"Toys R Us, crushed by online competition, files for bankruptcy"
After years of continued struggle (and debt), Toys R Us is filing bankruptcy ($1 billion in debt). However, the chain doesn't plan to halt operations yet.
“Like any retailer, decisions about any future store closings – and openings – will continue to be made based on what makes the best sense for the business,” Michael Freitag, a spokesman for Toys “R” Us, said in an email.
Although Toys R Us is not closing down just yet, this decision has immediate impacts on other retail vendors. I expect Toys R Us' stock to continue to fall at a steady rate, along with other companies such as: Payless Inc., Gymboree Corp. and Perfumania Holdings Inc. (who are experiencing similar fates). Amazon, a major factor to this trend, will continue its steady growth. Amazon is dominating the retail market and taking "brick-and-mortar" stores off the map. Even though Toys R Us has an online store, Amazon has blown it away with its customer benefits and diverse inventory. In the long term, jobs will be lost in the U.S., however, Amazon continues to grow and create more jobs daily. It's disappointing for me to see stores like Toys R Us go out of business (since I used to be a consumer of the goods as a child) but I understand the switch to quicker/more available purchasing.
http://www.msn.com/en-us/money/companies/toys-r-us-crushed-by-online-competition-files-for-bankruptcy/ar-AAscl80
This situation sounds very similar to Blockbuster and Netflix. I think e-commerce is slowly taking over business to consumer transactions. Like you said above, many companies are experiencing similar fates as Toys R Us and Blockbuster. I think if businesses don't recognize early that they are losing consumers to e-commerce then they will follow in this path. One thing a business might be able to do is try to partner with Amazon where the products people are buying online will come from stores like Toys R Us or Payless. This will allow the stores to stay in business while also shifting into the e-commerce trend. Another thing that would help the situation is if Amazon specifically hires employees from the companies that go out of business in order to try to save the jobs. I agree with your statement about how disappointing it is to see these stores go out of business since they were a part of a lot of our generation's childhood.
ReplyDeleteI agree with Erin and Nick. E commerce is the now and the future as we see with Toys r us having to file for bankruptcy, and like Erin mentioned with the Blockbuster and Netflix situation. Erins idea is interesting regarding Amazon hiring the people who lost their jobs due to them. I like this idea from an economic standpoint to reduce frictional employment however I can see problems in these employees work efforts and being suited for Amazons level of work.
ReplyDeleteBut Amazon may not have positions for these people, and these people may not want jobs at Amazon - it's a fairly toxic work culture, and we can only hope that culture isn't the future as much as e-commerce is.
ReplyDeletehttp://nymag.com/daily/intelligencer/2015/08/former-amazon-employees-detail-brutal-workplace.html
It is tough to see a place like Toys R Us having to file for bankruptcy but I think it was just a matter of time before it happened. From what it says in the article they had been struggling for a long time and after the new CEO took over you would hope things would have turned around but they didn't. He was put into a tough situation and it sounded like he tried to make some changes to the company but they just weren't able to evolve quickly enough. I think Toys R Us should have seen what happened to blockbuster as a sign that they needed to pivot their business model sooner.
ReplyDeleteOne other big effect that online stores are having is on inflation. Amazon and websites like it are basically giving consumers lots of choice among products so they can choose the lowest cost product from many retailers. Toys are very easy to buy online because unlike clothing they don't have to be tried on for size. So in addition to putting mall stores that consumers visit out of business, the growth in popularity and use of online websites may be causing inflation to stay low. A Bloomberg article discusses the Amazon-inflation theory but concludes other reasons are more likely keeping inflation low like competition from firms abroad that make goods available more cheaply due to lower labor costs.
ReplyDeletehttps://www.bloomberg.com/news/articles/2017-09-23/who-killed-u-s-inflation-here-are-suspects-in-yellen-s-mystery
This is very relatable and relevant for me because I am an amazon prime user. Usually buying items on Amazon is cheaper and quicker than other websites. They have just about anything from office supplies to clothes making it more convenient than going out to buy something or ordering from multiple websites.
ReplyDeleteThis is not very surprising to me. Retailers such as Toy R Us have been struggling with the recent rise of Amazon because of the convenience of the shipping and the low prices that they offer. Although I did also grow up with going to Toys R Us, with the success that Amazon has had in changing the way of the retail industry, it was only a matter of time before Toys R Us closed. I think that this could benefit the economy because as Amazon grows, the more people they will be able to hire.
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