After a trending move from shopping in stores to online, foot traffic at Toys ‘R’ Us locations have been declining as consumers have moved on to e-commerce sites such as Amazon and Walmart to purchase toys. By next year, the largest U.S. toy retailer is expecting to exit bankruptcy after defaulting their debt last September and is looking to reinvent stores with play labs to tackle e-commerce. Toys ‘R’ Us is looking to test this strategy this holiday shopping season where 75% of all toy sales are made. The retailer already set aside more than $400 million of their $3.1 billion bankruptcy loans to enhance about their 900 locations over the next 3 years with better paid and experienced employees. About $72 million of the $400 million will be used towards wage increases for better skilled workers. The closures of unprofitable locations are expected to happen as well and make improvements on their website and loyalty programs.
Toys ‘R’ Us is upgrading shopping experiences and wants to offer those that are found in stores like Dick’s Sporting Goods Inc., Ulta Beauty Inc., and Best Buy Co. Inc. However, this new plan is expensive to scale up for big retailers like Toys ‘R’ Us that depend heavily on seasonal hiring. There is a possible chance that the retailer might be out of business in the next 2 years in the U.S.
“We think our scale is a huge advantage, because we have a brand that’s nationally and globally known,” Dave Brandon, Toys ‘R’ Us chief executive said.