The Toys "R" Us saga gets bleaker by the day, and if it's not crystal clear at this point, "saving" the U.S. operations of the company was never in the cards. As I've been saying for awhile, the endgame is that Toys "R" Us as we've known it for the past 70 years is over. The name will eventually live on in a new form as a complete reboot much like we're seeing happen with FAO Schwarz and KB Toys. As for who will own it, that's still a mystery, though as I reported earlier this month, there are people interested - including a group that has the involvement of former TRU CEO Jerry Storch. One player that's out is MGA Entertainment's Issac Larian, who tweeted his disappointment after his repeated attempts at salvaging parts of the company were shot down.
At The Toy Association's PlayCon in San Francisco, Ellia Kassoff, head of Strategic Marks, LLC, addressed toymakers and others about the plans for resurrecting the KB Toys brand in malls around the country. First announced back in March (with an update here), KB Toys will return as a new retailer rooted in nostalgia - and the plan is to do it starting with pop-up shops this coming holiday season. Prior to being destroyed by Bain Capital Partners (who also killed Toys "R" Us), KB operated under many variations of their name, including K•B Toys, K•B Toys Outlet, K•B Toy Works and Kay-Bee Toys between 1922 and 2009. With Toys "R" Us currently in the final processes of winding-down operations in the United States, the biggest question is how, exactly, will Strategic Marks be able to pull this off - and how it's going to be done in time for this year's holiday season. Today, Kassoff offered up answers - some of which came directly from members of the audience.
My inbox has been exploding since Sunday, and yes - things are getting weird. Last weekend, THE ROCK FATHER™ Magazine was the first to report on the plans of Strategic Marks, LLC's plan to revive the KB Toys brand in the wake of the Toys "R" Us collapse. The news spread quickly, leading to excitement, speculation, and mostly the question of "how?" Over the past few days, I've exchanged messages with Ellia Kassoff, head of Strategic Marks, who promised more news soon on the launch and how they plan to "revive and rebuild" the once iconic retailer. Now we have a little more insight, and it came from an unexpected source - the New York Post. Turns out, some familiar players in the pop-up game just might be getting in on the action.
3/20/2018 For an update on this story - click here!
With the recent news that Toys "R" Us has filed for liquidation in the U.S., there's been much discussion on what the future will hold for toymakers, the ever-changing retail landscape, and most importantly - the 33,000+ jobs currently at stake. While some are trying to craft a save that could keep the Toys "R" Us brand afloat in some manner (such as an investment group led by MGA Entertainment's Issac Larian - just one player in the mix), others are looking to the future by taking pages out of the past. Now things have gotten a little weirder as Ellia Kassoff of Strategic Brands, LLC has entered the fold with a bold claim: "We're going to save the toy industry!" His plan? To resurrect KB Toys.
A week ago, despite all the rumors of doom and gloom surrounding the fate of Toys "R" Us, my wife and I took our girls to our local store on a Friday night. Our visit was multi-fold - the main interest being that we needed a very specific birthday gift for our nephew (my wife = "the cool aunt"), and our girls wanted to pick out a little something with their own money. They receive a modest amount that caps at $5 per week based on performance at school as tracked by the Class Dojo app, and at five and eight they've reached the point of really enjoying the opportunity to pick something out and pay for it themselves. For our youngest, it was one of MGA Entertainment's L.O.L. Surprise Lil' Sisters, and for our oldest a small case of eye shadow from the Claire's Boutique store-within-a-store. What I was impressed with was that the attitude at the store was not gloomy at all - the employees were friendly, the store bright and clean, and it was still well-stocked with new items. Along the way, we received a demo of a Mattel classic - the Hot Wheels Criss Cross Crash (the girls love their Hot Wheels, just like daddy), and checked out the full assortment of Hasbro's new toys from Avengers: Infinity War. There were quite a few customers, and if you didn't know the backstory, you'd think all was well at Geoffrey's house. We got what we came for - an Imaginarium Ride-On Train that was priced at $149.99 in-store, but $104.99 on the TRU website. A quick mention at the check-out and it was price-matched and we were out the door. Less than a week later, rumors began swirling again that the folks pulling the strings on Toys "R" Us were considering a full-scale liquidation, and one that could come as soon as today - Monday. I drove by the Toys "R" Us in Gurnee, Illinois again on Saturday, and the parking lot was so packed, it could've been Christmas Eve. As of this writing, no news came through from TRU, but now all signs are pointing to something happening on Thursday, March 15, 2018.
[Updated 9/18/2017 - 11pm CST - Toys "R" Us filed for Chapter 11 Bankruptcy Protection]
There's a big problem at Geoffrey's house, and if you follow the toy industry or the retail sector in general, then you've no doubt seen it coming for years. Retail is a challenging space to begin with, and when you look at specialty retail, the landscape gets even bumpier. When it comes to toys, there's only one major toy store left in the United States, and that's New Jersey-based Toys "R" Us. While they've had their share of issues over the years, one thing that's really bothered me has been the involvement of Bain Capital Partners since 2005, at which time they, along with Kohlberg Kravis Roberts and Vornado Realty Trust took part in a leveraged buyout of of the iconic toy retailer. There's a lineage here in which Bain Capital has notoriously taken successful companies, saddled them with debt, and eventually flushed them down the toilet, all while the "partners" make out like bandits. One such victim was KB Toys, who Bain targeted as a profitable business with over $1.4B of annual sales. Strapped with debt, bankruptcy followed, and eventually KB was dead. History has been known to repeat itself, and it looks like Toys "R" Us could be the next victim. After all, Bain is playing the same game right now with another retailer - Gymboree, who was acquired in 2010 and filed for bankruptcy in 2017.