Toy R Us is also closing 25 of its 106 stores in the UK

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Toy R Us is also closing 25 of its 106 stores in the UK
Image credit: Flickr (CC) / Mack Male

It seems that the Toys R Us woes aren’t over. The company is preparing to close 25 of its 106 stores in the UK. Something that wasn’t part of the first deal, the BBC reports.

When Toys R Us filed the original bankruptcy documents in September 2017, they were covering only the business of the company in the US and Canada. The rest of the global Toys R Us chain remained/remains operating as normal. Or so it seemed.

The BBC now says the toy chain store giant looks to move away from the “big-box” out-of-town store model. This means the huge stores on the outskirts of the cities aren’t going to have a bright future. The sources of BBC say the company is already drafting the needed documents to close down 25 of its 106 stores in the UK.

But the change in the model isn’t the only reason. The store closures are a part of a deal to renegotiate local company debts to its landlords. The local company is already seeking approval from its board and the US parent company to enter talks with the landlords. As you can imagine, goal is simple – to work out a deal which will allow the UK branch of Toys R Us to continue working as normal without being pursued for the debt. The company hasn’t commented officially.

According to some analysts, there’s more to come. “Toy retailers, fashion retailers, everyone is going to reduce the size of their stores. It’s coming. In the coming 24 months you will see a lot more of this sort of news,”Retail analyst Kate Hardcastle, from Insight With Passion says.

Toy stores are the first to suffer since most of the toy sales are moving online fast. Also, the toys are a very specific market where brands are vital. If you’re buying a LEGO set for example the decision is where to buy it from, not which company makes the better set, as there’s only one – LEGO. It’s the same with a lot of other toys. Plus, you don’t really need to try it out, and if you do, you can always return it. It’s more difficult with clothes.

So, people are more and more open to buy toys online which is faster and often, cheaper. And often you can buy directly from the brand you want. As a result, big names like Toys R Us will have to rethink their entire model and strategy. Otherwise, they risk more and more closures in the not so distant future.