If you've been following the downturn of the market for Toys R Us, then you may have heard that the store has filed for bankruptcy protection. It has been trying to make a profit for a period of time without making a dent in its debt, which now stands at $7.9 billion. In 2005, the store had gone through a leveraged buyout, and most of the debt is due to that situation.
Interestingly, other shops, specifically neighborhood toy shops, aren't having the same issues as Toys R Us, pointing to the possibility that it's not what they're selling that's the problem. One store reported its annual sales growing by around 3 percent yearly. Why are these stores seeing an influx in profits when big-name stores are struggling?
That's been attributed to the personalized service you receive at a smaller store. On top of that, children often want to go to the store, and smaller stores allow them to play and explore instead of being restricted to walking down impersonal aisles.
Employees at the mom-and-pop shops also have an edge; they have specialties and know their products. They make solid recommendations and help people in a manner that major retailers typically do not. While people do still make many purchases online through services such as Amazon.com, others prefer the in-person route, especially when it means their children get a chance to engage with a product before a purchase.
Bankruptcies can strike any company. If you find yourself struggling, don't wait to find a solution. The right kind of bankruptcy could help.
Source: Chicago Tribune, "Why neighborhood toy stores are thriving while Toys R Us goes bankrupt," Abha Bhattarai, Sep. 25, 2017