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.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Letter: South Shuswap incorporation a foregone conclusion?

Writer overwhelmed with information at committee meeting

Snapshot: Valentine’s donations to Shuswap organizations

Shuswap SPCA, SAFE Society receive some love from SASCU Insurance

Sniffing out options for expansion of Salmon Arm’s sewage treatment plant

Public presented with nine site possibilities at open house, feedback to help narrow options

CHIME finds four days of noise, twelve days of silence from space

The radio telescope picked up the first recorded pattern in radio signals from space

Summerland’s Justin Kripps picks up back-to-back bronze medals in weekend racing

Canada’s two-man bobsleigh is third in the rankings heading into the World Championships

VIDEO: Kawhi Leonard wins first Kobe Bryant All-Star MVP award

Leonard scored 30 points and hit eight 3-pointers to lead Team LeBron to a 157-155 victory

Monday marks one-year anniversary of man missing from Langley

42-year-old B.C. man, Searl Smith, was last seen leaving Langley Memorial Hospital on Feb. 17, 2019

BC Ferries sailings filling up Family Day Monday

More than 20 sailings added between Swartz Bay and Tsawwassen for long weekend

UBCO announces new top boss for Okanagan campus

Lesley Cormack will start in the position this summer

Nine West Kelowna athletes to go to B.C. Winter Games

The athletes will compete in biathlon and cross country ski

Amtrak warns of delays as railways from Seattle to B.C. blocked by Wet’suwet’en supporters

Coastal GasLink said it’s signed benefits agreements with all 20 elected band councils along pipeline route

Federal emergency group meets on pipeline protests as rail blockades continue

There’s mounting political pressure for Trudeau to put an end to the blockades

VIDEO: Minister reports ‘modest progress’ after blockade talks with First Nation

Wet’suwet’en hereditary chiefs say Coastal GasLink does not have authority to go through their lands

B.C. man released from quarantined cruise ship in Japan

Because Spencer Fehrenbacher has American citzensip, he was evacuated by the U.S.

Most Read