Geoffrey LIVES! The resilience of a good brand.
So, you thought Toys "R" Us was dead? Think again.
A brand that has touched the lives of so many people doesn't simply vanish into oblivion. Once again, this proves that when a brand connects with consumers on an emotional level, especially children, it can endure despite the odds and continue to thrive in an ever changing commercial landscape.
The news in late 2017 that the Toys "R" Us retail chain was going under was received with great sadness by millions of longtime customers and fans who grew up visiting its stores across the United States. In fact, there was a tremendous outpouring of public melancholy over the announcement. Everyone from television personalities to your next door neighbor seemed to lament the closing of the chain. They all appeared to have one thing in common: an emotional connection to the brand. Nearly everyone had a fond childhood memory or story about visiting a Toys "R" Us store.
Many have placed the blame for the toy chain's downfall on the rise of ecommerce, particularly Amazon. However, that likely played only a small role, if any, in the company's fate.
Toys "R" Us was already deep in debt and facing serious financial trouble long before Amazon became the dominant force it is today. During the late 1990s and early 2000s, increasing competition from retailers with lower prices, such as Walmart and Target, began taking a toll on sales.
Then, in 2005, the company was taken private through a buyout by KKR, Bain Capital, and Vornado Realty Trust. The $6.6 billion acquisition left the company carrying approximately $5.3 billion in debt. This proved to be a critical mistake. By that point, Toys "R" Us was being squeezed from every direction: discount retailers on one side and ecommerce on the other. The enormous debt burden, combined with declining sales, left the company unable to properly maintain its stores, let alone invest in new ideas or innovations that could drive growth.
Finally, disappointing holiday sales in 2016 left Toys "R" Us with little choice but to file for Chapter 11 bankruptcy protection in September 2017 and eventually close its U.S. retail stores.
The company's top lenders scheduled an auction for September 2018 to sell the Toys "R" Us and Babies "R" Us brand names, along with their valuable licensing agreements and intellectual property... but wait!
In early October, they concluded that the brands were simply too valuable to let go. The auction was canceled, and instead they chose to regroup, restructure, and return.
Geoffrey lives!
The investors announced plans to create a new Toys "R" Us and Babies "R" Us company that would maintain existing global licensing agreements while investing in new retail locations. They also planned to expand the brands' international presence and continue developing their private label business.
That is the power of strong branding.
A brand that creates a lasting emotional connection with consumers does not disappear easily, if ever. So many of us are thrilled that Toys "R" Us did not disappear after all, but instead returned leaner, smarter, and better aligned with today's changing consumer landscape. As new stores continue to open, childhood memories can once again be relived, while new memories are created with our own children.
What about you?
What is your favorite childhood memory at Toys "R" Us or Babies "R" Us?
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