy last September.
The downfall of the once giant toy retailer is a dual-sided story. First, the financial troubles of the organization ultimately stemmed from the company being taken into the private sector while already in financial trouble. The new private-equity owners of the organization had taken a hands-off approach to managing the business. With that hands-off approach came hiring of leaders that didn’t push the business out of debt.
As the organization struggled to get out of large amounts of debt, with reports of the organization owing upwards of $400 million per year just in interest alone on the debt, the organization slowly saw their creditors push for liquidation and store closing and vendors backing out of shipments due to them knowing they would struggle to get their invoices paid. After the Chapter 11 filing last fall, the company thought they could make one last push through a black Friday and Christmas shopping season to try and turn things around, but they weren’t. The public knowledge of the filing scared away customers and vendors alike and the company was doomed.
The second side to the downfall of the Toys “R” Us chain can be led back to the company’s inability to adapt to the changing marketplace over the years. When Toys “R” Us was in its prime, their main attraction was the store itself with aisle upon aisle of toys. From that time in the 1980’s until now, shopping trends sure have changed to the world of Amazon.com and online shopping in general. As internet sales skyrocketed and other companies adapted their sales and marketing campaigns to the online world to compete, Toys “R” Us failed to do that and the consequences were dire.
