If Toys ‘R’ Us liquidates, where will all the toy shoppers go?

By RetailFOXBusiness

Toys ‘R’ Us prepares to close 900 stores in US

FBN’s Cheryl Casone provides an update on Toys ‘R’ US, which is preparing to close 900 stores across the country.

Many are speculating that Toys “R” Us liquidation plans to shutter all of its U.S. stores is imminent after the toy giant announced plans to close all of its UK stores on Wednesday.

Continue Reading Below

The retailer has been struggling to keep afloat after a lackluster holiday season and failing to find a buyer to help the toy giant out of its massive piles of debt. But as with any retailer’s demise, many industry insiders are already weighing in on who could potentially capitalize off the toy giant’s death.

Although the likely winners will be Amazon, Walmart and Target, leading toy expert and CEO of TTPM.com Jim Silver says other big retail chains have already started to add more toys.

“Best Buy is expanding their toy selection. Party City is adding more toys. FAO is reopening. Kohl’s and JC Penney will carry more toys,” Silver tells FOX Business, adding that he also expects smaller specialty chains to expand as a result.

Another possibility, adds Silver, is that one of the larger international toy chains such as UK- based Smyths Toys could now be looking to target the U.S.

Gerrick Johnson, a toy analyst for BMO Capital Markets, says if liquidation happens, the move will most likely only affect smaller toy companies, and giants like Mattel and Hasbro will likely gain market share because of their scale—eventually.

“It will be harder for new products to emerge and for untested concepts to be tried out,” Johnson tells FOX Business. “So there will be disruption in the near term if these stores liquidate.”

Many big toy makers, he says, will likely struggle this year as Toys “R” Us shutters 180 store locations across the country over the next two months because of the steep discounts it’s currently offering on toys.

“These goods are 20% to 70% off. And that sell-through won't generate reorders. So the first half, and potentially the full year, will be difficult for toy companies because of this,” Johnson says.

A representative for Toys “R” Us declined to comment to FOX Business in regards to the possible liquidation.

Toys “R” Us has been struggling for several months now. In September, just before the holiday season, the company filed for bankruptcy protection as its sales have been waning and debt was piling up. Then in late January, the retailer announced its plans to shutter roughly 180 stores across the country, wiping out one-fifth of its U.S. store fleet.