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Amazon Has Considered Buying Some Toys ‘R’ Us Stores

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Re: Amazon Has Considered Buying Some Toys ‘R’ Us Stores

#41

Post by maxerickson »

olivermarks wrote: post #32
ceejayoz wrote: post #29

Earlier quoted context omitted.

Cite for the above: https://www.bloomberg.com/news/articles/2018-03-16/who-kille... Buy company. Take out massive debts on company's books. Withdraw hundreds of millions in "fees". Let company collapse. Rinse, repeat.

Taking a corporation private, loading it with billions in debt, starving it of funding and sucking it dry before collapse should be a criminal offense IMO

I think the terms of the loans matter a little bit.

If the money is coming from investors that are getting bad advice, that's a problem. If Warren Buffett wants to risk $4 billion on some Bain scheme, meh.

Re: Amazon Has Considered Buying Some Toys ‘R’ Us Stores

#42

Post by filoleg »

mox1 wrote: post #21
vinhboy wrote: post #11

I think Amazon should do it. I personally believe Toys R Us just missed an opportunity to run a proper business. They have a ton of retail space, but every time I've been there, it's run like Walmart. Shit everywhere, no one to help you find anything, etc... There's nothing suburban parents like me want more than an indoor play space for my kid (for extremely hot or cold days). If they properly utilized their store a…

Their current business model is (was?) to price everything in the store 5-20% higher than elsewhere, but then offer coupons, sales, etc. to offset that. When our daughter was born we price compared them for a lot of big ticket items, but ultimately just bought online or at Target / Walmart. A few times a year they have a good deal on something (again with coupons) so we purchase, but walking into the store blind shop…

Their abhorrent aka non-existent return policies too. I am not a serial returner, but the inability to do so doesn't help in their favor when I am making a decision on where to buy.

Re: Amazon Has Considered Buying Some Toys ‘R’ Us Stores

#43

Post by martinald »

ceejayoz wrote: post #29
MadBohr wrote: post #17

Earlier quoted context omitted.

It's important to note that a lot of the failure of Toys R Us has to do with private equity buyout rather than a poor business model. Of course, their business model was flawed, but remember that Toys R Us was bought in 2005, and the toy market was MUCH simpler back then. Amazon was hardly the player it is now. The private equity firm then loaded them up with crippling debt. Move forward a few years, and enter Amazon…

Cite for the above: https://www.bloomberg.com/news/articles/2018-03-16/who-kille... Buy company. Take out massive debts on company's books. Withdraw hundreds of millions in "fees". Let company collapse. Rinse, repeat.

Are the companies that are writing these massive debts actually making money at the end of the day though? If that stops then the whole industry and practice will stop.

Re: Amazon Has Considered Buying Some Toys ‘R’ Us Stores

#44

Post by __abc »

mc32 wrote: post #4
DanCarvajal wrote: post #2

I mean there has to be an non-dilapidated Toy 'R' Us location somewhere right?

These are. I've been to one. Not a bad store at all. Resurrecting a highly nostalgic brand may be a viable option, if Amazon has some trick up their sleeves. The one thing they can't fix is low birth rates though, so it would have to transform the stores a bit.

Whole Foods me.

As a parent, put a craft beer/craft coffee in my hand (mark that up too, I'll pay) and give my kids and myself an experience, more than just a static display.

Blicks, a store for art supplies has done this with wine nights, painting lessons (with wine), etc.

Ignoring all the damn alcohol, it's brands that will compete by creating an experience that may stand a chance (IMO)

Re: Amazon Has Considered Buying Some Toys ‘R’ Us Stores

#45

Post by jonknee »

jgh wrote: post #5

On the topic of toy stores / toy store innovation, that American Girl doll store is insane. My wife and I went there to buy a doll for our friend's daughter for Christmas and holy hell is that place busy / kinda weird. It's like a Bloomingdale's or something for dolls. Kids can even sign up for "doll spas" and bring their dolls in to have their hair and nails done and stuff. Obviously I don't really get it because I'…

FWIW American Girl is owned by Mattel and Mattel is not doing well at all, in large part because American Girl is dying.

https://www.marketwatch.com/story/mattel-shares-plunge-as-no...

Re: Amazon Has Considered Buying Some Toys ‘R’ Us Stores

#46

Post by olivermarks »

maxerickson wrote: post #41
olivermarks wrote: post #32

Earlier quoted context omitted.

Taking a corporation private, loading it with billions in debt, starving it of funding and sucking it dry before collapse should be a criminal offense IMO

I think the terms of the loans matter a little bit. If the money is coming from investors that are getting bad advice, that's a problem. If Warren Buffett wants to risk $4 billion on some Bain scheme, meh.

Private equity deals where a major employer is loaded with debts on purchase usually cripple the company and turn it into an also ran. You'd think politicians would insert themselves at this point particularly when companies collapse. TRU is by no means the first company this has happened to.

Manchester United in the UK were bought and loaded up with debt. They are ok now as the team is doing well, but if they stumble there is a colossal mountain of debt that still needs servicing regardless.

The whole concept of being allowed to financialize delicate businesses needs more regulation IMO

Re: Amazon Has Considered Buying Some Toys ‘R’ Us Stores

#47

Post by jerrysievert »

gedy wrote: post #18
vinhboy wrote: post #11

I think Amazon should do it. I personally believe Toys R Us just missed an opportunity to run a proper business. They have a ton of retail space, but every time I've been there, it's run like Walmart. Shit everywhere, no one to help you find anything, etc... There's nothing suburban parents like me want more than an indoor play space for my kid (for extremely hot or cold days). If they properly utilized their store a…

Issue is, a company does that and then parents still search and buy the toy for cheaper on Amazon from their phone. I have family members who run a small retail store with excellent inventory and service, and they barely scrape by due to people show rooming. They are not in toys, but they simply cannot compete on price, as Amazon, etc sells it cheaper than they can buy from the suppliers.

it's been a couple of years since I went into a toys r us, but the reason why I stopped going wasn't the very messy store, nor the lack of inventory, but the prices being about 20% above MSRP, especially when I can go to a specialty store a couple of blocks away and pay MSRP for a lot more inventory.

I think that the idea of a "destination store" has been dying a slow death, and making them a lot more unattractive is accelerating this.

as for toys, I found myself paying a little over MSRP (not 20%) at my local walking-distance boutique store, but mostly because it was in my neighborhood.

Re: Amazon Has Considered Buying Some Toys ‘R’ Us Stores

#48

Post by nradov »

MadBohr wrote: post #37
olivermarks wrote: post #32

Earlier quoted context omitted.

Taking a corporation private, loading it with billions in debt, starving it of funding and sucking it dry before collapse should be a criminal offense IMO

Unfortunately that's the nature of business. Sometimes it's impossible to predict market situations 10, 15 years out. I doubt anybody at Bain could have predicted in 2005 that Amazon would completely dominate the retail market in 10 years. Also, some responsibility falls on the debtors themselves for taking on potentially risky investments, but there are so many loopholes and gotchas here that I really can't comment…

Amazon doesn't dominate the retail market. Walmart still has much higher retail revenue.

Re: Amazon Has Considered Buying Some Toys ‘R’ Us Stores

#49

Post by excalibur »

empath75 wrote: post #6

> Additional stores would give Amazon space to showcase its popular Echo line of devices, which run on the Alexa voice-activated platform. I'm pretty sure they're not going to buy a big box retailer to jam a bunch of echos into it.

Obviously they would sell other things too.

But the Echos would likely be front and center. The toys for enriching young children would be replaced by toys for enriching young AI. It's like a private hell designed specifically for a toy store.

Re: Amazon Has Considered Buying Some Toys ‘R’ Us Stores

#50

Post by lbotos »

jobu wrote: post #27
vinhboy wrote: post #11

I think Amazon should do it. I personally believe Toys R Us just missed an opportunity to run a proper business. They have a ton of retail space, but every time I've been there, it's run like Walmart. Shit everywhere, no one to help you find anything, etc... There's nothing suburban parents like me want more than an indoor play space for my kid (for extremely hot or cold days). If they properly utilized their store a…

> I personally believe Toys R Us just missed an opportunity to run a proper business. Toys R Us has been struggling to pay off $6 billion in debt from the Bain Capital takeover in 2005. They didn't have the capital or the margins to invest in maintaining their stores, let alone competing with Amazon. Buying a company with debt and then forcing that company to pay off that debt is fairly common, but for some reason it…

Isn't that the nature of a business in America? It acts as a "corporate veil" and as long as you aren't using business funds inappropriately, the business is the "last stop".
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