Executive Briefings

Why Neighborhood Toy Stores Are Thriving While Toys "R" Us Goes Bankrupt

Ella Wiesenfelder has been coming to Barstons Child's Play her whole life, so naturally it's where she wanted to be on the afternoon of her 8th birthday.

She had already picked out a Lego spaceship and a magic kit with 150 tricks for herself and was now helping her 6-year-old sister, Cora, make a selection.

"How about this?" she asked, holding up a pony that changes colors in the bath.

"This is fun. It's much better than shopping online," she said, "because I don't know how to use the computer."

Ella and Cora, it’s fair to say, are not Toys "R" Us kids.

Last month, the big-box toy retailer filed for bankruptcy protection after a long, losing battle to sell its own brand of fun. Competitors have pulled ahead with better customer service in stores and better shopping experiences, prices and selection online. Ultimately, though, it was a heap of $7.9bn in debt — mostly dating to a 2005 leveraged buyout — that did it in.

If Toys "R" Us is a private-equity horror story (not one for the kids), then mom-and-pop neighborhood toy shops are more like a fairy tale.

Here at Child’s Play in Northwest Washington, annual sales have been climbing about 3 percent a year, as parents eschew megastores and online options in favor of the company’s four locations, which together bring in millions in annual revenue.

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She had already picked out a Lego spaceship and a magic kit with 150 tricks for herself and was now helping her 6-year-old sister, Cora, make a selection.

"How about this?" she asked, holding up a pony that changes colors in the bath.

"This is fun. It's much better than shopping online," she said, "because I don't know how to use the computer."

Ella and Cora, it’s fair to say, are not Toys "R" Us kids.

Last month, the big-box toy retailer filed for bankruptcy protection after a long, losing battle to sell its own brand of fun. Competitors have pulled ahead with better customer service in stores and better shopping experiences, prices and selection online. Ultimately, though, it was a heap of $7.9bn in debt — mostly dating to a 2005 leveraged buyout — that did it in.

If Toys "R" Us is a private-equity horror story (not one for the kids), then mom-and-pop neighborhood toy shops are more like a fairy tale.

Here at Child’s Play in Northwest Washington, annual sales have been climbing about 3 percent a year, as parents eschew megastores and online options in favor of the company’s four locations, which together bring in millions in annual revenue.

Read Full Article