As sad as the end of Toys R Us may be, the iconic toy store is far from the only retailer struggling these days — and it’s not the only one throwing in the towel this week. Say goodbye to Claire’s, the girls’ accessories chain, which on Monday (March 19) filed for Chapter 11 bankruptcy protection. And, of course, grocery giants such as Amazon, Walmart and Kroger continue to put smaller players out of business.
Here’s a look inside some of this week’s unfortunate, but hardly shocking, bankruptcy news.
The Latest from Toys R Us
The Easter bunny will not be paying a visit to Toys R Us this year, unless it’s to get a discount on toys for Easter baskets. The beloved, bankrupt retailer has announced the cancellation of all in-store events, such as its annual Easter Egg Hunt and Geoffrey the Giraffe birthday parties.
According to CNBC, the retailer is also saying goodbye to its helium tanks this week and has already stopped assembling bikes, power wheels and swing sets.
The formal liquidation process will likely begin Thursday, sources told CNBC, but that doesn’t necessarily mean all of its stores will be closing their doors immediately. There are plenty of discounts to go around, but the deepest ones have not yet kicked in — and won’t until business slows even more.
Shopping will wind down gradually, with some product shipments continuing — including the popular L.O.L. Surprise dolls. Other toymakers have withdrawn their support. For instance, Pokémon trading cards have been pulled from some Toys R Us locations.
The moves by these toymakers represent two schools of thought. The CEO of L.O.L. dolls’ parent, MGA Entertainment, had hoped to give Toys R Us a strong holiday tailwind to help it survive. Unfortunately, it seems that more toymakers took the Pokémon route, wavering on support when the retailer needed it most. Lack of product selection certainly didn’t do the toy store any favors in its death throes.
But trying to save the sinking ship didn’t do MGA Entertainment any favors either: Toys R Us still owes the company approximately $14 million to $15 million for its holiday products.
Claire’s Joins the Bankruptcy Club
Tale as old as time: Waning mall traffic has driven yet another specialty retailer to file for Chapter 11 bankruptcy protection. The girls’ accessories retailer Claire’s is best known for its cheap jewelry and ear-piercing services.
The company told CNBC that it expects to reduce debt by $1.9 billion and will also drum up $575 million in new capital through an agreement with creditors. Citigroup reportedly committed $135 million in debtor-in-possession financing.
Claire’s expects to complete the Chapter 11 process in September.
Regional Grocery Chains Gobbled Up by Larger Competitors
Winn-Dixie will close 35 stores in Florida after its owner Southeastern Grocers filed for bankruptcy last week, Bloomberg reported. Under the same ownership, BI-LO, Harveys Supermarket and Fresco Y Más will also see store closures for a total of 94 closures across all Southeastern Grocers brands.
Amazon takes the brunt of the blame for driving local and regional supermarket chains out of business, but it’s not working alone. European-born discounters such as ALDI and Lidl are forcing smaller players to keep their prices low in an industry that already has notoriously thin profit margins.
Meanwhile, America’s two biggest grocers, Walmart and Kroger, keep dumping money into technology and delivery upgrades, making things even harder for the little guys.
Yet even as smaller players struggle to keep up with the heavyweights, these industry giants are themselves struggling to keep up with Amazon as well as the growing trend to sell more groceries online. Together, Kroger and Walmart have lost more than $30 billion in market value this year.
It’s not that Amazon has more stores, bigger stores or more substantial market share in grocery — yet. However, if history is anything to go by, the eCommerce giant will continue expanding in this category, creating even greater challenges for small chains like Winn-Dixie along the way.