Are Online Stores the Death of Physical Toy Stores – The Story of Toys R Us

With the recent bankruptcy claims filed by Toys R Us, the entire toy industry of the world is roiled and shaken. Many people have termed this closure as a part of the larger trend where a number of retail stores are closing down. Some people are calling this a retail apocalypse which is mainly triggered by the rise of ecommerce and the change in customer preferences. But, the struggles faced by the toy company are not new. The firm was under great debt and was taken private in 2005 in a $6.6 billion private equity. The idea was to improve the state of the company, but the debt never seemed to lessen.

Traditional retailing has been seeing tough days for quite some time now. We have seen traffic in shopping centers declining steadily while more people are moving towards getting things online. But, are online toy stores like actually causing a death of the physical toy stores? Let’s take a look.


As per Darrell Rigby, the retail industry goes through a major disruption every 50 years. Toys R Us was born in one such disruption as well in the wave of discount stores and category killers in the 50s and 60s. The economics were shifting back then just as the case is now. Families started moving out to the suburbs which led to the popularity of stores like Toys R Us. Fast forward to today and you will see that retail is in the process of reinvention again. Stores like Toys R Us failed to keep up with the changing business environment. People are able to get the same, or even better products online and that too in rock bottom prices. The aisles of Toys R Us seemed pale compared to the variety you see online.

Is Retail Apocalypse Real?

It is a fact that the openings of physical stores have been growing year by year, by more than 50%. This is driven mainly by the hypergrowth of off price channel and dollar stores. You will also notice a lot of digitally native brands moving into brick and mortar market such as Bonobos and Warby Parker. Do you know that as much as 91% of all retail sales last year were made through a brick and mortar store and conspiring the current trends, physical stores will still be accounting for as much as 80% of all retail sales in the year 2025?

The retail arena, including but not limited to toy stores, is definitely different from what it was a decade ago, but if you think online stores have actually caused a death of physical toy stores, that is hardly the case. That being said, physical toy stores also need to invest time and efforts into making their stores go digital as well. This will be an addition to their already flourishing business. However, the death of physical stores due to widespread online stores is not the case.

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