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Toys ‘R’ Us Didn’t Have to Die

bloomberg.com

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Re: Toys ‘R’ Us Didn’t Have to Die

#51

Post by Analemma_ »

hn_throwaway_99 wrote: post #20
voidmain wrote: post #6

Despite 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…

It at least sounds plausible to me that you could make a toy store a "destination" business if you did something to differentiate it from Amazon: kids parties, video game tournaments, something. You'd have to transform what it means to be a "toy store". Of course, that takes a lot of money, and with Toys-R-Us' debt load there was no way they could have afforded that.

I don't know if it scales up to big box stores, but this– plus adding food/café– is what a lot of game and hobby stores have been doing, and it seems to be working. There at least five stores like this in the Seattle area (2 of Café Mox, Meeples, etc.) and they seem to do good business.

Re: Toys ‘R’ Us Didn’t Have to Die

#52

Post by ggg9990 »

PhasmaFelis wrote: post #29
ggg9990 wrote: post #25

Toys R' Us was dead so many years ago. I went there once to buy a present for a kid and it was just so depressing and not at all a fun or cheerful place. When I had a kid of my own I never took her there. I regret it not being what it was when I was a kid but I don't regret it going from its state ~10 years ago to dead.

I wonder if what you're actually describing is the change in your adult perspective, not in the store. As a kid, and as an adult who likes toys, shelves piled high with toys are "fun and cheerful" all by themselves. I'm not sure what else you felt was lacking.

The kids in the store weren't happy or excited to be there, that's what was different from when I was a kid.

Re: Toys ‘R’ Us Didn’t Have to Die

#53

Post by duxup »

bunderbunder wrote: post #47
duxup wrote: post #41

Earlier 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?

Wild guess: Dropping the rents would prompt their remaining tenants to renegotiate their contracts.

Maybe. It's just strange as I've seen large % of commercial areas stay empty, they keep up the place, but almost nothing in the spaces, for years.

Re: Toys ‘R’ Us Didn’t Have to Die

#54

Post by yourapostasy »

duxup wrote: post #41
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…

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 in, which cushions their lack of cash flow."

There are also perverse incentives structured by the debt instruments securing these properties. [3]

There's some more miscellaneous reasons, like not wanting to hassle with renegotiations from existing tenants who hear about a lower psf/psm rent of a new tenant, not wanting to attract the "wrong" class of tenant, etc., but by and large, the money reasons talk loudest.

High real estate costs preventing affordable, energy-dense and hyper-efficient living and working for most of the world's population are imposing quite significant externalities around the world. Not really discussed much though, as it gores too many oxen. Saliently changing this status quo would require fundamental changes in how real estate and credit interact, and that's not going to happen without some real not metaphorical blood spilling.

[1] http://www.nydailynews.com/opinion/change-math-keeping-nyc-s...

[2] https://gizmodo.com/full-bank-accounts-empty-storefronts-the...

[3] https://commercialobserver.com/2016/09/soaring-retail-rents-...

Re: Toys ‘R’ Us Didn’t Have to Die

#55

Post by beedogunami »

wgerard wrote: post #39

What a trip. I used to go to the Times Square location with people who came in from out of town, as an attraction for when they inevitably wanted to check out Times Square. The article doesn't really do justice to what a spectacle it was (which is saying something, since the article calls it out repeatedly). The person-sized Lego Hulk they built for that store is still my phone background. Made this even more shockin…

[dead]

Re: Toys ‘R’ Us Didn’t Have to Die

#56

Post by ngold »

gkoberger wrote: post #22
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's easy to rattle off a list of things on HN, but a lot harder to build. If people were invited to come play with toys, they'd just do it for free, enjoy the day, and buy it online after. Your other ideas just seem like... free babysitting? It's not like parents are going to shop for toys while their kids are babysat for free. I agree the stores aren't great now... but they were working with insane debt and a dying…

History of fun podcast has an good run down of how they innovated through history. Sadly they did not this time, and pumped and dumped a great iconic property.

Re: Toys ‘R’ Us Didn’t Have to Die

#58

Post by xapata »

toomuchtodo wrote: post #17
whatsstolat wrote: post #15

Earlier quoted context omitted.

Nope that shit is getting disrupted. Ultimately mattresses will come from amazon.

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.

IKEA has some good mattresses that you can try in the store. And many are roll-packed for easy transport from the store.

Re: Toys ‘R’ Us Didn’t Have to Die

#59

Post by seandougall »

duxup wrote: post #41
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…

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 rest of the year. But also, the store is huge and its layout is unwieldy for most types of retail.

What I don’t understand as well is how many empty storefronts around here still have Radio Shack signs above the doors, even in what should be prime locations. I’ve started wondering if having been a Radio Shack is a curse of some sort.

Re: Toys ‘R’ Us Didn’t Have to Die

#60

Post by suresk »

benjaminwootton wrote: post #44
triviatise wrote: post #36

I dont know the economics of our local toy stores, but the ones that seem to thrive allow you to actually play with the toys. If it was more like a theme park or a playground you would get parents to bring their kids in just to play. For example, let kids drive power wheels around a track. Have playscapes that they can play on and buy. And sample toys that kids can play with.

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. But people still buy based on cost, and that makes it hard to compete with a company who has a much lower cost model than a physical retail store and has much larger scale.

I don't think retailers will stop the bleeding and start implementing some of these ideas until they can figure out how to solve the showrooming problem. They may never do so, and physical retail in most categories will be a distant memory for most of us.

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