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Toys “R” Us collapse a lesson of ‘change or die’

Toys “R” Us collapse a lesson of ‘change or die’

With the news that the Australian arm of Toys “R” Us has collapsed, a business management consultant has suggested it is another warning to retailers and businesses to embrace change or die.

The retailer announced last month that it had entered voluntary administration, but it held out hope that a sale or recapitalisation of the business could be found.

However, those hopes were dashed as administrators McGrathNicol announced that the brand would disappear, with stock to be liquidated over the next few weeks, before stores shut their doors for good.

The company has 44 Toys “R” Us and Babies “R” Us stores across Australia, employing around 700 people.

In a post on LinkedIn analysing the collapse, Dan Hadley, a consultant and economist at JLB Adelaide, said that the Australian division following its US sister company into bankruptcy was “inevitable”, as legacy retailers struggle to adapt to change within their industry and marketplace.

“What started as a children’s furniture store owned and operated by Charles Lazarus in 1948, evolved into one of the most recognizable brands globally with over 800 stores at its peak in the USA and a further 800 globally,” Mr Hadley said.

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He laid the blame of Toys “R” Us’ demise at the hands of e-commerce becoming the norm, which is pushing larger retailers to sidelines as nimble online operators grab market share.

“The overheads of stores, retail employees, lighting, display shelves and sign boards weigh heavy on modern [retailers] fighting against lean online enterprises that often do not even need to hold their own stock,” said Mr Hadley.

“These new firms co-ordinate direct to customer shipping and may be, in many instances, a company run by just one or several people.

“The loss of another retail giant sends a clear message to other retailers still in the fight that things need to change. Companies are going to have to adapt rapidly … and shift their mindset in order to remain competitive and in business.”

A particularly sad note on the retailer’s demise, as Mr Hadley pointed out, is that the founder of Toys “R” Us, Charles Lazarus, passed away just a week after the US arm of the business collapsed.

“His legacy and empire collapsing all around him at the very end and one wonders how heavy this must [have] felt for him,” Mr Hadley said.

Toys “R” Us collapse a lesson of ‘change or die’
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