. . . I suspect we're about to find out if a retailer can be too big to fail. When you put it that way, it's kind of like GM and Chrysler, huh? Toys R Us is a big company by itself, but at the same time, they buy so much from vendors (which is part of how they could get a debt that big, because Toys R Us is probably their main customer) that if Toys R Us falls, a lot of vendors will too. Amazon, Wal-Mart, and their copycats probably don't have near the amount of demand for the same products Toys R Us does. Then again, it might bring back mom and pop toy stores. After Borders shut down, indie bookstores slowly started to make a come back.And they're five Billion. Dollars. In debt. They haven't been paying their vendors half an aircraft carrier's worth.
Toys'r'Us lives on because Mattel and Hasbro can't let it die In electronics, Best Buy holds the same last-chain-standing mantle after Circuit City and HHGregg disappeared. In books, Borders went belly up, while Barnes & Noble remains. Similarly, KB Toys perished, and Toys "R" Us will likely limp along. The retailer of last resort, ladies and gentlemen.
Very interesting article. It has me wondering now if it would be possible for companies like Hasbro, Mattel, and MGA to leverage some of their debt to buy part of Toys R Us. Not that that'd necessarily be a good idea, but it'd probably make for an interesting experiment. Kind of like how, sometimes bakers unions buy a brand so they have a distinct product they can all sell and control, instead of catering to whatever brands that hire them.
This is called vertical integration and is subject to the Clayton Antitrust Act. Not to say it doesn't happen, not to say it's always illegal, but it's one of those warning signs that, back in the days of fair business practices, made lawyers itchy.
Huh. Living in the shadow of NYC for so many years I never realized this, but it appears to be true: You could definitely poke holes in this article's oversimplified argument but still cool.After Borders shut down, indie bookstores slowly started to make a come back.
According to the American Booksellers Association, the number of member independent bookstores has increased more than 20 percent since the depths of the recession, from 1,651 in 2009 to 2,094 in 2014. Meanwhile, Borders went bankrupt in 2011, and the fate of Barnes & Noble, which failed to make the Nook into a viable e-reader competitor with Amazon’s Kindle, appears murky.
The short answer is that by listing their shares as public companies, both Borders and Barnes & Noble were drawn into a negative vortex that destroyed the former and has crippled the latter. Not only did they become public companies, but they positioned themselves as high-growth companies, focused on innovation and disruption. That forced them to compete with the growth company par excellence in their space: Amazon. It also forced them to pursue high sales volume at the expense of inventories. Those strategies, as it turned out, were precisely wrong for the actual business they were in: selling books to a selective audience. Which is precisely what independent bookstores are good at.