The recent bankruptcy filing at Toys “R” Us has roiled the toy industry. Yet the struggles at the company are not new. The firm was taken private in a $6.6 billion leveraged private equity buyout in 2005, with the aim of turning the chain around, but the resulting debt has proved to be unserviceable.
Toys ‘R’ Us Might Be Dying, but Physical Retail Isn’t
Stores that adapt to a digital model are doing just fine.
September 20, 2017
Summary.
The recent bankruptcy filing at Toys “R” Us has roiled the toy industry. The news is part of a larger trend of closings that some are calling the retail apocalypse. The rise of e-commerce, combined with a shift in consumer preference toward dining out over shopping and with years of overbuilding, has made for distinctly unattractive economics in traditional retail. Take a closer look, however, and the prevailing narrative isn’t quite what it seems. Amazon has made a big push into physical retail, capped off by its purchase of Whole Foods. Other firms, ranging from Apple to Warby Parker, have moved into physical stores. So, clearly, the problem isn’t with retail itself but with the inability of legacy firms to adapt to a new model.
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Accelerate your career with Harvard ManageMentor®. HBR Learning’s online leadership training helps you hone your skills with courses like Strategy Planning and Execution. Earn badges to share on LinkedIn and your resume. Access more than 40 courses trusted by Fortune 500 companies.
How to develop a winning strategy—and put it to work.