Preview

Big toy retailers like Hasbro and Mattel and independent toy stores hope to gain market share from Toys R Us’ bankruptcy, but Amazon and its competitors may beat them to it.

What happened
  • In the wake of Toys R Us’ bankruptcy, toy manufacturers Mattel and Hasbro saw their shares slump—the latter’s Q1 2018 revenues decreased 16% to $716.3 million. Hasbro wants to boost its ecommerce and brick-and-mortar operations, and like other mass retailers, may diversify its product selection to fill the void left by Toys R Us.
  • But the industry trade association that represents toy retailers believes that the bankruptcy will pave the way for independent toy retailers to capture more of the market, with a predicted 20% increase in 2018 revenues.
Why it matters
  • Since Toys R Us declared bankruptcy, big box toy retailers are trying to capture its market share. But the continued struggle of other large toy companies like Hasbro and Mattel suggests that Toys R Us’ defeat was inextricably linked to the rise of mass retailers like Amazon, Target and Walmart. Amazon, for example, keeps toy prices low and takes losses on the vertical for the bulk of the year, making up for it during the holiday season boom. This way, Amazon steals market share from big toy retailers—something that contributed to Toys R Us’ downfall, and that could irreparably harm Hasbro and Mattel moving forward.
  • Independent toy retailers still have an edge against the Amazon and its competitors as points of discovery, but after years of falling victim to Toys R Us and other big toy retailers, they will have to continue fighting in order to remain relevant. In the meantime, mass retailers will continue their quest to satisfy their renewed thirst for toys.

SUBSCRIBE TO READ THE OTHER FOUR STORIES

This article is exclusive to Loose Threads Members, who get access to actionable analysis, insights and private events that drive growth.