Retail

The giraffe that stole Christmas: How the collapse of Toys ‘R’ Us will affect the holiday period

Kevin Moore /

I love Dr Seuss. As a kid, my parents read his books to me. As a dad, I read The Cat in the Hat to my kids and got into trouble with their mum for falling asleep alongside them halfway through reading The Sleep Book. My blended family grandkids now have the dubious honour of hearing me read Green Eggs and Ham.

How the Grinch Stole Christmas! was turned into a film and remains the second highest grossing holiday season movie of all time.

In short, the Grinch tries to ruin Christmas by stealing all the toys and threatening to throw them off Mount Crumpit. Why? because he believes the holiday has become too commercial, and the focus on just buying and giving stuff should be replaced by a focus on being with family and friends.

Yep, try telling that to an extended family of toyless two-year-olds through to 15-year-olds surrounded by slightly inebriated parents, aunts, uncles and grandparents on Christmas Day. Now that would make a seriously good reality show.

In 2015, Kmart in Australia significantly reduced the lines of branded toys it stocked as it pursued a very successful direct sourcing model: buying unbranded toys to improve margins.

In June 2016, Target removed its hugely successful June annual Target Toy Sale whereby parents could layby (order in June, collect and pay in store in December) toys for Christmas. It was semi re-introduced in 2017 as a much weaker catalogue-based offer with layby available in 90 % of stores.

In September 2017, Toys ‘R’ Us filed for Chapter 11 in the US. Failing to find a solution for its global woes, this triggered the closure of all 44 stores, warehouses and the Toys ‘R’ Us website in Australia in August of this year. At the time Toys ‘R’ Us sold about $270 million worth or one in five toys in Australia. About $35 million of these sales were online.

So Geoffrey the Giraffe stopped buying Lego, Barbie, Beyblades, Funko figures and Beanie Boos and closed his warehouse in Australia. Apparently, he has resurfaced in the US and has just been ‘on holiday’. During the Christmas buying period? In retail? No wonder things didn’t work out.

About 40% of toy sales are made in the seven weeks from November 1 to January 31 so Toys ‘R’ Us alone, with 20% market share of last year’s Christmas toys, would have been carrying about $120 million inventory in store and at the warehouse about now.

So if Kmart has less branded toys, Target has fewer toy orders on layby, and Toys ‘R’ Us warehouses and stores are empty. Where are all the toys?

It’s okay, they’re not all at the top of Mount Crumpit. Cindy Lou went up and talked the Grinch down with all the toys. They’re now online. Internationals Amazon and eBay, along with local young online retailers Hobby Warehouse and Toy Universe, supported by a network of national and independent retailers, will have the toys you need.

However, I have three-year-old Billie at my Christmas dinner table this year. I’ll be buying my toys sooner rather than later to ensure the Christmas spirit, and wine, can be happily enjoyed by all.

NOW READ: Stockings filled with coal: As Roger David collapses, can retail survive until Christmas?

NOW READ: Christmas retail planning in full swing: What you can do to prepare your business

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Kevin Moore

Kevin Moore is a retail expert and the chairman of Crossmark Asia Pacific Holdings and Now Comms Group. He is also an independent director of Australian fintech company InvestSMART.

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