Wednesday 28 February 2018

Toys Aren't For Us

Toys R Us, the giant toy seller, has gone into administration.

 Image result for toys r us
Its a very sad day for them. And it will be reported as such. For about five minutes.
3,200 direct jobs at risk. Many hundreds of other indirect jobs at risk too.
If this were a steel mill or a car plant employing far fewer workers, the government would be pressured to intervene and the press would demand action. But as its just retail, no one will do anything. 

Maplins have gone into administration too. That's after going down in 2014.
That's another 2500+ jobs gone.

Retail renews itself used to be true. Not anymore. Where there used to be a Woolworths, ten years ago, today will be a Poundland. H&M, Or a Primark, about the only brick retailers who could fill that size space today. But there are thousands upon thousands of empty retail units. Many unlet for over a decade. 
Years ago when the retail crisis first hit we asked on here what will replace the shops. I suggested we couldn't all be working serving coffee and delivering parcels to each other. Turns out, we can.

I went into Toys R Us in the summer. Transformer toy hunting. I prefer Smyths Toy Store, who will be gaining from Toys misfortune. But my boy likes Toys R US best.

Having been an administrator and retail liquidator in the past, I saw instantly this firm was at collapse. And all the signs saying "Refitting". "reserved  for new stock coming" and "this till is closed please use the main entrance one," couldn't hide that.

Toys R US were the pioneers of the big, in and out of town shed units. The cathedrals of retail. That like their medieval inspirations, are now just the same empty, costly monuments to a religion that has moved online.

Shelf spacing. Where stock is displayed with space between items. And the top shelves are empty. Something that is heresy in a superstore. 
"We aren't a newspaper. We Don't Sell Space"

Unit removal. Whole sections where a fixture has been taken away. You can see the pressure marks and edge dirt marks on the floors. Concession stock unfilled. This is sale or return lines . And looking poorly where the bill hasn't been paid and no new stock is being delivered until it has.

Lighting out.
 In these big shed units, its a mini cherry picker required to change a light-bulb up in the girders. Some have their own. But its a health and safety nightmare. As well as being very costly. So sometimes a firm comes in and changes all the strip lights every 6-12 months. Replaces the spots. Dusts the permanent signage, etc.
When they haven't been paid, the lights really do start to go out.

That yellow Warning Tape covering ripped and peeling up flooring or holes in walls. Cables wrapped in brown tape. Tills unmanned where the recruitment freeze was operating. These signs led me to tell my young son whatever he was thinking of buying, get it today. Because we probably won't be coming back.

That was the summer. In the winter it was worse. 
I remember remarking to Mrs Q that if you can't sell toys at Christmas, you can't sell toys at all. 

The Entertainer, another Toy chain, are saying how well they are doing. But I believe it is only them. A very sound, private, company. That doesn't take risks. They are very unusual in retail for how they operate.

The retail consultants are on the media and lamenting that neither Maplins nor Toys understood the change they were in. That to remain relevant they both needed to invest in many more staff and selling themselves as knowledge centres of their products.

I have never agreed with this as a general strategy. It works for some. But staff are the greatest expense in a retail business. Their wages continually rise whether profits are up or down.
Rents can be renegotiated. As can stock prices. But wages are fixed by law.
And just having knowledgeable people won't make consumers spend with you if your prices are higher than amazon.
Its knowledge and sales skills. If retailers were like car showrooms, softly applying the pressure, they might do better. But that's even more costly and just as fraught with risk. 

I believe I could have come up with some ideas for Toys R us. Some method of recapturing market share. Boosting footfall. Finding a better, alternative use for the giant space they occupy and the giant space that is their car park area. 

Kids cafes and ice rinks. Soft play and scooter tracks. Nerf gun shooting range and firefight.
Digital video games centres and craft areas. Music and rock band and singing / garage band/song star/ Hollywood film making zone.

A much more involved, interactive and cheap, half day out destination focus. With the selling Toy focus more like the giftshop at the end of the ride at a theme park.

Thank God I no longer do this. 
And don't have to cost it. And charge a large fee to present a cash strapped board with staggeringly expensive, risk-ridden, only possible, partial solutions to the ongoing retail evolution.

Image result for maplins
And even better haven't got to explain to Maplins that glitter balls and disco lights aren't going to be enough to survive in the twenty first century.

Expect more of this this year. The rent rise and the pound bite, plus the consumer slowdown that the car dealers and supermarkets have been reporting for the last six months, will tip a few more into insolvency.


Mark Wadsworth said...

Luckily, my kids are nearly grown up, so I can live with this. Bloody shame about Maplins though. Good job I bought those WiFi extension thingies from them last month!

Anonymous said...

To the land owners who are putting rents up - where's the business logic in this if all it's going to do is drive the tenant into administration and where it's presumably unlikely you'll then fill the space?

If it's in the South East the only point I can see is to drive all the businesses out then use the land to build flats

Nick Drew said...

We use Makro, a general cash-&-carry (with spurious rules about how you need to be in the trade to shop there, which everyone knows how to get round), set in a vast hangar of a warehouse. The symptoms of decline you describe were exactly what they seemed to be going through a while back; they stripped out an entire (and once-thriving) mezzanine level, discontinued clothing & shoes - and now seem back in rude health. But all of that is just a punter's judgement based on observable signs; I have no idea on their financials at all

as for unmanned tills - I wonder about B&Q sometimes. They've seen off Do-It-All & Payless DIYet al, but that was years ago. Some of that stock dosn't look cheap to carry - big power-tools & motorised garden kit, kitchen stuff etc. Maybe the manufacturers finance the stock? Then again, run-of-the-mill garden centres per se are about the most profitable things you'll find, or so my accountant tells me - so maybe B&Q has enough of the garden-centre trade to cross-subsidise the kitchens etc.

Bill Quango MP said...

ND: We looked at B&Q a good while back. They were on the list of ten most likely to topple. But the fall of Focus and Payless boosted them. And they sold up in china and used the profits to reduce their debt.

I shop there,but have never liked the whole format. I always feel I'm paying a fortune for some cheap Chinese screws and bits. Which I am.
Homebase is the one to watch. Terrible figures last year. And their new investors have put on hold all their big plans for rejuvenation.
In the early 2000s Homebase was a go-to destination for the changing rooms, House doctor era.

B&Q were a firm that went heavily down the customer service, knowledge-base route.
But with their almost entire lack of anyone in the building it seems they have abandoned that route.

MW:#metoo! On wifi extensions. But when I looked at their cctv I thought it was very overpriced.

ANON: Its not rents going up. Its rates. The government made a right hash of the rates increases. They wanted to reduce for the rural areas that are in actual danger of having no shops at all.
So they dumped a big increase on the cities. Rents are paid on the value of a property. A corner shop in a fashionable London residential area saw 500% rises. That will close down any business.

It happened before in the 1990s. But then there were loads of new high profit retailers like mobiles, cd and games, and coffee shops emerging. And cheap imports from China.
This time, nothing is coming except tattoo and fast food. Even the betting shops are giving up.

Anonymous said...

"Maplins have gone into administration too. "
I noticed a change in my local Maplins recently, a shift away from electronic components toward something else, computer stuff ( I think ) but that wave has passed too.

Maplin had stiff competition from Ebay, and the other online retailers. That wouldn't be so bad, but by comparison they were too expensive.

But also, who does hobby electronics these days?

I might pop down there (half an hour walk ) to see if there is any bargains, tho.

Toys r Us? Good riddance to bad rubbish. Plastic tat piled high.

Jeremy Poynton said...

Amazon ... that is all ye know on earth, and all ye need to know

dearieme said...

I saw an NHS podiatrist a couple of weeks ago. "You can buy insoles like this over the counter" he said.

"Where should I go for them?"

He looked at me as if I were a moron. "Amazon, like everything else."

Given all the snow maybe I will order a few things from Amazon.

Scrobs. said...

Having worked in building and developing retail sheds for forty years, I've always wondered how Toys R Us even got going, let alone lasted so long.

The earliest stores (about 1983) were started by a skilled retail developer who knew his stuff, but seeing the shelves of cheap plastic in their Tunbridge Wells store last year, one wondered how on earth it could survive! Amazon does all the toys you need now!

I think B and Q stand a good chance to stay afloat. I've been there a lot recently, and while I do go on a day when I get 10% discount, the timber products and choices are pretty good in my opinion. I think they've dragged themselves out of the cheapo budget building pits, but gardening products are a nightmare to control anywhere, which is why a well-run garden centre will sell almost the same stuff, but it isn't half-dead by the time you get it home.

Garden centres like Notcutts are quite an innovation, now selling all sorts of things, and on a forced through-run to the exit, which is annoying, but seems to work.

Food retailing in big shops will always be king though...

K said...

B&Q can presumably survive on timber. Wood is too big and light to bother shipping from much farther east than Scandinavia or Germany.

K said...

In case it's not clear: "big and light" isn't a typo. Wood doesn't have a profitable value/density ratio when shipped from places like China.

Scrobs. said...

Good point K.

The reason why I've spent a fortune in my local B and Q is that a daught is changing all the cupboards in her house and getting new ones.

When we took two carloads of the old chipboard units to the tip, there was a pile the size of a house, waiting to be recycled! MDF is the word these days so yes, they are getting it right on that score as well, as most of their stuff seems to be made from the regurgitated pantry doors of yesteryear...

There's also a limit as to how many elecrical tools one actually needs, but stock levels are pretty high!

Electro-Kevin said...

Actually electronics is one of my hobbies. I love combining capacitors, resistors, transistors, integrated circuits, bulbs, LEDs... and doing the maths.

It's a fascinating subject.

Timbo614 said...

@ E-K, Yes #MeToo - and where (if you are prepared to wait a while) do you order all the new, shiny stuff from?

What everyone(?) does is order direct from China for hobbying via everyone's favourite online car boot sale. Doesn't matter if it takes 5 weeks to arrive and it doesn't matter if some of it never does because it's so cheap you win anyway. That I believe is what killed Maplin hobby electronics. Without it they are just another Home Bargains type store and they were nowhere near cheap to compete.

Electro-Kevin said...

I do go to Maplins but the items are so low priced that they are hardly likely to keep the company afloat. It will be easy enough to source online and that's the retailer's nightmare.

We need housing. Turn these spaces into flats.

My original kit came from America. The Maplin one was just a tad too childish. It's been an absorbing hobby while my wife is watching leftist shite on BBC catch up.

She asks me what I am doing and I say "Building a jammer for that bloody TV." to which,

"Well why don't you just use the remote ?"

D'oh !

Bill Quango MP said...

We are doing a shop refit now. Was six panels of slatwall short.
Which is abugger because it costs as much to deliver six as it does sixty.

The shopfitters went to Band Q and bought bath panels. 3mm by 6ft white panels that they will just glue to the wall and we will attach shelving too.

The cost of the 6 bath panels was less than the cost of one wood panel.

We shall see tomorrow when they fit it up if it works.
If it does we shan’t be spending £25 a panel anymore. But £6.from b and q.

Anonymous said...

Where is the end, is it Amazon?

Though, big government makes all consumer goods too expensive and allied to their mates in the corporate sector, really I'm surprised most bigish retail parks, outside of London and the big metropolitan centres still exist.

Gubmint red tape; rules and regs/H&S, carbon floor prices coupled with expensive electricity/gas thanks to the green energy clusterf**k.

retail outlet parks are run, beset by the big corporate sharks,

Not just rate hikes but councils charging excess for waste disposal,

Competition from the massive online sellers,

It doesn't take a genius to work out that, you have to shift some ruddy/us toys to just break even and that list, is not even mentioning 'unit' costs.

To what end?

You can't just go on milking a dying cow, at some point some fekker has got to say "ENOUGH we need to start cutting the paper clip counters".

Statism, is the enemy of the consumer and the antithesis of free competition, Statism is, next worst, is the, bastard sister of Leninism aka corbynism.

Wildgoose said...

Amazon is very cleverly aiming for a situation where they are in effect a monopsony. There are laws against monopolies, but a monopsony is where there is only one buyer rather than only one seller.

If you have to place your goods for sale at Amazon's site (and give Amazon a cut) in order to find customers then you are effectively in a monopsony position.

That's the End Game.

Anonymous said...

ND - " run-of-the-mill garden centres per se are about the most profitable things you'll find"

Only until we run out of final salary pensioners or the spouses of well paid chaps. Can't believe what they get away with price-wise. Put it on the edge - just rural, but not too far away - of a southern town, make sure it's got a good coffee shop, and there'll be an endless stream of women doing coffee and cake before buying a pot plant "for Gill at work".

MW - Maplins were OK for those Powerline WiFi extenders, which are great things and enabled wifi through the whole house as well as the garage 20 yards away.

E-K - CPC aka Farnell are pretty good for all things electronic. But once you've bought, they send bumph every week through post.

Anonymous said...

One word:


Those who go under are carrying too much debt and this applies to

individuals as well as businesses.

Demetrius said...

I put a link to this on Tim Worstall's post on Maplin's. Times and retailing change. My parents were anxious for me to get a job with Woolworth's, but I failed and went to university instead.

dearieme said...

I've never been to a Toys R Us. I bought a couple of things from Maplin, years ago.

Tell me, are Amazon better than e-Bay?

Jimmers said...

Macro was taken over by Booker cash and carry. They can run a decent c&c business and converted the Makro stores to their business model, which seems to work.
Makro tried to sell to retailers but also had what they called personal business users - any Tom, Dick or Harry could wangle a card. However, they couldn’t compete on price with the big grocers even if you had to buy in bulk in Makro. Why would you buy a kg of coffee from Makro for the same cost per gram as 200g jar from Tesco?

Anonymous said...

I don't use Amazon much, Bezos seems to be trying to corner the retail market. Ebay is individual sellers, private or corporate, using a platform which takes a cut. Diversity!

Nick Drew said...

Anon@11:14 - Only until we run out of final salary pensioners

There's a whole heap of leisure-industry business models that collapse at that point

also the Care industry?

Raedwald said...

Bugger. I'll have to ask the brother to nab me a few Maplin's print catalogues before they go. Real shed-porn, those things; I've spent scores of pleasurable hours turning the thin, densely printed pages deciding which weather station not to buy or which gold-plated set of phono leads not to install ...