I don’t blame Amazon. I blame you, Toys R Us. You didn’t adapt as you could have. You are partly responsible for your own demise. Your free shipping threshold was too high (comparatively) and most items weren’t available for site-to-store pickup. It was like you didn’t even try to compete with online retailers. Did you think you were immune? Some of your sales were okay, but the coupons had more fine print and exclusions than most legally binding contracts. Here locally, I hated your new location. You should have known that upstate moms hate Woodruff Road. That’s when I stopped going on a regular basis. I’ve never met another mom who gushed, “I just love the traffic on Woodruff Road! And right next to a hunting and fishing superstore! It’s perfect!” There are things you did well. I always appreciated the super-comfy mom’s lounge with the glider-rocker, a cozy lamp instead of harsh fluorescents, and a real changing table, not the flimsy plastic barely-bolted to the wall where you have to change the baby while standing on one leg so the other knee can support the table public restroom kind of changing table. You also had a better selection of baby food, carseats, feeding supplies, and more. In fact, it was a pretty great baby store. Maybe you should continue doing away with Toys R Us and keep Babies R Us, you know, a smaller commercial footprint, but with all the stuff we didn’t know we needed as parents, along with the 80s nostalgia that we had as kids. Born in late 1979, my entire childhood was lived in the 1980s. Geoffrey was a celebrity. I can still sing the Toys R Us theme song (I’ll spare you). It was a big deal to go to Toys R Us then. Now we just order stuff online. Where’s the fun in that?
At least, that’s more or less the letter I’d want to write Toys R Us as a mom. Now that that’s out of my system, few were surprised last week when the toy Goliath announced the official closure of approximately 800 stores (although it’s rumored they’re trying to save 200 or so). It’s been swamped by debt since the buyout in 2005. Then they actually partnered with Amazon for awhile, which ended up biting them. However, the toy megastore didn’t just start losing money because we as consumers became spoiled by 2-day Prime shipping, or site-to-store from Walmart, or an increase in toy shelves at Target. No, Toys R Us stopped being fun. Remember the contests that gave some lucky kid the ability to run through the store and win as many toys as he or she could handle? Or how toys used to be set up in the aisles to play with? Toys R Us was at one time a fun place to shop, an entertainment mecca, and (loosely speaking here!) a babysitter all rolled into one. It was beautiful. You can’t get that sort of experience from online shopping. But then it became just a store like any other, like a grocery store but with toys, clothes, and room furnishings instead of food. The Peter Pan of the retail world grew up.
Problem is, what to do with all those 40,000-65,000 sf spaces? Traditional retailers aren’t filling those sizes like they used to. There has been some increase in non-traditional use—ie, trampoline parks, paintball facilities, indoor carting, churches, libraries, schools, or daycares– to fill that big box space. Some retailers, such as Dick’s Sporting Goods, are holding out on expansions until they see how much lower the market lease rates will be. However, Toys R Us owned many of their own properties (either directly or through Toys R Us Property Co), so leases were below market in some areas already. The remainder were owned by REITs, including Simon, Kimco, Brixmor, Weingarten, and DDR. Looking to the future of tenant spaces, the plan may become to redevelop and split the behemoth spaces into smaller units which will command higher per-sf lease rates. In fact, some traditionally large retailers (like Kohl’s and Target) are trying out smaller versions of their stores in test markets, and small format retail now has a $1 trillion market share. The downside for landlords in the here-and-now though, is that the renovation and re-leasing process takes months to sometimes years.
Those hoping to fill units in the shorter term may find interest from retailers like TJMaxx or Ross, both of whom are still adding stores. In other words, there is still an opportunity here to fill and/or revitalize the spaces without having the dreaded ghost town effect of a missing anchor tenant. But hey, who said growing up was easy?