Who Will Be The Next “Toys 'R' Us”?

Who Will Be The Next “Toys ‘R’ Us”?

Toys Were Us

March 23, 2018, marked the start of what’s been called “the biggest, if saddest, Toys ‘R Us sale ever”. It’s the closing-down sale of a brand that has a special place in every kid’s heart, as it liquidates all its stores, roughly 700 of them in the US including Babies ‘R Us locations.

What is telling, however, has been the market’s reactions to these sales.

For example, shopper @DavidConlee ironically tweeted: “Toys R Us liquidation sale = 5% off Legos.  So now they’re only 15% more expensive than Amazon.  Why are these guys going out of business again? #toysrus”

There’s a bigger story here. It’s the story of brick & mortar stores competing with online retailers, and it’s about which of these online giants are going to step into the space left vacant by Toys ‘R Us.

Who Are The Other Big Players In The Space?

Hovering over the dying Toys ‘R Us brand are 2 main players. Target may be eyeing some of the real estates, but those looking at the billions of dollars in toy sales that are now up for grabs are old adversaries Amazon and Walmart. These giants, who many believe were the reason Toys ‘R Us went bankrupt (some believe they actually pushed them over the edge with aggressive pricing strategies), are certainly licking their lips at the prospect of getting more involved with this market.

There is enough to go round, and many independent online retailers are sure to cash in as well.

While Amazon is known to be strong in the online toy business, what many people underestimate is how powerful Walmart is in this space. In general, Walmart has over 3,500 Supercenters in the US. These are just their flagship locations. These stores employ over one million people nationwide and contribute to Walmart US sales of $315 billion (2017).

They are the largest seller of toys in the US and have been building relationships with toy makers, offering high-profile exclusive products, and providing great pricing for a while now.

Amazon, meanwhile, is the largest seller of toy and baby products online in the US as of 2016.

Both will be girding for battle over this segment, and we are sure to see fireworks in the months ahead.

Bigger picture: Amazon vs Walmart

As Dennis Green notes, “As more and more customers move online, retailers are racing to convince them to shop on their website over a competitor’s. The two companies that have captured many of those customers are Amazon, and, to a smaller extent, Walmart. It seems on the surface level that the two retailers’ offerings now might be equal in terms of price and convenience.”

He goes on to point out that Walmart experienced some bumps with its online offering in the most recent quarter, falling to 23% online sales growth from 50% in the previous quarter.

Amazon, however, broke records this holiday season, with some analysts estimating that they were behind nearly half of all online sales over this period.

Conclusion

It’s been called “The Story of Our Time”. Amazon vs Walmart is about more than 2 companies. It’s about a changing consumer landscape, about the future replacing the past, and has lessons and implications for any business, but particularly for online businesses.

At Market Beyond, we recognized this early and created a platform and a set of tools to allow businesses to compete – and win – in this changing, challenging environment. So if it’s real-time, actionable insights you need, or intelligence on competitor moves that you wish you had, Markt Beyond can provide these and give you that edge to be successful in the Amazon/Walmart era.

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