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Toys, But No Stores

Where have all the toy stores gone? In the wake of the rather unceremonious demise of Toys "R" Us, it appears that the manufacturers themselves are also suffering. Why? Well, for one thing, major players like Mattel and Hasbro have far fewer places to sell their toys at present.

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Unless your name is Wal-Mart or Amazon, you probably aren't selling many toys if you are a retailer. Toys "R" Us was a place where children could play, discover, and most importantly for marketers, sample new toys. And now it is no more. Indeed there are no major competitors to replace the brand, and as a result, branded product marketers are simply selling fewer toys. But is this a temporary state of affairs, or is this the shape of things to come?

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The toy industry is a $27 billion industry with Amazon representing about 25% of the market. Revenues are currently falling, but much of this has more to do with the pricing pressure caused by the liquidation of Toys "R" Us. In short, these goods are at rock bottom prices right now, which means that manufacturers are holding back so that they don't get mixed up in this temporary erosion of prices. This would affect brand equity. In other words, when Toys "R' Us is finally dead, prices will return to normal, and the remaining retailers will grab all of the market share that the dead retailer has left behind. Will a new major toy retailer emerge, or will we be stuck with Amazon and Wal-Mart for the foreseeable future? We shall see.



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