Ghost of Toys R Us still haunts toy makers

The store liquidated its 800 U.S. stores six months after it filed for Chapter 11 reorganization

Just last year, a kid in the market for an Uncle Milton ant farm could choose from a half dozen versions, including glow-in-the dark or an ant village. Now there are only three. Last year, there were 60 kinds of K’Nex construction sets on the market. This year there are 20.

A year after Toys R Us imploded, toy makers are still readjusting to the big loss of shelf space. That means slashing the number of styles they carry, re-evaluating how they sell large toys like playhouses and cars, and changing their packaging to squeeze into smaller retail spaces.

It’s a jolt for toy companies. They had already been trying to reinvent themselves amid an onslaught of changes, including kids’ evolving tastes toward gadgets, as well as the rise of Amazon and online shopping. They never expected the iconic chain to liquidate its 800 U.S. stores six months after it filed for Chapter 11 reorganization in 2017. Some companies depended on the chain for as much as 40 per cent of overall sales.

READ MORE: Bright future for Canadian Toys ‘R’ Us stores, president says during B.C. visit

A slew of retailers like Walmart, Target and Party City rushed to expand their toy aisles to capitalize on Toys R Us’s demise, but toy companies say they aren’t able to fill the void. The stores devoted big sections to toys year round and served as incubators of new trends. They also say that Toys R Us’ massive orders of tens of thousands of units offset the cost of production.

All this has led to fewer options for kids.

“Maybe the world only needs one kind of ant farm, but in the day, you had a choice,” said Jay Foreman, president and CEO of Basic Fun. The Boca Raton, Florida-based company purchased the assets of Uncle Milton, which makes ant farms, along with K’Nex and Playhut, over the past year. He is now evaluating his overall lineup.

Many parents have taken note of the more limited options.

Stephen Desch of Keyport, N.J., said when his now 3-year-old daughter wanted a crab-shaped sandbox, he found it at Toys R Us. But he can’t find certain items now, like a plush toy inspired by the Jay character from the Netflix show “Beat Bugs.”

“It’s definitely annoying,” Desch said.

Vanessa Myers of Bristol, Virginia, cites too many choices in some categories, like light up toys for the tub. But she does worry about the dwindling selection of dolls and bikes.

“I really want dolls that are diverse,” in hair colour and ethnicity, she said.

READ MORE: Toys “R” Us files for bankruptcy protection in U.S.; plans to follow suit in Canada

Toys R Us collapsed after racking up nearly $3 billion in revenue last year, or 12 per cent of the U.S. toy market, according to market research group NPD Group Inc. Jim Silver, editor-in-chief of TTPM, an online toy review site, estimates that 40 per cent of Toys R Us business wasn’t scooped up. Even as the former investors of Toys R Us try to resurrect the business in the U.S. in time for the holidays, many expect it to be a shell of what it was.

The effort follows a 2 per cent drop to $21.6 billion in toy sales for last year, with demand weakening during the second half of the year with the loss of Toys R Us. That reversed four straight years of sales growth, NPD says.

Mattel’s annual sales last year fell 8 per cent, reflecting a negative 6 per cent impact from the toy retailer’s liquidation. At Hasbro, annual sales dropped 12 per cent, dragged down by the loss of Toys R Us. Mattel had been struggling for several years, but it had been starting to see a turnaround.

Toy makers have been expanding online, but that isn’t the panacea, says Marc Rosenberg, the strategic marketing adviser who was behind the success of Hasbro’s furry hit Furby. Physical stores still drive the toy business and profitability since companies don’t incur shipping costs, Rosenberg says.

Foreman agrees, saying his new line of Cutetitos — beanie babies wrapped up in a burrito blanket and launched for the holidays — would have fared even better if Toys R Us was around. Typically, Toys R Us would have devoted a 3-feet-by-16-inch display in a highly visible spot to a hot item. Instead, stores gave Cutetitos an area that measured 18 inches wide by 5 inches deep.

Isaac Larian, CEO of privately held MGA Entertainment, has seen overall sales triple last year because of its popular LOL toys. But its Little Tikes division, which makes toy cars and playhouses that need big areas for display, suffered a 12 per cent sales drop because of the loss of Toys R Us even as his business with Amazon rose 50 per cent. Overall, 27 per cent of its overall business stemmed from Toys R Us, but at Little Tikes, that figure was 40 per cent.

Larian’s Little Tikes toy factory — the largest U.S. toy factory — based in Hudson, Ohio, is running at 25 per cent capacity. Larian says he’s cutting the number of Little Tikes toys it produces mainly because of the loss of Toys R Us. He’s now expanding into housewares to keep the factory busier.

“Every day we are reinventing ourselves,” he said.

Anne D’Innocenzio, The Associated Press

Like us on Facebook and follow us on Twitter.

Just Posted

Ranchers help grow PRH

Ranching family’s roots recognized through PRH donation

Oktoberfest kicks off new Beer Week

The 10th annual event ties into the new week-long celebration of craft beers.

Summerland council agrees to 30-year lease with steam railway

Tourist train has been operating as an attraction in Summerland since 1995

Speeding a concern on Summerland streets

Police observe fast motorists in town and on Highway 97

Rain in forecast for Okanagan-Shuswap region

Mixed bag of clouds, sun and showers forecast for the week ahead

Election 2019: Robert Mellalieu — Green Party candidate for Central Okanagan-Similkameen-Nicola

Robert Mellalieu is running for the Green Party in Central Okanagan-Similkameen-Nicola

Greta Thunberg meets with First Nations chief in Fort McMurray

Thunberg has turned her protest against climate change into a global movement

Canucks hang on for 3-2 win over Rangers in New York

Vancouver scores three times in first period

More beef products recalled due to possible E. coli contamination

The food safety watchdog has been investigating possible E. coli 0157:H7

Roads contractor waits for snow removal equipment as winter looms

The newly-hired highway maintenance company serving the region is hitting some bumps… Continue reading

B.C. VIEWS: How to get the best deal on your ICBC car insurance

ICBC slowly being dragged into the 21st century

Pot legalization has gone ‘well’, but ‘yellow flags’ on vaping: task force chair

Canada legalized cannabis for non-medical use on Oct. 17, 2018,

Most Read