In Fort Collins, Colo., a vacant Toys ‘R’ Us store is being turned into an adventure park, with trampolines and dodge ball courts. Scandinavian furniture has replaced Fisher-Price baby gear at a location in Sioux Falls, S.D. In northwest Atlanta, a Hobby Lobby is moving in.
At shopping centers where Toys ‘R’ Us was a key tenant before its messy liquidation in June, traces of the bankrupt chain are steadily being erased. And as the industry’s main showcase in North America, Toy Fair New York, opens this weekend, many in the fun-and-games trade are trying to move on as well.
But Toys ‘R’ Us isn’t ready to let go.
On the brink of imploding at this time last year, the retailer is now embarking on a revival set in motion months ago by the hedge funds that own its debt and control its intellectual property.
A new entity, Tru Kids, is “starting with a clean sheet of canvas,” said Richard Barry, the company’s chief executive and a former chief merchandising officer of Toys ‘R’ Us. Introduced last week, the company will manage brands that include Toys ‘R’ Us, Babies ‘R’ Us and Geoffrey the Giraffe, the Toys ‘R’ Us mascot.
So far, there are few details about Tru Kids’ plans. It has no physical operations or e-commerce presence in the United States. Toys ‘R’ Us, unable to sustain its vast portfolio of huge stores and carrying $5 billion in debt, closed all 730 of its locations last year. Any stores Tru Kids opens will probably be smaller than its predecessor’s, with an emphasis on what Barry described as in-store experiences and technology-enabled shopping.
“Nothing is signed, nothing is set in stone,” he said. “We absolutely don’t want to overpromise in any way what this is.”
Attempts at comebacks are not unusual among retailers. FAO Schwarz was reincarnated in modified form last year, three years after shutting down. Many companies, under pressure from Amazon and other online outlets, have learned to adapt in their own ways.
The Tru Kids leaders, most of them former Toys ‘R’ Us executives, plan to meet with dozens of vendors at Toy Fair to promote their new endeavor. Barry is set to help give out the industry’s Toy of the Year award.
A tough crowd awaits.
Mark Carson, a founder of the manufacturer and retailer Fat Brain Toys, is among those wary of Toys ‘R’ Us rising from the dead. He said he still had a “bitter taste” in his mouth after the company shut down without fully repaying him. But the amount he was owed — less than $100,000 — was dwarfed by the outstanding balances of many other vendors, he said.
“I’m not going to roll the dice on their new business,” he said. “I’m open to working with them, but it’s not like I’m desperately waiting for them to come back.”
The collapse of Toys ‘R’ Us had far-reaching effects. Tens of thousands of workers lost jobs. Competitors were undercut when liquidation sales flooded the market with deeply discounted goods. Vendors locked into exclusive contracts with the chain scrambled to find new outlets. Last week, Hasbro, the world’s largest toymaker, blamed the “unprecedented” store closings for holiday earnings that fell well short of expectations.
“It was traumatic for the industry,” said Richard Gottlieb, founder of Global Toy Experts, a consulting firm. How traumatic? Gottlieb said that the last time he saw Geoffrey at an industry event, he “didn’t know whether to hug him or punch him in the face.”
In the most recent holiday season, the confusion caused by the absence of Toys ‘R’ Us was clear.
Sellers of all stripes tried to fill the void, often slashing prices to compete. Mass-market retailers like Target and Walmart made extra shelf space for popular toys that also popped up in supermarkets and electronics stores. Amazon mailed out a thick toy catalog, a first for the company.
Many specialty retailers had hoped for a “huge boost” after the closings, said Richard Derr, who owns a Learning Express store in the Chicago area. It never came. Only a third of what would have been Toys ‘R’ Us sales during the holidays wound up going to other retailers, Wall Street analysts estimated.
“Most of it went ‘poof,’ ” said Derr, who leads a group of more than 100 Learning Express franchisees. “It’s the old buffet effect: If it’s right in front of them, people will eat. If not, they go without.”