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Does Toys ‘R’ Us Demise Spell Death of Retail?

It might be the end of a chain—or the end of an era.
Does Toys ‘R’ Us Demise Spell Death of Retail?

Last week, the iconic retailer Toys “R” Us unexpectedly announced the closure or sale of every one of its U.S. locations. The bankruptcy of this “category killer” certainly marks the end of an era, as many news reports have noted, but as of now there’s a chance that part of the chain, or some of the stores, will remain open under new management. There’s even talk of an Amazon acquisition.

Like many post-war big box chains, the first location of what would become Toys “R” Us was actually in the city: it was opened in 1948 in what is now a yuppie bar in the Adams Morgan neighborhood of Washington, D.C. In 1957, the first suburban location opened in Rockville, Maryland, a wealthy D.C. suburb. In the decades since, Toys “R” Us has grown from one of dozens of stores in the toy sector to the nation’s, and perhaps the world’s, preeminent toy retailer—it is active in nearly 40 countries. The chain presided over the consolidation of the toy sector, having outcompeted and eventually purchased KB Toys, probably the second-most iconic American toy store. (Amid the mess of bankruptcy and liquidation, it’s possible the KB name will be resurrected.) And don’t forget that the whole idea of a large, year-round toy store was born in the consumerism of the post-war era. Toys were once, like Easter bunny chocolates and corned beef, largely seasonal goods, confined to Christmastime.

At this point, there are two versions of Toys “R” Us. There is the globetrotting retailer piloted for years now by real estate interests and investment firms, as disconnected from the actual business of selling toys as the executives in the Tyson Foods suites are from raising chickens. Then there is the 1970s-vintage box store along a suburban commercial strip, still sporting the old multicolored-tile facade, an inducement these days more to nostalgia than to buying.

[googlemaps https://www.google.com/maps/embed?pb=!4v1521213958048!6m8!1m7!1sZVH066Nn7PFpHWVxtS9GSg!2m2!1d40.29087488613538!2d-74.68730132463489!3f313.3136230303302!4f-17.458033321429582!5f0.7820865974627469&w=600&h=450]Toys “R” Us on U.S. Route 1 in Lawrenceville, N.J., a typical suburban commercial strip

If the success of Toys “R” Us has its origins in the post-war years, so, in a twisted and indirect way, does its demise. A company called Vornado Realty Trust acquired a large share of Toys “R” Us in 2005, with apparently mixed motives: there was an element of Bain Capital-style investment—that didn’t work out so well—but also an interest in the real estate on which the stores sat, which may yet work out for them.

Vornado Realty Trust has its origins, like Toys “R” Us itself, in American midcentury retail. As I documented here, Vornado was a small appliance manufacturer in the post-war years (I have a Vornado blender from 1972 at home). In 1959, Vornado was acquired by the New Jersey-based discount department store chain Two Guys. By the late 1970s, the Two Guys stores were aging and declining in profitability—though still turning a profit. The company, renamed Vornado, took a look at the real estate values of the plots where the stores were located (having been part of the first wave of suburban development, Two Guys owned nearly all of its real estate). Vornado discovered that the land was worth much more than the actual stores, and liquidated and shuttered the company, finally renaming itself Vornado Realty Trust. To this day Vornado owns and rents out most of the shopping plazas and plots of land where Two Guys stores once stood. Vornado has continued to occasionally identify and purchase struggling retailers, generally with an eye towards the real estate. Toys “R” Us was one of these.

This is how tortured corporate retail can become: the ghost of a 1940s New Jersey discount store had a hand in the shuttering of America’s biggest toy retailer in 2018. Of course, while some of that real estate, especially along very dense commercial strips, will sell like hotcakes, much of it will remain vacant, depriving sparsely trafficked or downmarket shopping plazas of their anchor stores. And anchor stores they are: in the ongoing “retail apocalypse,” these stores are 40,000 to 65,000 square foot dinosaurs. They are too small for department stores, but most mid-sized big box stores such as Dick’s Sporting Goods or Best Buy are no longer expanding as they once were. Many others, like Borders and Sports Authority, no longer exist. Some of the locations will surely be “downcycled”—taken over by deep-discount chains like Big Lots, Ross, Shoppers World, and Burlington. Many vacant locations will be torn down and redeveloped, but that will take time. In the meantime, the bankruptcy will impact, in some cases fatally, the futures of small independent businesses that merely have the misfortune of being located in a center anchored by a Toys “R” Us.

This brings to mind a fascinating 2011 essay about the McDonald’s McRib, which analyzes the sandwich not as a food item but as a manufactured product, which, of course, it is. One comes to realize that these sprawling national and international conglomerates—whether McDonald’s or Ruby Tuesday or Wal-Mart or Toys “R” Us—are not so much stores or restaurants as they are corporations that happen to sell food or merchandise. There is little commitment or stake in the particular line of business, let alone commitment to broader stakeholders such as employees, customers, and surrounding communities. Small businesses, by necessity if not by desire, are more closely tied to their locales, and their owners are more likely to have real expertise in their fields.  

One only needs to read a few blogs or Reddit threads by corporate retail workers to realize that the food-and-stuff-selling corporations have massive corporate management apparatuses above their actual retail or restaurant operations. For many of them, the barrier between the retail and management level is more or less impermeable. They do not prize skilled salesmen or chefs in their executive suites; they prize MBAs who have lost the ability to speak jargon-free English and who may well have no idea what goes on in a commercial kitchen or stockroom. Or a toy store.

Retail is now moving towards automation and mechanization, with some fast food outlets replacing cashiers, and with Amazon Go reinventing the store as an empty self-service warehouse with bare industrial ceilings festooned with CCTV cameras. Indeed, if one goes back to the early days of the supermarket in the late 1920s and early 1930s, the whole point was self-service. An illuminating book on the history of A&P, “The Great A&P and the Struggle for Small Business in America,” recounts the backlash against what were then large, centralized supermarkets. A&P was destroying the mom-and-pop store. Yet those vintage A&Ps would today appear to be basic grocers and would be about the size of a CVS. There is an appropriate middle ground between moral panic and “it has always been thus.” The difficulty, of course, is finding where that middle ground lies.

Will we one day recall, with a tinge of nostalgia, the warmth and community of the Amazon Go store, before we turn back to our headsets to do more “v-commerce”? Will the experience of actually going out shopping with help from informed, enthusiastic business owners be as distant to the average consumer as self-flagellation and hair shirts are to the average Catholic? Perhaps. Yet one of the fastest growing areas of retail is the local, the artisanal, and the seasonal. The spirit that animates farmers markets and craft breweries and bars lighted with Edison bulbs may well come to breathe new life into ordinary retail. In fact, small neighborhood toy stores—the kind that Toys “R” Us ran out of business over the decades—are making a comeback. The kids like them better, but whether the fickle globalized economy will has yet to be seen.

For now, we are now reduced to mourning warehouse stores loaded with cheap imports, since they are among the few vibrant and collective spaces that remain in American life, especially in the aging post-war suburbs. Since 1995, Americans have been bowling alone. If the retail apocalypse and the encroachments of big tech continue apace, we will more and more often be shopping alone, too.

Addison Del Mastro is assistant editor for The American Conservative. He tweets at @ad_mastro.



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