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Toys ‘R’ Us Didn’t Have to Die
91–100 of 226 posts
Re: Toys ‘R’ Us Didn’t Have to Die
#92Earlier quoted context omitted.
What I don't get is there are a lot of empty storefronts and places moving that I see... and retailers say the rents are still sky high for those storefronts. Is it really worth the property owners keeping them empty?
I’ve been wondering the same thing. There’s a former Borders in Pasadena that sits empty for most of the year, and only houses a Halloween costume store seasonally. They finally brought down the part of the sign that said “Borders” a few months ago, but they left up the “Books - Music - Cafe” part. It’s clearly not worth renovating, but maybe the seasonal business brings in enough that it doesn’t need a tenant the re…
The Borders thing is a pattern that happens all over the country; pop-up Halloween costume stores love old Borders locations, and other abandoned retail spaces.
I suspect it's a combination of factors that leads to this:
* Retail was heavily overbuilt leading up to the 2008 market crash, so even a decade later there's oversupply of retail real estate compared to demand for it
* The economics of brick-and-mortar retail haven't gotten much better, which further depresses demand
* There are probably uses for those properties as tools for tax arbitrage which are best served by keeping them empty (and in California, the fear of Proposition 13 reassessment being triggered by redeveloping the property)
So leaving it empty most of the year, with the seasonal rental, may be the best option for the owner of the property.
Re: Toys ‘R’ Us Didn’t Have to Die
#93Despite the title and the focus on the form of financing, none of the facts in the article even suggested to me that the company would be in any better shape if it had used equity financing rather than debt. It sounds, rather, like an unprofitable business that no one in their right mind would give any more money. If someone thinks they can figure out how to make a workable business out of big box toy stores, it soun…
You're missing the key piece: Toys R Us didn't go into debt for any good business reason, it was bought by a private equity firm and loaded with debt it didn't need. This is how private equity works: 1. A PE firm uses a combination of other people's money (limited partners a.k.a investors) and debt to buy a company. 2. The PE transfers the debt to the company's books. This way, if the company goes bankrupt the PE fun…
Why is this legal?
Re: Toys ‘R’ Us Didn’t Have to Die
#94I read the whole article, and I didn't really see a convincing argument that it didn't have to die. Sure, it could have eked out a few more years... but it was living on borrowed time. Not only do most people shop online now, most toys are also online. I imagine most parents put money into TV shows, video games, iPhone apps, etc.
There's nothing about the brick & mortar toy space that's inherently living on borrowed time. It was Toys 'R' Us' own mismanagement that doomed it. Toy stores can be a destination. Provide a compelling experience for parents and kids alike. It's easy to imagine a space where kids get to play with toys hands-on, and parents get to judge for themselves whether they think they're appropriate in terms of fun and quality—…
And the ultimate toy destination store FAI Schwarz also went out of business. Maybe Toys R Us could have done better but they were in a place where digital was making big gains.
I’m not sure to what degree you can focus on elaborate experiences for stores that are in every shopping mall.
Re: Toys ‘R’ Us Didn’t Have to Die
#95Earlier quoted context omitted.
What I don't get is there are a lot of empty storefronts and places moving that I see... and retailers say the rents are still sky high for those storefronts. Is it really worth the property owners keeping them empty?
> Is it really worth the property owners keeping them empty? Yes. It's a tax dodge. [1] [2] The owners "...hold out for higher rents to increase the worth of their properties because value is based on future income stream...They can afford to forego current rental income, waiting for higher-paying tenants because they claim big business losses. Landlords get a tax loss from negative rental income when no rent comes i…
As someone who also owns such vacant properties, loses can't continue indenfinately i believe.
I sold my company (had a legal battle with my partners which destroyed me emotionally and now I find it hard to trust others, naturally i am risk reverse now), and deployed excess capital in these vacant kept properties. I simply have no desire to earn extra income on them. I hope I'll make some amount on appraisal.
Secondly, not everyone is in the market for maximizing their gains. It would cost more of my time if I ran into a bad tenant who sued me (if partners i known for years couldn't resist, what makes a random one any different? No amount of rational explanation is going to change my belief. Once you are burned, you even start hating candles). I optimize for less risk and if it comes at zero return or slight loss, all good.
Re: Toys ‘R’ Us Didn’t Have to Die
#96My kids love video games, I thought toys don't give them enough kick.
Re: Toys ‘R’ Us Didn’t Have to Die
#97Earlier quoted context omitted.
I remember reading 20 years ago how retail stores need to turn into experience destinations. I think the perceived risk at the time was mail order rather than the internet. However, even with Apple and the Apple Store there for all to see, few retailers still seem to get this. Without the hands on element, they are really fighting a losing battle vs ecommerce.
Apple sells high-margin products that are typically priced the same (or roughly so) everywhere - I don't know that there are interesting lessons for all industries to learn here. Wasn't Ron Johnson's attempt to take some of those lessons to JC Penney pretty disastrous? Everyone always has the same ideas when retailer struggles come up, and a lot of the ideas would undoubtedly make many stores more pleasant to visit.…
I’m a bit surprised that we haven’t ended up with some formal manufacturers showrooms fronting Amazon or whatever. But I guess as long as some big box retailers hang on there isn’t the incentive
Re: Toys ‘R’ Us Didn’t Have to Die
#98Begs the question, what kinds of local businesses are structurally safe from being disrupted by Amazon? Some that come to mind:
* Food - restaurants, fast food, pizza, takeout
* Social experiences - bars, cafes, arcades, comedy clubs
* Things that can't be shipped - gas stations, perishables
* Things you want right away - milk, delis, convenience stores
* Things that can't be commoditized - Copying keys
* Services - Barber shops, mechanics
Other ideas?
Re: Toys ‘R’ Us Didn’t Have to Die
#99Earlier quoted context omitted.
After buying a Serta from Amazon and a Tuft and Needle, I will never buy a mattress again without being able to lay on it first. Disrupted? Try to fit a king foam mattress back in the box to meet return obligations when you don’t like it, before we touch on the counterfeit product issue from Amazon.
Is “Certa” a typo (for “Serta”) or some kind of knock off? I’ve had great experiences with buying mattresses online. The secret is to have friends with a variety of mattresses so that their homes become your showroom.
That's an absolutely horrible option compared to going to a mattress store and trying different ones for yourself.
Re: Toys ‘R’ Us Didn’t Have to Die
#100Retailing seems to be dying in US irrespective of the company: https://www.bloomberg.com/news/articles/2018-04-17/retail-st... Couple of years ago, one of my friends bought a store at a strip mall. The store was making a loss. And the previously owners were an elderly couple. So my friends thesis was that they weren't exactly tuned into the digital presence business and it was still entirely possible to run a store i…
> Couple of years ago, one of my friends bought a store at a strip mall. The store was making a loss. And the previously owners were an elderly couple. So my friends thesis was that they weren't exactly tuned into the digital presence business and it was still entirely possible to run a store in US.
Did your friends have extensive experience running such a business?