It is the absence of the sheer variety of toys that Toys R Us offered and now missing from the marketplace that is going to be a challenge for the toy industry for some time to come.
CNBC reporter Sarah Whitten contacted me this week about an article she was writing on Target's disappointing sales this Christmas. Her report, "The real warning in Target’s holiday sales: Toys are in trouble," notes that Target pointed to weak toy sales as one of the reasons they disappointed shareholders this holiday season (shares of Target stock fell 7% on the news).
In giving her my input, I expressed my opinion that the loss of Toys R Us had a lot to do with not just Target's weak performance but the entire toy industry this past holiday season.
Here is how I put it in her article: “The chickens are coming home to roost from the Toys R Us bankruptcy,” said Richard Gottlieb, CEO of Global Toy Experts. “You cannot eliminate that many toys from the marketplace (remember TRU had vastly more items) without it having an impact. A great loss of incremental and impulse sales.”
To elaborate, Toys R Us provided a vastly larger variety of toys than all the other outlets combined. They were the only major player which was all about toys, and as a result, they carried more items and more assortments. There was, therefore, a greater variety in the marketplace. As a result, there was more to buy. Not only that, a trip to Toys R Us resulted in more impulse toy purchases. After all, its a toy store, so adults and kids see a lot more items designed to catch their eye.
Yes, the Internet continues to gobble up sales from the bricks and mortar stores, there was no hot toy this year, and fears of tariffs and the specter of impeachment dampened holiday spirits. But in my opinion, it is the absence of the sheer variety of toys that Toys R Us offered and now missing from the marketplace that is going to be a challenge for the toy industry for some time to come.