California toyco MGA Entertainment and Florida-based toy and novelty company Basic Fun! are making plans for a post-Toys “R” Us world. The New Jersey-based retail giant officially filed a motion seeking Bankruptcy Court approval in its Chapter 11 proceedings to begin the process of winding down all US businesses, resulting in the impending closure of more than 700 remaining stores.
Basic Fun! CEO Jay Foreman says the company will fill the void with existing customers like Target, Walmart and Amazon. In fact, Amazon was Basic Fun!’s ninth-largest account three years ago, and the company expects Amazon will be its second or third largest account this year.
Foreman says consumers will continue to navigate online while other big box, mid-tier and smaller retailers seize business opportunities previously occupied by Toys “R” Us. He anticipates that retailers in the vicinity of existing Toys “R” Us stores will take on extra capacity and, while consumers will have a smaller selection on store shelves, he believes they will have a bigger selection online than ever before both from Amazon and other big-box retailers scaling up their online presence.
Moving forward, Basic Fun! will also ramp up its acquisition strategy in an effort to increase its scale. Since 2013, the company has completed a number of purchases including The Good Stuff Company, Uncle Milton Industries, Tech 4 Kids and K’NEX.
And while Basic Fun! is looking online in the wake of Toys “R” Us beginning the process of shuttering its US operations, MGA Entertainment is looking north. Yesterday, Toys “R” Us Canada announced that it will continue normal business operations as the retailer and its advisors are in active discussions regarding an acquisition of Toys “R” Us Canada’s entire business.
MGA Entertainment CEO Isaac Larian (along with affiliated investors) submitted a bid yesterday to buy the retailer’s 82 Canadian locations. The group will reportedly also seek to operate as many as 400 US locations. Larian called on fellow toymakers to band together to save the retailer through posts on LinkedIn and Twitter.
“I didn’t see a lot of leadership in the toy industry, so I stepped up,” Larian tells Kidscreen. “No retailer can fill the hole left behind by Toys “R” Us. The damage this has done cannot be recouped for many years to come.”
Larian anticipates that MGA Entertainment’s sales–along with those of most toycos–will decline by at least 15% in 2018. No matter what happens with the bid on the retailer’s Canadian locations, Larian anticipates a disastrous toy year. Basic Fun!’s Foreman, however, remains optimistic.
“The toy industry as we know it has been around for over 100 years,” Foreman said in a company statement. “We’ve been through wars, financial crises, upheavals in retail, the advent of video games and mobile gaming, and we have always found a way to bounce back and thrive.”