We have discussed the struggles in retail, notably in our May and June articles on the retail environment. Toys R’ US, the largest toy chain in the US, just filed for bankruptcy. Toys and games aren’t any less popular, but the sales have migrated to discount all-in-one outlets. Moreover, the Wall Street Journal observes that Toys R’ Us was “late to develop and expand its e-commerce business”, which gives Toys R Us fewer ways to compete against the ease of online purchase and delivery options.
We are still surprised that national retailers cannot manage to stave off bankruptcy now, just before we head into the all-important holiday season where sales are highest. As part of its bankruptcy filing, the company is raising $3 billion to stock shelves and hire additional staff for the holiday rush, but bankruptcy courts get to decide if they’re allowed to reserve that money or start paying off debtors. If Toys R Us doesn’t get access to funding quickly, they may be forced to shutter operations extremely quickly.