5 Ways Retailers Can Avoid Ending Up Like Toys “R” Us

(Originally published in Online Retail Today)

Industry analysts have prophesied a forthcoming “retail apocalypse” in recent years, and with good reason — since 2017, formerly infallible retailers like Foot Locker, Best Buy, Bon-Ton, Sears and Macy’s have either filed for bankruptcy protection or shut down stores.

If you’re still looking for proof that we’re living in one of the most transformational times in retail since the 2008 financial crisis, look no further than the recent demise of Toys “R” Us.

Ripples have been felt throughout the retail industry since news of the company’s bankruptcy broke in mid-March after the toy giant struggled to refinance $400 million of its $5 billion debt. Their closure marks the third-largest retail bankruptcy in U.S. history, and not only does it affect toymakers and investors, but the economy as well. (Recent reports suggest that as many as 31,000 of the company’s former employees are now out of work in the U.S.)

Years of serious debt accumulation is to blame ultimately, but there were many other factors that lead to their death.

Here are five areas retailers and brands should improve upon if they want to avoid a similar fate.


Think Outside the Big Box

Take a look at a map of all the big box stores closing in 2018 and the first thing you’ll notice is their locations: suburban shopping destinations filled with similarly massive stores.

As Bloomberg recently reported, the U.S. was already over-stored long before the e-Commerce boom thanks to commercial real estate investments on the outskirts of cities big and small.

Recent studies suggest 60% of the world’s population will likely live in large cities by 2030, and that transition is already well underway. That means shoppers are going to have less physical space, and less money to fill it with.

If retailers want to stand out from their suburban contemporaries, they’re going to have to follow Target and IKEA’s footsteps and create smaller, more curated showrooms in urban locations. After all, that’s where their customers will be in twelve years time (if they’re not there already.)


Optimize Your Omnichannel

It’s understandable that some traditional retailers are nervous about upping their online presence — after all, how is it possible to compete with companies like Amazon without a substantial investment or proper infrastructure?

Toys “R” Us finally attempted to revamp their web store in May 2016 following years of court battles over a failed co-partnership with—you guessed it—Amazon, who had been beating them at their own game online for years. But it was too little too late. (As eShopWorld previously pointed out, the retailer had a lack of free shipping options, and some of Toys “R” Us’ items were selling on Amazon for $3 cheaper or less as recently as 2017.)

Still, by allocating a bit of your budget to e-Commerce solutions you’re further embedding your brand in the customer consciousness, and that’s important when more and more shoppers are doing independent research on products before stepping foot in stores, and wanting access to goods anytime, anywhere. (Also, contrary to popular belief, Millennials prefer going to brick-and-mortar locations, and by 2030 they’ll comprise 35% of all spending — invest in all avenues or your stores, physical or otherwise, will suffer.)


Make Shopping an Experience Worth Remembering

As I discussed in a previous blog post, major retailers need to re-think the in-store experience to keep customers coming back (or discovering their stores in the first place). Toys “R” Us had been attempting to regain consumers by offering Nerf target practice, Pokémon trading card events and birthday parties, but it was too little too late.

Companies can get in on the game by offering events that educate and entertain consumers (preferably both) that use existing products as the focal point.


Empower Your Store Associates

In recent years, one of the complaints, when it came to Toys “R” Us, was its appearance: sparsely stocked shelves, and a lack of employees to look after them.

According to court filings, that’s because the business was more concerned with improving their in-store experience and growing their e-Commerce division. As previously mentioned, both are essential parts of many successful retail strategies, but at the end of the day, it’s important to remember that your store employees are the frontline of your brand — invest in their training and the whole business benefits.


Get to Know Generation Z

Wayne Gretzky famously said: “Skate to where the puck is going, not where it is.”

In retail, that means getting a firm grasp on the shopping habits of Generation Z, who contribute approximately $830 billion to U.S. retail sales annually (a number that is only expected to grow as they age).

A recent survey found that they’re spending more on food, beauty and video games than apparel. Retailers and brands, take note: diversify or die.



Marc Gingras is the CEO of Foko Retail, a retail execution platform. He is an entrepreneur and angel investor, and sold his last venture, Tungle.me, to Blackberry. Gingras holds an MBA from INSEAD, a MASc in Management Sciences from the University of Waterloo and a BASc in Mechanical Engineering.