Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Toys ‘R’ Us Didn’t Have to Die

bloomberg.com

Post reply on HN
Print view View original

221–226 of 226 posts

Re: Toys ‘R’ Us Didn’t Have to Die

#221

Post by jonhendry18 »

bunderbunder wrote: post #171
pouetpouet wrote: post #86

Earlier quoted context omitted.

The US have too much retail space. Retail is not really dying there is too much of it. https://www.statista.com/chart/9454/retail-space-per-1000-pe... https://qz.com/1032723/theres-much-more-empty-retail-space-i... https://www.theatlantic.com/business/archive/2017/04/retail-...

I wonder if it's also a case of there being too much of the wrong kinds of retail space. If there's a retail store within a mile of our house, I'll happily walk to it and do my shopping there. Especially when it's a pleasant day outside, that's an enjoyable way to get out of the house and get a little light exercise. If the only kind of store left that sells what I need is one of the big box stores, so that going the…

Back in the day there was more variety and more general-audience stores: small bookstores, magazine stands, maybe a mid-high end audio store, small toy store, music/video store, maybe a small pharmacy location.

Today, to put it bluntly, the stores skew heavily toward women-oriented products (clothing, accessories, underwear). Which is fine, and probably inevitable (clothing and whatnot are the kinds of things people prefer not to buy online). But there isn't of as much interest or utility for anyone else.

Re: Toys ‘R’ Us Didn’t Have to Die

#222

Post by jonhendry18 »

padobson wrote: post #207
bunderbunder wrote: post #171

Earlier quoted context omitted.

I wonder if it's also a case of there being too much of the wrong kinds of retail space. If there's a retail store within a mile of our house, I'll happily walk to it and do my shopping there. Especially when it's a pleasant day outside, that's an enjoyable way to get out of the house and get a little light exercise. If the only kind of store left that sells what I need is one of the big box stores, so that going the…

What if your house was the shopping mall? When Sears, Macy's, JCPenny, etc all die, there's going to be a lot of shopping malls with big empty spaces. If those spaces were transformed to residential, it'd be trivial to walk to all the little shops currently between the big anchor chains, regardless of climate or season.

There's a former mall near Yale in New Haven that was converted to upscale apartments with some retail at ground level.

Re: Toys ‘R’ Us Didn’t Have to Die

#223

Post by jonhendry18 »

aviv wrote: post #11
thisisit wrote: post #8

Retailing 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…

In a few years strip malls will be occupied only by food businesses, pharmacies, check cashing places, and urgent care clinics.

In my town in Connecticut, medical offices are multiplying like rabbits.

Re: Toys ‘R’ Us Didn’t Have to Die

#224

Post by jonhendry18 »

jaysonelliot wrote: post #10
gkoberger wrote: post #5

I 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—…

" It was Toys 'R' Us' own mismanagement that doomed it."

It was the private equity investors who loaded it up with debt in order to cash out who doomed it.

You don't have a hope in hell of adjusting to market changes when your funds are tied up paying off the loans your owners made you take on in order to fund their takeover.

Re: Toys ‘R’ Us Didn’t Have to Die

#225

Post by eldavido »

nradov wrote: post #205
eldavido wrote: post #185

Earlier quoted context omitted.

I think this is a general phenomenon in finance/valuation and I'm sure someone has studied it. Even when the value of something has fallen (as measured by market comparables, ability to generate incomes like rent, etc) people become anchored to a valuation and think they'll get the price they want if they just hold out a little longer. There's something psychologically difficult about accepting that you aren't going…

Large commercial landlords are usually fairly rational. They aren't as likely to fall victim to the sunk cost fallacy as individual homeowners are. More likely they're highly leveraged and gambling that prices will rise enough in a few years to deliver a huge return.

This phenomenon is a close cousin of the sunk-cost fallacy but it's not quite the same thing.

I'm talking about rationally assessing that the value of an asset has fallen, vs. sunk cost's "we've come this far..." - even if you're rational, it can be hard to sell and psychologically tolerate taking such a huge loss.

Re: Toys ‘R’ Us Didn’t Have to Die

#226

Post by gaius »

jonhendry18 wrote: post #224
jaysonelliot wrote: post #10

Earlier quoted context omitted.

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—…

" It was Toys 'R' Us' own mismanagement that doomed it." It was the private equity investors who loaded it up with debt in order to cash out who doomed it. You don't have a hope in hell of adjusting to market changes when your funds are tied up paying off the loans your owners made you take on in order to fund their takeover.

It’s insane that as a PE you can borrow money, buy a company with it, transfer the debt to the company and you magically own the company having paid $0 of your own money for it.
Post reply on HN