After 70 years in the business of entertaining children, Toys "R" Us is going out of business. That means, any unused Toys "R" Us and Babies "R" Us gift cards need to be used in the next 30 days.
The company was already in bankruptcy, overburdened by five billion dollars in debt. Executives tried to refinance that debt, but no one stepped in to help. The company was hurt even more by weak sales over the Christmas season, as more customers took their money to discounters like Walmart and online retailer Amazon.
The company is planning to put out the liquidation sale signs, and close for good. That means the loss of 30,000 jobs nationwide.
"They had a lot tied into their physical locations”, says Chris Hinsch, Associate Professor of Marketing at Seidman College of Business at Grand Valley State University. "I'm not sure the physical store created a value for the customer." Hinsch is not surprised to hear the iconic toy chain is closing its doors. "They needed to upgrade those assets as time went, but they couldn't find the financial resources to do so."
The writing was on the wall. The company was struggling financially for the past few years and consumers turned to big box stores and online retailers like Amazon. Toys R Us had lost its niche. “The biggest place they went wrong is not adapting to the marketplace as it changed."
The liquidation process is expected to begin over the next few months. The company told its employees that its assets were for sale, but any hope for the company's future, remains to be seen. "I wouldn't hold my breath. I'm not sure the value of Toys R Us is there, like it was when I was a kid."