Jan 30, 2021 12:35 AM EST
The COVID-19 pandemic has pushed another company to make a hard decision. Toys R Us has closed its only two remaining stores in the United States.
Toys R Us made the difficult decision as the consequence of all the hardships brought about by the coronavirus pandemic. This does not mean the company or the brand is no more. Instead, the company plans to shift its already limited resources to opening in new locations where there are likelier to have better shopper traffic. A spokesperson for the company told CNBC this himself.
"Consumer demand in the toy category and for Toys R Us remains strong and we will continue to invest in the channels where the customer wants to experience our brand," the spokesperson shared.
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COVID-19 had a mixed impact on the toy industry. As parents and children are forced to stay at home, toy sales actually increased in 2020. In 2019, the rates increased by a total of 15%, amounting to $25.1 billion.
But the sales happened not on physical toy stores, but online.
"The industry's resiliency is very much underpinned by the reality that, in times of hardship, families look to toys to help keep their children engaged, active, and delighted," shared Juli Lennett, vice president and industry advisor of U.S. toys at the NPD Group, in a statement.
The NPD Group reported that as families turned to toys to make sure their kids can fare better with being at home at extended periods of time, the sales are happening online.
This means paying lease can be a waste.
Tru Kids, an entity that acquired Toys R Us' intellectual property when it liquired in 2018, opened two smaller-format stores in late 2019.
One of them is located at the Unibail-Rodamco-Westfield's Garden State Plaza mall in Paramus, New Jersey, while the other one is at Simon Property Group's The Galleria in Houston.
The Houston location was closed on Jan. 15, the spokesperson revealed, while the Paramus location followed suit, as reported by CNBC.
Representatives from URW and Simon have yet to comment on the said news.
Tru Kids is still running Toys R Us' website, which ultimately sends customers to Amazon when they want to complete a purchase. Tru Kids serves to market the toys and is the one still icensing the brand globally.
Many consumers have personally avoided shopping on physical stores, even if the strick lockdown measures were lifted. They stayed clear of brick-and-mortar stores during the pandemic because staying home is clearly the safer option, especially for their kids.
As a result, they resorted to buying more goods, including toys online. Naturally, mall-based retailers have suffered massively.
With the pandemic not stopping, it might take a long time even before shoppers start being comfortable with shopping in malls.
Based on the findnigs of one retail research firm, there might be at least 10,000 store closures to be announced by retailers in the U.S. in 2021.
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