Skip to comments.The Real Reason Toys R Us Is Closing That No One Wants to Talk About: Birthrates
Posted on 03/20/2018 8:40:52 AM PDT by SeekAndFind
If you're a parent, you've had at least one passing discussion on the closure of Toys R Us. The mega-giant toy chain that ruled the childhoods of many of today's parents is shuttering nearly 200 stores this month. While bankruptcy is the official reason, it isn't the only or perhaps even the biggest reason why Geoffrey the Giraffe is being sent to the big zoo in the sky: Debt. Competition from online retailers like Amazon, as well as cheaper big-box stores like Wal-Mart and Target. Yes, bad customer service, too. All of these are the most commonly cited reasons for the ultimate failure of Toys R Us. But, hidden within their press release on the bankruptcy is a reason rooted in cultural trends, the stuff that ultimately makes or breaks economic indicators:
The decrease of birthrates in countries where we operate could negatively affect our business. Most of our end-customers are newborns and children and, as a result, our revenue are dependent on the birthrates in countries where we operate. In recent years, many countries birthrates have dropped or stagnated as their population ages, and education and income levels increase. A continued and significant decline in the number of newborns and children in these countries could have a material adverse effect on our operating results.
In other words, Americans just aren't having enough kids to justify the existence of that many toy stores.
Play out the low-birthrate factor and you'll realize that fewer kids over time equates to fewer consumers overall. Ten or twenty years from now we might see the same massive closures of the stores that are winning out over Toys R Us today. It isn't just that people are buying less due to the Great Recession. It's that there are fewer people to go out and buy anything at all. As The Washington Post reports:
The change in the number of children born in the previous 12 years (and thus sitting right within the Toys R Us demographic), tracks closely with the companys changing annual revenue. ...its nonetheless apparent that Toys R Uss fortunes rise and fall with the population of its target market.
And thats why the companys demise should worry the rest of us. Toys R Us focuses on kids, so its feeling the crunch from declining birthrates long before the rest of the economy. But its just a matter of time before the trends that toppled the troubled toy maker put the squeeze on businesses that cater to consumers of all ages.
In stark contrast to their failure in the American market, all 53 franchised Toys R Us stores in Israel will remain open. Israel is known for having the highest birth rate in the developed world. The average Israeli woman has three children, nearly double that of the average American woman. The Israeli fertility rate of 2.6 exceeds both the American rate of 1.9 and what's known as the "replacement rate" of 2.3. The "replacement rate" is what a nation needs to maintain in order to ensure long-term survival.
There are no kids
” The Israeli fertility rate of 2.6 exceeds both the American rate of 1.9 and what’s known as the “replacement rate” of 2.3. The “replacement rate” is what a nation needs to maintain in order to ensure long-term survival.”
White Americans have been propagandized for years not to have children while the government and associated non-profits bring in millions of third worlders whose sole aim is procreation and parasitism. What did they think was going to happen?
Essentially they were unable to manage change.
Corporations cannot grow every year, forever. They need to have a plan for homeostasis when the market saturates or adapt to new markets. Most just plan on buying out the competition or getting bought out but eventually that will fail too.
Kids don’t want toys, they want cellphones to play games on.
Give me a break. I’m not even going to read the article.
With stats on Latino birth rates, a savy business executive would be stocking the stores for a changing demographic, not closing the stores.
This is a continuation of “big box failure” as our economy struggles to adapt to the new online marketplace.
Personally, I think there’s a renewed niche for locally-owned, brick & mortar franchise opportunities which piggy-back upon an online presence, but that’s just my opinion...
I agree sort of, while American Births have declined, the shortfall has been made up by Illegal Aliens having lots of children. The problem is they Can’t use their EBT to buy toys.
And lest we forget - Toys-r-Us has long been a friend and sponsor of Planned Parenthood... oh the irony.
Kids play with digital toys, real toys are so 20th century.
There are plenty of kids. But they are largely born to poor illegals in cities, not wealthy suburban parents.
And Amazon has probably eaten their lunch. If you’re a parent, do you really want to take your toy-hungry kids to a store where you have to say ‘no’ a hundred times—or just order something more conveniently off Amazon?
The real, real reason is that they had a mountain of debt after being looted by a takeover artist and then sold off in a leveraged buy out.
Essentially a shark took a big, big bite out of their bank account and left them with bills but no cash.
Bain Capital was the name of the shark.
Contributing factor, sure. Having the expense of big box stores with comparatively overpriced products and no real differentiation or compelling value proposition to spend more.... Chapter 7.
Fascinating to watch consumers, even at a Wal-Mart box store, pulling out their smartphones to product/price compare to Amazon or even Walmart.com.
Brick and mortar shopping will of course continue to survive, but Toys R Us certainly isn’t the model to follow.
Maybe its their own fault they are failing
They knew it would happen. They wanted it to happen. We're being replaced, right on schedule.
The movie Chitty-Chitty Bang-Bang, where children are outlawed, comes to mind.
The problem with statistics is the spin. They can be interpreted to pitch any conclusion.
Amazon & mail order are better shopping experiences. Children are moving more quickly out of the “toy years” and into video games & social media. Rather than reading the market & adapting a niche to adapt TrU has remained static & gotten worse on customer satisfaction at the same time. We live in an area with 3+ kid families the norm but most of our buying isn’t at TrU it’s on line.
I will never buy from amazon because I will not support Bezos.
Illegals don’t want toys.
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