Toys "R" Us Gone? Say It Ain't So

So Toys "R" Us is looking at splitting off Babies "R" Us and selling off the toy business.

When I was a little kid, going to Toys "R" Us was a rare treat - something that happened only a couple times a year. I used to go there in search of the latest Star Wars action figures, Atari 2600 games and whatnot. The place always seemed to be like a fantasy land, with all the latest cool toys around. It was such a treat.

Later in life, I worked on the interactive part of their business, buying online media for the company when they went head-to-head with online toy retailers during the dot com boom when I was working for K2. I remember going to the Union Square store with K2's COO, Rob Burke, and spending around $500 on toys for the office. We bought remote control cars, Nerf weapons, beach balls, a robot and a bunch of other stuff and let staffers spread it around the office. IIRC, then-chairman Matt DeGanon was seen from time to time stalking creatives and programmers with a Nerf bow and arrow, firing plush missiles over the tops of the cubes occasionally, for shits and giggles.

The news about Toys "R" Us is disappointing. What makes it more disappointing is that the mega-retailers are responsible. They sell their toys as a loss leader, making it difficult for a large toy retailer to do business at all.

I constantly tangle with my cousin Al over my point of view on this, but I think the world is a suckier place when a mega-retailer like Wal-Mart can succeed on the breadth of its offering, running other retailers out of business because they can sell things like toys at a loss and make it up on sales of other goods. We're moving toward a world where all stores are Wal-Mart because their stranglehold over the distribution of retail goods forces manufacturers to make crappy deals or risk being locked out of the stores entirely. Call it progress if you will, but will the country be better off when every retailer faces being undercut by Wal-Mart? How can you compete when the guy down the street is selling the same stuff at a loss and making it up from sales of household goods, small appliances, groceries and all sorts of other stuff?