With the Death of Toys R Us, Who Will Dominate the Toy Market This Festive Season?
Big-box retailers such as Walmart and Target are making the most out of the death of Toys R Us this festive season. From the looks of it, it’s paying off according to information released by industry aficionados.
At one point in time, Toys R Us was one of the biggest toy retailers in the United States, but all that came to an end in June after they closed down their final stores in the country.
From Glory Days to Final Chapter
At the time, information released by Jefferies shows that the company accounted for a whopping 20 percent of the toy sales in the US in 2017!
That being said, some retail experts are worried that the liquidation of the company would not provide a sizeable opportunity for toy sales this festive season primarily because a number of retailers would not be as enthusiastic regarding this category of sales.
Nevertheless, anecdotal evidence and early data show that early holiday sales are not being predicted to follow this trend at the national level.
The former CEO of Walmart, Bill Simon, informed the CNBC that he was thrilled to see the fight for the toy business was back on as the Black Friday promotions and Thanksgiving Day Sales kicked off last week.
Could Target Take the Toy Dominance Award Home?
On Friday last week, the former CEO of Walmart further predicted that Target would be the winner in this year’s toy race. That being said, he still believes that the demand for toys will continue to rise and there will be plenty of people looking to get a hold of these accessories during the Black Friday events.
In response, a lot of grocery chains, department stores, and drugstores have apparently put aside space for toys in their stocks amid rumors of bankruptcy.
As a matter of fact, Best Buy, which is an electronics retailer, has proceeded to sell Mattel Barbie dolls!
Indeed, even athletic stores such as Outdoors and Academy Sports have offered a discount to sporting goods that are under KKR & Co.
Nevertheless, experts have agreed that big-box operators such as Costco, Walmart, Target, and the likes of Amazon are some of the biggest beneficiaries of the Toys R Us capitulation.
Keeping this in mind, it has opened the opportunity for other retailers around the globe to maximize on the lucrative opportunity. For example, the recent reopening of FAO Schwarz, a famed toy seller, showed that the demand for toys was still high.
Former CEO of J.C. Penney, Allen Questrom, informed Squawk Box that closures of Toys R Us around the country was a massive plus for a number of small-business retailers, not only in the toys department, but in the apparel department as well.
Festive Season Looking Bleak in the Toy Department
That being said, the closure of other miniature stores such as Macy’s and Bon Ton are providing the large operators the opportunity to enjoy the expanding toy space.
Despite the closure of these stores, it does not mean that this will result in direct profitability for the companies poised to benefit from the closures
Indeed, this is the first time in over two decades that physical stores seem to have the upper hand as compared to the proverbial online companies this festive season.
However, the CEO of MGA Entertainment has made worrying concerns that not even one retailer, or a combination of them, will have the kind of influence that Toys R Us had during the festive season.
According to Isaac Larian in an interview with Closing Bell, he expressed his worry that there may not be any company with the ability to fill the void that Toys R US left behind. The main reason why is because unlike Walmart and other companies, Toys R Us specialized solely in toys!
In fact, in December, Toys R Us was famous for having some of the most desirable toys around. However, they would minimize some of their inventory in January, which means there would be a shortage of merchandise this Christmas.
Increase in Stock Value
As a result of the current situation, the shares of Walmart have risen by up to 1.5 percent during intraday trading on Friday last week, with consumers capitalizing on Black Friday sales.
Surprisingly, Target’s stock catapulted as a result of its silenced third-quarter earnings, having shed more than 2 percent intraday.
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