Harve Light: Where Will All The Toys Go? – The Toy Book

Harve Light wrote an article for The Toy Book titled “Where Will All The Toys Go?”

TOYS “R” US FILED FOR BANKRUPTCY protection almost nine months ago. The battles over assets are still raging in the courtroom, but the industry marches on. The filing’s immediate impact on the supply chain was harsh. Stores closed and thousands lost their jobs. As expected, there was a great deal of panic despite the fact that many anticipated the filing. What would happen to the supply chain? Worries about follow-on bankruptcies were common. Enough time has passed that now is a good time to ask the question, “Was there a ripple effect?” More specifically, what was the effect on suppliers and their liquidity? What happened to all the vacant real estate? How has the toy industry adapted? What are some of the unintended consequences?

It is a little early to see the full impact on suppliers. They still have to go through the first holiday season since Toys “R” Us’ exit, but early indications point to two very different results. As expected, the other major retailers—Amazon, Walmart, and Target—are picking up a lot of the slack. The margin compression for suppliers in the U.S. is beginning to show itself, and it will have a negative impact on supplier profitability. The large toy makers appear to be the big winners in the race for share with these retailers. In addition, the bigger companies continue to deploy resources for growth outside the saturated U.S. market.

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