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Comment by product50 | Hacker News Reader

Though this may have something to do with Amazon (and retail generally trending online), it does appear that the big culprit here were Bain Capital (and its partners) who took it private in 2005 via leverage buyout and ladened Toys r Us balance sheet with untenable debt from thereon. Apparently, they were paying $500M in interests alone per year vs. reinvesting capital in growth of their offline stores or online retail.

I personally feel that, similar to bookstores which as seen a resurgence in neighborhood mom & pop stores, while Amazon will continue to dominate, a lot of smaller toy retailers (both online and offline) will spring up to take Toys r Us' space.

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Toy stores are a _great_ example of opportunity for brick and mortar. Just like book stores, they operate in a space where curation, discovery and the physical experience adds real value.

The town I grew up in has a great independent toy store, and I make it a point to shop there every time we're in town. Every time I find something unique that I would have never looked for on Amazon, and often I'm hooked by the tactile act of playing with something that couldn't be fully replicated online.

As an interesting aside, this particular store[1] fought for its right to keep their mural (which was awesome but violated city codes) all the way to the supreme court[2]. They lost, but you've got to admire the chutzpa of someone willing to do that.

[1] http://www.inlandoctopus.com/

[2] http://www.seattletimes.com/seattle-news/city-paints-over-wa...

>Toy stores are a _great_ example of opportunity for brick and mortar. Just like book stores, they operate in a space where curation, discovery and the physical experience adds real value.

Not anymore. Customers just use them as a free showroom and then buy it cheaper off Amazon.

If a toy store can't figure out how to take advantage "but MOMMMMMM I want it NOWWWWWWWWWW!" then little kids are far more mature than they were a few decades ago. :)

You want that toy? Here, watch a YouTube video of someone else playing with it until Amazon delivers it tomorrow.

Better yet try saying "no".

The way adults say no to alcohol, cigarettes, sex, procrastination, and using their smartphones?

One would hope so!

I don't know why, but my kids do really well in this situation. We often say "maybe for your birthday" or "we'll add that to Santa's list" or "we're not buying toys today". They might make a little fuss, but so far it's been pretty easy. We also do the thing where you repeat back what they said to them, like "oh you want that don't you? I know, but not today".

Edit oh and they are pulled out of the store if they don't behave, so there's that too.

It cuts both ways, there's "webrooming" too:

https://www.shopify.com/retail/why-retailers-should-embrace-...

It does cut into their margins, they can't be way more expensive than online.

No way. The high-quality wooden hand-crafted toys at good mom & pop toy stores are not available on Amazon. Discoverability of good intellectually stimulating toys is similarly poor on Amazon.

You also overestimate the delta between the Amazon price (if the product is carried by Amazon) and that of the brick & mortar price. Often the brick & mortar price is identical after shipping costs.

The competitive advantage of a good mom & pop toy store is a specialized, curated selection of unique merchandise.

Perhaps Etsy can compete in this category, but I am in doubt that Amazon is there yet.

> Often the brick & mortar price is identical after shipping costs. The competitive advantage of a good mom & pop toy store is a specialized, curated selection of unique merchandise.

I think their main advantage is not the curation but the availability. You can plan a trip to the toy shop, agree to a budget, go and play with toys, choose something in budget, and go home with a toy. This is a way better parent-child bonding experience than scrolling through pages of licensed junk together & then waiting 2-3 days.

Re curation: most good toy stores have the same sort of stuff. Most 'boutique' 'niche' ones have expensive crap for idiots with money. Protip: your kids will play with toys until they break, don't buy that miniature replica Miele vacuum cleaner toy for $200 unless you don't mind throwing it away in 3 months.

Museum shops seem to follow the 'specialized, curated selection of unique merchandise' of children's toys.

Museum shops are an excellent place to buy toys.

Wooden hand crafted toys are kind of a boutique, luxury market, though, not a representative case.

Yes but thats a very small example of the market.

When we are looking at the generic market, nowadays people go to a store, look at something and then go on their phone to see if they'll find it cheaper anywhere else, as local stores tend to overprice stuff to make up their marginal costs.

I dare you to try telling a 3-year-old who's winding up a tantrum because they want the airsoft pistol from the other aisle that they have to wait 3 days for the sensible age-appropriate & mentally-stimulating toy to arrive.

You raise a good point. Availability is a huge advantage, especially for last-minute gift purchases. I haven't seen the good toys that I'm looking for on Amazon; I have seen them on Etsy.

On a tangential matter, I disagree with avoiding opportunities for teaching children delayed gratification in such a high impact way.

Think about it this way: every time you rightfully don't give your child something they want due to their bad behavior, you're giving them an effective lesson and improving their future life.

It's cruel to intentionally create situations that trigger a child; it should happen organically. It doesn't take long for children to adapt to understanding they won't get their way and start adopting appropriate self control.

Especially with modern research showing the damaging effects of corporal punishment, parents should take opportunities when they arise to discipline their children in a way that is meaningful to the child: withholding a toy they desire or another form of leverage.

> On a tangential matter, I disagree with avoiding opportunities for teaching children delayed gratification in such a high impact way.

My comment on 2-3 days? That’s too long for a child to make the connection between behaviour and outcome. I love delayed gratification and would ask that we wait to play with the new toy until after we get home, eat, tidy up, etc. I hope that they make the link between waiting, being praised for doing a good job with something else, then playing.

I would be interested in seeing the research about the negative effects of corporal punishment if you have a link.

If trips to a toy store lead to tantrums, that sounds like an argument /against/ shopping there, not an argument /for/ shopping there.

My argument is against online price-matching being a suitable way of shopping for parents with young children, not against visiting toy stores. I see I wasn't clear that: taking your attention off your children to focus on your phone in an area with a high number of distracting items will likely lead to a situation where you need to reassert parental control.

Did you know? The 2-year-old will tantrum regardless where you are, and buying online means you don't have a quick out on hand (either getting the toy almost immediately after calming down and ensuring enough separation between the tantrum and getting the toy, or some stopgap alternative toy that's a tenth of the price).

You are obviously not a parent; you do not avoid trips to the toy store indefinitely.

"No way. The high-quality wooden hand-crafted toys at good mom & pop toy stores are not available on Amazon. "

If they have any kind of success and are visible - the chinese will have copies flooding the market within weeks. Small shops play a game to sell - but don't become too big.

I bought a $80 item from a toy store this week, the price was the same as Amazon and I was glad not to deal with delivery, boxes and packaging. At another toy store i picked up a llama llama book, but it was $17 in store, and only $10 on Amazon. I didn't get the book. $7 is worth waiting and dealing with boxes

>>Customers just use them as a free showroom

And that free showroom is now gone.

All the best buying something on Amazon, and realizing that you didn't like it after it was delivered at your home. The cost of treating it as a free showroom will now cost customers buying a lot of products they don't like.

Cost customers? Amazon has free returns, and sometimes they even refund you and let you keep the item.

Meanwhile, it's not like you can really test a toy in a store, and returning it means another trip.

Amazon only has free returns if you choose very specific options that place the blame wholly on the seller (I think it's "item defective"). If, for example, you say that you found a better price, or just didn't want the item anymore, Amazon charges a hefty return shipping fee and may also charge a restocking fee.

Of course, this means that customers always choose that option, and FBA sellers get harmful demerits on their account every time that happens. This is such a popular way to hurt FBA sellers that people have a habit of ordering items from competitors just to return them as counterfeit and/or defective, in the hope that doing this a few times will get a competitor removed from the seller pool.

Nope, sorry. Just returned something, selecting that I ordered by mistake, yet didn't have to ship it back at all.

It's possible that Amazon has some algorithm that decides whether a product is worth returning or not, and that they just tell you to keep the product since the cost of return handling, etc., would consume the margin they'd make reselling it. I'm not sure if this type of algorithm would be applicable to FBA sellers, but I doubt Amazon would want it to be, since they'd lose out on the opportunity to collect additional handling fees from the seller.

Just conjecture at this point as I don't think any non-Amazon employee could know exactly all the details around when Amazon decides to charge a return handling fee, etc. I guess this may be in the fine print somewhere, but I would rather expect the fine print just to say "We can charge you a return handling fee if we want".

My experience is that I tried to return something last year, and Amazon was going to dock 12 dollars of my 14 dollar refund for return shipping if I clicked anything other than "defective". The product wasn't defective so I just decided to keep it, not worth the hassle for a $2 refund.

Did you order from a third-party FBA seller? If you did, they will often tell unsatisfied customers to keep the product and issue a refund anyway, because they'd rather be out one unit than have a return against them.

It wasn't from FBA, sold by Amazon itself.

Amazon has free returns for now as only a tiny minority uses that as an option. Also returns work largely if there is a defect or you genuinely bought a wrong product(Like a wrong shoe size).

If most users start doing returns, they won't be free or even possible, given how much logistical nightmare that will be.

Beyond all this, that turn around time to buy a single product will be high.

Stores offer a good middle ground, and you can get a good hold of things before you actually make a purchase. I'm not saying toy purchase or any other purchase online will go down, but there will be a lot of buying will be waste.

> If most users start doing returns, they won't be free or even possible, given how much logistical nightmare that will be.

Would this nightmare be worse than unlimited 1-day shipping? Amazon seems to have worked that one out already.

Most places would allow you to print a label and leave the item at a designated collection point. In the UK there's heaps of companies handling this (CollectPlus, MyHermes, ParcelPoint, even Post Offices).

> Amazon has free returns

I doubt this is true for anywhere but North America.

You doubt incorrectly :) From Amazon.de: "If you want to return an article within Germany, Belgium, Ireland, Luxembourg, the Netherlands, Poland or Portugal, we even supply you with a pre-paid return mailing label"

Sometimes they even let you keep the item. I barely buy anything from them, but I had that happen earlier this month with an item worth ~30€, despite choosing the option that indicated it was my fault.

This is incorrect for Amazon.de.

You generally pay 3,90€ for returning the item via DHL/Hermes (unless you declare the reason for return as e.g. not working). Certain categories (clothing) have free returns. This is only the case if the order was placed through FBA or Amazon itself. Marketplace sellers with their own fulfillment usually charge you for returns or don't provide a shipping-label at all.

(source: selling on AZ)

AFAIK Amazon.de does not charge for a return label no matter which reason you state if you return within 14 days and the article is valued over 40€ (even though they could legally now). Since this April they require Marketplace vendors to cover shipping back in those cases as well.

Why not check? I would be surprised to find a market where Amazon charge for returns (for Amazon-fulfilled items).

>Every time I find something unique that I would have never looked for on Amazon, and often I'm hooked by the tactile act of playing with something that couldn't be fully replicated online.

You're absolutely right. The result usually is though that the kid finds a toy they like then puts in on their Birthday/Christmas wishlist from where the Santa buys from Amazon. I like to think I never do this, but if the price is much higher even I have a limit.

I think that manufacturers should sell to physical toy stores at a lower price, and actively make sure online price is the same or higher than instore. but I dont how easy this is to police or even if is legal in some countries.

>I think that manufacturers should sell to physical toy stores at a lower price, and actively make sure online price is the same or higher than instore. but I dont how easy this is to police or even if is legal in some countries.

These days, many brick & mortar stores are a market inefficiency. It's simply cheaper to store & ship out of centralized warehouses (as it goes when you order online) than to ship merchandise to individual stores, which themselves have limited floor space and storage space (resulting in less variety of products) as well as a smaller potential customer-base (only those who live nearby). I don't see why manufacturers should be punished by selling at a lower price in order to sustain outdated business practices.

Stores that provide additional value, having unique goods that can't be found online or have cool atmosphere or such, will be fine.

What do you think of Amazon's retail outlets? They're little bookstores with a café and a display for a few electronics. They don't provide anything unique. In fact, they only sell what's popular on Amazon.

> The result usually is though that the kid finds a toy they like then puts in on their Birthday/Christmas wishlist from where the Santa buys from Amazon.

Well, it's also that when you walk in there looking for a present for the kids birthday party you are about to take your child to attend, you end up buying something there, and possibly even paying them to wrap it for you. I'm not sure I've ever ordered a present online for a friend of one of my kids. I have enough trouble remember the party is that day and getting there on time, much less ordering ahead of time.

Absolutely. For any parent with no time and a bit of money, the toy store is far faster for a just-in-time present purchase. I have yet to find a worthwhile price difference for merchandise on Amazon.

Former electronics manufacturer sales here. Manufacturers usually set the pricing steps with volume generally at the lowest price they can accept. The venue of goods sold often does not play a role in manufacturers' price structure.

Now when it comes to channel cost, physical stores are already taking more margin out of retail price and for manufacturers, there is simply rarely large enough incentive to sell to physical toy stores at a lower price.

It's possible to enforce MAP pricing (minimum advertised price) online that matches in-store prices, but if you're a small player you'll lose out on the business of some of the larger buyers who are used to getting their way, and then you run the risk of getting yourself put out of business by trying to help out the little guys.

MAP is really hard to enforce, in practice.

When your largest reseller is even 1-2% under MAP you you really can't do anything about it. Especially if they are over half your income - it's a game of chicken that isn't worth playing.

MAP really only works when your resellers are fairly diverse and fairly even-sized. But if that were the case, we wouldn't have online behemoths undercutting everyone else in the first place.

In many European countries, the prices of books are fixed [1]. Sometimes it's arranged by law, sometimes by publishers. Toy publishers could try to achieve the same.

[1] https://en.wikipedia.org/wiki/Fixed_book_price_agreement

I think you'd struggle, with the sort of toys ToysRUs sell, to make an argument for cartel-style pricing based on cultural benefit.

Arguably "big box" toy stores work against cultural value in toys.

> I like to think I never do this, but if the price is much higher even I have a limit.

Really? You rationalize going to a brick and mortar international franchise simply because it is physical, instead of going to an online international franchise?

Thats the biggest stretch of "buy local" that I've ever been exposed to.

They offer a service that can be consumed for free: physical interaction with product on the show floor.

If you consume this and then buy on Amazon, Amazon is effectively unloading the marginal costs of running show floors to the brick-and-mortar stores.

OP is talking about a small toy store, but regardless - an international franchise that has a location in your home town employs people from your home town, whereas Amazon (for the sake of argument in this case) does not. That's the core argument of 'buy local'.

Pretty sure the person who delivers my packages doesn't live in another country.

A tiny fraction of the alternate, yes. Though of course much of the logistics planning an operations is easily outsourced.

Though it may be an international franchise, it still provides local jobs.

Amazon provides salaried jobs at their regional warehouses, and revenue to the resellers, and revenue to affiliates.

Perhaps the only thing missing is a way to sort results on Amazon by locale.

Amazon may be local to my state but the small toy store is local to my _city_. The warehouse four hours away means less to me than someone who pays taxes in my city and lives two miles away.

If there were an Amazon warehouse nearby would that change things for you?

I live about 2 miles from both amazon and jet warehouses, and that doesn't make it feel any more like a local business.

I don't think the size of the warehouse matters - that's like caring how a big the kitchen is at a great restaurant. It's the experience of finding the thing you spend money on, and then getting whatever value it is you hoped for.

There is a physical constraint aspect to local businesses that create an inherent diversity. Being next to a huge store curated by one entity is much different.

Would you rather live next to a Wal-Mart or a thriving strip/block with a dozen or so various options? It depends on your needs and desires I suppose.

A slight price increase can be more than worth getting an item immediately instead of waiting for it to ship, while 1 to same day delivery would be generally much more expensive.

Perhaps the end game is that customers will pay $10/family to enter the bricks and mortar store) - not unreasonable, if it has entertainment value/ a cool vibe.

Then the $10 is rebated off anything they buy in-store.

I'd love to see a toy store with a cover. But I feel like I might have to hurry.

I think the place brick and mortar seems to do well is where the store adds value over just selling merch. You go to Home Depot for expertise as much as for parts. You go to a local boardgame store for recommendations and events. You go to a toy store to get your hands on them and leverage staff expertise and curated inventory.

The only big problem with this approach is showrooming.

Toys r us or best buy carry bad products and are staffed by the lowest bidder. They offer no value over Amazon, so Amazon makes them worthless.

There's a lot here I agree with, but...

>You go to Home Depot for expertise as much as for parts

Has not been my experience. Ace hardware is a little better, but not much.

I suppose sometimes they get lucky and a knowledgeable retiree is willing to work for those wages.

Expertise at a Home Depot can be problematic. Sometimes you get someone who really knows what they are talking about. Sometimes you get someone who doesn't, but is speaking with authority anyway.

A friend recently told me about a time he sent his wife in to Home Depot with a list of things to get, and she came home with a different set of things that an employee recommended. My friend went back there to raise a stink about being sold the wrong things, found out the employee was a out of work plumber, and that "sharkbite" is great stuff.

"That's funny" I told my friend, "Literally yesterday I was talking with my plumber and he pointed out that I had sharkbite running to my sprinkler system. I told him I didn't know what his opinion of it was, but I didn't love sharkbite, he said he didn't love it either."

Mostly I go to my local hardware store because it's 2 minutes away rather than 15. Lowes is another 5+ minutes further, but it seems to have a lot more choice in some things, and I've had a bad experience with a couple Home Depot employees that I just can't let go of.

Home Depot does seem to have a weird set of things they do stock and don't. Like all their thinset mortar didn't seem to be labeled as modified or unmodified last weekend...

Either way, the fact that you can even have that conversation with a person at the store is a huge difference from the kid who'll read you the card on the display if you ask him about a product at Best Buy.

And yeah, I used sharkbite to book my dishwasher up, but it's definitely on the list of "get that replaced next time a plumber is in the house".

FWIW, my friend is a plumber and he thinks Sharkbite is one of the best things that happened to plumbing. Of course he didn't use it for every job because the cost isn't always justified.

I suck at plumbing. For people like me who do the occasional repair around the house, Sharkbite is a godsend.

... until it isn't. I'm just finishing up a kitchen/dining room remodel due to water damage, so I'm probably gun shy here. :-)

(clarification: Unrelated to sharkbite, but I appreciate the damage water can cause)

Ace Hardware is a cooperative, not a chain, or even a franchise system. As such they vary a lot, and it seems on average they are getting worse.

We used to have a really good Ace chain around here, with a proper hardware section and quality tools. They now only stock super common hardware, not the stuff I'd go to a specialty store for, and a lot of really garbage tools.

And they certainly don't have any experts anymore. you're lucky if somebody's working who knows how to run the key machine (which also no longer requires any skill)

I don't understand why it being a cooperative makes for wide variance in staff quality. Do US Americans not like working in co-ops? What is it about profit sharing that causes the variation, in UK cooperatives seem to be more liberal and offer better working conditions but their recruitment seems pretty much inline with other forms of corporation.

Can you offer any further insight?

Perhaps the demise of this particular store (chain) is orthogonal to their cooperative status but you're assuming a causality?

It's not a cooperative like REI or other much-loved stores are cooperatives. In the case of REI, the end customers are the members. In Ace's case, the store owners are the members.

So in the example of REI, it's a cooperative but there is still a central control and consistency between stores.

Between Ace chains, the only thing common is the word "Ace" and some fraction of Ace-branded products in the store. Some chains have tons of them, some have very little. The "Ace cooperative" exerts very little control over the stores. The cooperative is mostly about branding, not about products or quality.

I gave up on Ace like a decade ago... my local Fred Meyer (Kroger) has a better hardware section than my local Ace.

I don't really have any loyalty to Home Depot vs. Lowe's vs. a local mom and pop, just have what I need when I need it.

> > You go to Home Depot for expertise as much as for parts

> Has not been my experience. Ace hardware is a little better, but not much.

Most Home Depot employees at my local store were very knowledgeable for a while, but the construction market is so crazy here (Colorado) that anyone with that knowledge can make at least double what Home Depot will offer.

That said, my local store still does have a few knowledgeable people, but they tend to work morning shifts. I've learned to drop in before work if I have any DIY-type questions.

My strategy is to look for the people working there around retirement age. A lot of times they have been tradesman or contractors, and are working part time for some extra money.

Must be a regional thing. The guys at my local Home Depot know their crap. They're not the confused teenagers that run most local big box stores.

for what it's worth, OSH seems to be the happy medium for me.

I'd first ask on the relevant StackExchange site than ask the salesman. At least I'd probably get more than one opinion.

I may be in the minority for now, but I doubt they can live off that kind of 15m "consultations" when people are willing to do it for free online.

> Toys r us or best buy carry bad products and are staffed by the lowest bidder. They offer no value over Amazon, so Amazon makes them worthless.

I would think that instant gratification is of high value when shopping for toys with a child.

Toys R Us is a place to look at toys mainly though IMO. They're all boxed with wire and plastic holding them in place. Lots of expensive stuff in plastic with a "try me" button. Not really instant gratification like a traditional toy store (Hamleys, say) where you can play with lots of the toys before you choose.

Absolutely. My local bike shop[0] does this amazingly - holding rides, in-store events, very friendly and knowledgable mechanics, lots of in-house produced merch and encourages a culture of customizing and sharing bikes between customers. They do a lot of online work too, with an amazing series of instagram accounts.

[0] http://bluelug.com/

Bike shops play by different rules. The industry and vendors collaborate to block big stores. You cant get a Colnago or pinarelo or any top end bike at Walmart or web Walmart (amazon) you have to go to a bike shop and said shop is expected to perform certain services as you buy that bike. They fit it, they assemble it properly, usually tune it after a few rides, etc. the wholesale price has a price cooked in for assembly and those services. There are industry groups that aggressively police it. The small shops are, in essence, representatives for the vendors. There are also agreements that strongly control what's on the floor, a Specialized shop very rarely has Cervelo, BMC, or Trek bikes too, some might but generally the vendors don't allow it.

It changes periodically, Giant, Specialized and Trek are big enough that they are doing their own stores and performance shops and not relying on small dealers as much. It's also different from many other things in that a misassembled bike can result in death. The industry as a whole supports bike shops though

Why would Walmart stock high-end bikes, fully knowing that their floor staff don't have the expertise to answer any questions about the products? Who would go to Walmart to buy a high-end bike?

Walmart shoppers look for commodity items, full stop. There is nothing wrong with that, by the way; toilet paper and cleaning supplies are used by everyone but are barely distinguishable.

But Toys R Us was not a value adding retailer but rather just another big box warehouse store that did as well at lowering costs on big selections as possible before Internet shopping started to dominate big sales on big selections.

Which is a great way for vulture capitalists to steal money from a company. I've seen it before:

1. Take out a giant loan and use it to buy a company by offering slightly more than it's worth.

2. Transfer the loan to the company's books.

3. You now own a company and it didn't cost you anything! You get to be the CEO or sit on the board. And take nice fat bonuses.

4. The company now has to pay off the loan it used to buy itself from operating revenues. So you regrettably have to announce layoffs and closures.

5. Eventually the once-great limping company is killed off, enters bankruptcy, and the company is liquidated to pay off your original loan

What I don't understand is how it is legal or why investors/banks go for it.

Because it doesn't work that way? The banks that fund the "giant loan" in #1 put in covenants preventing any payments to the equity investor (who has to put in their own money) from paying out on the equity until all the debt has been paid off. This is not their first rodeo. The nature of the covenants varies a lot between industries, but the general rule is that the banks won't lend into the deal unless they are guaranteed to get their money back out first (maybe the CEO gets a salary, but it's all specified in the debt documents upfront). That's almost the definition of leveraged finance.

If you want to criticize the leveraged buyout model, a stronger critique is whether the equity investor is putting 10 bets down, where each has a 10% chance of a >10x return, which puts 9 companies at risk.

The covenants still typically allow the private equity investor to do a 'recap' (i.e., issues themselves a dividend) while still having the debt outstanding. This would come with restrictions, such as balance sheet ratios and interest coverage ratios.

What the PE player would want to do is do the leveraged buyout, cut expenses to boost EBITDA, reduce working capital demand (create cash) by lengthening payables, collecting extended debts, and cutting inventory or selling off excess assets, and then once interest coverage is up from the EBITDA boost, issue a recap as big as the covenants allow to get much of the original equity risk off the table.

Then they see if they can grow it, or sell it off, to get their multiple.

Sometimes it works, sometimes the company goes through bankruptcy (ch 11) instead. It's not whether it always works, it's whether it works on average. The results have higher variance due to the higher leverage but it doesn't make it wrong.

You’re not wrong, but neither is the parent. The way LBO works is you pick a juicy target with a lot of cash. Then you raise equity from others in your still-worthless company. Then you take out a loan for up to said company’s cash reserves plus the cash you’ve raised. Guaranteed win for sleazy VC and bank. Company is screwed, but their CEO probably got a nice bonus for negotiating the buyout plus a hefty separation package.

I'm a Star Wars collector and parent who shops at TRU. Beyond debt, the stores are mismanaged the same as most other old-school retailers that are having problems.

For the last Force Friday (the day all the stores get new Star Wars toys and people go out at midnight to purchase), there were numerous reports of TRU's opening at midnight with almost zero new inventory. How does that happen, it's a planned date set months in advance. My TRU also has $200 items that have sat on the shelves for over 2 years.

Same thing happened to iHeartMedia (formerly ClearChannel). Bain Capital took it private via the leveraged buyout and now the company is burdened with $18B debt and is likely to declare bankruptcy soon.

I just don't understand the people/institutions that give loans to such entities when a simple analysis would show how burdened by debt they are... are these investors really that stupid to loan money at unsustainable rates?

2005 was a different age, both in the shopping world and finance.

LBOs still happen, unfortunately.

Stupid? The investors are loaning someone else's money. They probably isolate it legally so if the loan defaults they are not personally liable and it doesn't affect any other investments. The money isn't hard earned. It isn't someone's hard sweat-earned savings invested. It is debt. Debt generally just expands the money supply.

> a lot of smaller toy retailers (both online and offline) will spring up to take Toys r Us' space

Why would anything take its space? It's still a highly valuable brand, that I'm sure the next owner(s) will want to leverage to the fullest.

>>It's still a highly valuable brand

Is this true? I don't really connect the brand with value anymore. I think that legacy was firmly in the 1980s-1990s. There's some value there, but I doubt it is highly valuable.

I don't believe so. Toys R Us makes most of their money during the holiday season, and most of their stuff is overpriced crap. They're regularly 20-30% more expensive than Target, which in itself is already overpriced compared to BezosCorp.

> who took it private in 2005 via leverage buyout and ladened Toys r Us balance sheet with untenable debt from thereon

You are not taking into account the changing habits of kids as a result of both the iphone and ipads or equivalent. Kids don't view toys the same way that they did prior to 2007 onward and neither do parents. I grew up in a day and age where getting a chance to have a toy was a big deal (and only happened a few times per year at that). Today kids can play games and be entertained with a digital device. It's hard to even compare to whatever projections that were done with the leveraged buyout.

With three kids, my wife and I used to buy Lego at every opportunity. It was also an easy gift idea to give to grandparents.

My kids haven't played with Lego for years. They enjoy doing it Minecraft or one of a zillion other Steam games that offers the same build-it-yourself functionality as Lego.

And Lego's not doing so well either https://www.nytimes.com/2017/09/05/business/lego-sales-toys....

> Bain Capital

Obligatory Colbert video.

https://www.youtube.com/watch?v=rSLGt0-bHIA

Yeah, here in the UK Smyths Toys (a large out-of-town toy retailer that first entered the UK market a decade ago) seems to be doing doing a roaring trade these days and expanding rapidly, Toys R Us not so much. I believe Smyths are still owned by the original family that founded it too.

> Though this may have something to do with Amazon (and retail generally trending online)

Online shopping plus theres a growing trend to spend money on experiences instead of things. We've switched to buying our kids things like climbing lessons or horse camp instead of toys.

Yeah, so Bain made a bad decision when they bought Toys `R' Us and took on a lot of debt right at the moment when Amazon was about to enter the business. Now they lost their investment. Why do I get the sense that Bain is being cast as a villain in this story?

Bain didn't take on the debt, Toys R Us did. Here's how the Bain play book works:

- Buy company's and strip them and lay off workers

- saddle company with massive dept (leveraged buyout)

- extract large fees

- sell company at profit

Later, the company, weaked by dept often goes bankrupt.

http://www.motherjones.com/politics/2011/09/mitt-romney-bain...

"Here’s how a private equity fund such as Bain Capital works: It picks a successful company and then takes it over with a leveraged buyout (LBO). The money borrowed from a bank to pay off the owner or stockholders does not become the debt of Bain Capital. It becomes the debt of the company that was taken over." https://sandiegofreepress.org/2012/07/how-mitt-romney-drove-...

This is definitely Bain’s standard playbook.

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