What does Toys ‘R’ Us closure mean for local business?

Toys ‘R’ Us Australia has gone into voluntary administration, following the collapse of the retail giant’s parent company in the United States in September 2017. It’s a blow for Australia’s retail, toy and gaming industry with 44 stores set to close and over 2700 jobs at stake.

With the toy and game retail industry experiencing decline in Australia over the past five years, IBIS World suggests the closure of the big name brand will sound as a warning knell for locals. Toys R Us was the industry’s largest player with a 20.4 percent market share.

Many Australian toy and game retailers have been feeling the pinch thanks to competition from stores such as Kmart and Target,  along with online-only retailers such as Toy Universe and Online Toys Australia.

“Toy and game retailers have long been warned that being a simple shop for toys would not be enough to compete, and Toys ‘R’ Us was not able to adapt fast enough to changing market conditions,” suggests IBIS World Senior Industry Analyst, Kim Do.

“The company’s stores failed to attract busy parents, many of whom purchased toys from stores such as Kmart while shopping for other necessities.

Toys ‘R’ Us’ fallure is expected to revitalise the way other retailers operate their brick-and-mortar stores. These retailers will likely review their product ranges to reduce cluttered inventory and start focusing on niche markets.

“Most importantly, many of these incumbent operators are anticipated to shift their emphasis towards creating experience-based destinations for consumers, such as creating in-store play areas to generate brand value,” concludes Do.

The Toy and Game Retailing industry’s revenue is projected to grow at an annualised 1.7% over the five years through 2022-23, to $1.0 billion.

 

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Cec is the managing editor of KBB. She is a multimedia professional with over fifteen years experience as an editor on titles as diverse as SX, CULT, Better Pictures, Total Rock, MTV, fasterlouder, mynikonlife and Fantastic Living. She has spent the past four years working as a news journalist covering all the issues that matter in the political, health and LGBTIQ arena. She is the Head of Content at Pinstripe Media and a recent convert to the world of small business.

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