Christmas without Toys R Us: What does it mean for toy retail?

With the crucial Christmas trading season in full swing, which can account for as much as 25 per cent of yearly sales for toy retailers - the Retail Gazette takes a look at what the absence of Toys R Us will mean for the sector.

Toys R Us

Throughout 2018, California endured the most destructive and deadly wildfire season on record, with over 8000 fires destroying an area of 1,890,438 acres and killing hundreds.

Amid this widespread devastation and the destruction of 130 million trees, one flower is poised to thrive, granted life by the inferno.

The Iliamna Bakeri, more commonly known as Baker’s Wild Hollyhock, is rife in Northern California’s woodland regions and its bright pink flowers only bloom after a large fire, popping up in their millions amongst the ashes.

2018 has been similarly unkind to the retail industry, with a storm that has brought about the destruction of dozens of retailers, costing thousands of jobs.

One of the most significant victims this year was Toys R Us, which traded from over 100 stores in the UK and employed over 2000 people. It also accounted for an eyewatering 10 per cent of the total toy market in the country before it collapsed in March.

With the Christmas season in full swing, which can account for as much as 25 per cent of yearly sales for toy retailers, vibrant and healthy flowers are beginning to bloom from the ashes of the fallen giant.

“You have a once in a lifetime change to your business but to have twice in a lifetime change to your business, it’s phenomenal, it’s massive,” The Entertainer founder and owner Gary Grant told the Retail Gazette.

The Entertainer, one of Toys R Us’ closest rivals, opened 16 new stores this year and is estimated to have increased its share of the UK’s toy market by one per cent.

“The reason for the rapid expansion over the last 10 years is mainly due to my first once in a lifetime break, which was when Woolworths went into administration and finally closed towards the end of 2008, and then Toys R Us going into administration and finally closing at the beginning of 2018,” Grant added.

“We will grow this year by approximately 25 per cent, the lion’s share of that growth has come from the high street.”

Although Toys R Us’ demise has presented huge opportunities for The Entertainer to tighten its grip on the UK’s toy retail market, the widespread troubles in the sector have cleared the way for it to quickly and cheaply grow its store estate across the country.

“There have been so many retail shop opportunities this year as other retailers have closed or trimmed down their store portfolio,” Grant said.

“We’re being offered so many shops now we’re able to pick and choose. Because costs have gone down, rents have gone down on many shops in the UK, it’s possible for our model now to work in so many more locations. We will open significantly more shops next year than we’ve opened this year.”

Other less direct competitors to Toys R Us have also been granted the opportunity to grow in its absence.

“You have a once in a lifetime change to your business but to have twice in a lifetime change to your business, it’s phenomenal, it’s massive”

Hawkins Bazaar, which has transitioned away from being a classic toy retailer and more into the gifting and gadgets market, has started to expand its stock into areas it would have never considered before this year.

Its chief executive David Mordecai said: “What it’s meant for people like us, we’ve introduced Lego this year which we might not have done had Toys R Us been around.

“Because they aren’t, we’ve been quite keen to add another brand into our store, we think there’s a gap in the market for us to stock the product as well.

“It’s not a massive opportunity, but there is an opportunity for us to look at some of the brands they would have stocked and think actually there is a market there for us.”

One of the key reasons attributed to Toys R Us’ decline was its lack of competitive online offering, and failure to effectively react to the growing threat of online retailers.

Although Grant said that its decline, along with Woolworths’, had effectively “cushioned the impact of online” for physical toy stores, their online counterparts were still given their share of opportunities.

Ebay toys category manager Alice Winter said this was especially true of smaller independent retailers selling on the platform.

“Obviously we did see a bit of a gap when Toys R Us stopped selling, but because we have such an array of toy sellers on the site, they kind of picked up the sales,” she said.

“The small to medium size retail businesses started to pick up those sales, which is really positive for those types of sellers.

“It’s a huge opportunity especially for the smaller lesser known sellers we have on the site to get eyes on their products and sell their brand on Ebay.”

Retail is an ecosystem, and like the flowers absorbing the nutrients from the remains of burnt plants in order to thrive themselves, the fall of one business provides sustenance for a myriad of others.

Toys R Us story is far from unique, and it’s likely that more retail institutions will crash and burn in the coming year. But, among the wreckage the shoots of young retailers will emerge, grow, and blossom.

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