Toys R Us staff ‘badly let down by management’
The demise of Toys R Us is the unfortunate but inevitable conclusion of a retailer that lost its way and forgot core retail competencies, according to Neil Saunders, Managing Director at GlobalData Retail.
It is set to shutter or sell all of its 885 stores in the US in the coming months, putting about 33,000 jobs at risk. In the UK, meanwhile, all stores will close in the next six weeks following the chain's collapse into administration. “Even during recent store closeouts, Toys R Us failed to create any sense of excitement. Moreover, its so-called heavy discounts remained well above the standard prices of many rivals like Amazon and Walmart. Arguably, if Toys R Us can't successfully execute a closeout and stimulate interest, then it has little to no chance of trading under normalised conditions,” says Saunders.
Whilst the retailer could blame suppliers and competitors for its demise, the primary responsibility lies with poor management decisions, Saunders believes. As the competitive dynamics of the toy market intensified, management failed to respond and evolve. As such, the brand lost relevance, customers and ultimately sales.
“Admittedly, the leveraged buyout which burdened the company with debt reduced the room for manoeuvre and left Toys R Us vulnerable. Questions should be asked as to the wisdom of this particular financial transaction which weakened the sustainability of the company,” he adds. “The main tragedy of liquidation will be the extensive loss of jobs. In our view, those on the shopfloor have been badly let down by management and those doing financial deals.”