Toys R Us is one of the largest toy retailers in the world, but the brick and mortar giant may be in trouble. The company has to pay off $400 million in debt in 2018, and it has hired the Kirkland & Ellis law firm to assist it. While it will likely try every other avenue possible to avoid doing so, there is a possibility that Toys R Us will have to file for bankruptcy next year.
If Toys R Us files for bankruptcy, it will be following in the footsteps of many other retail chains, like RadioShack and Payless ShoeSource. Sales at brick and mortar stores have suffered in recent years thanks to more shoppers choosing to spend their cash at online retailers like Amazon or digital products, leading to losses almost across the board, so it’s not surprising that Toys R Us is struggling as well.
In terms of video games specifically, Toys R Us is far from the only store that is hurting in the current market. While GameStop may not be on the brink of bankruptcy, dips in hardware and software sales have seen it close 150 stores worldwide. And if trends continue, GameStop will have to close even more stores over the next few years.
While Toys R Us and GameStop may be in dire straits, there is some hope for the companies yet. The Nintendo Switch launch has proven to be successful, with units flying off store shelves since the console was made available this past March. The SNES Classic Edition is sure to be a major hit as well, though Toys R Us may be missing out on some business by not selling SNES Classic pre-orders. 2017 will also see the launch of the Xbox One X, so there’s plenty of new gaming hardware that could help bolster holiday sales for Toys R Us this year.
In terms of software, the industry will see quite a few big games launch between now and the end of the year. For example, Super Mario Odyssey is scheduled to launch on October 27th as a Nintendo Switch exclusive, and November 3rd will see the release of Call of Duty: WW2, which could very well be the best-selling game of the year. Both these games and others releasing over the next few months could help Toys R Us improve its sales at its various locations.
With new software and hardware available this year, Toys R Us may be able to turn around some of its misfortunes and avoid filing for bankruptcy. In the meantime, it’s clear that these retail giants will need to figure out a way to evolve with the market or face more closures.