Toys R Us goes into administration

Firm News

By Phil Cake, Manager, Insolvency Department

Phil Cake Insolvency Practitioner at Gibson Hewitt

The UK arm of the international toy retailer, Toys R Us, is the latest retail giant to have entered into administration.

It appears that efforts to find a buyer for some or all of the stores have failed and the Administrator is now conducting an orderly wind-down of the business.  Effectively, a massive closing down sale.

This once more demonstrates the fragility of retailers who are overly dependent on sale via “bricks and mortar” and have not developed sufficient internet presence.

Toys R Us is the classic case of the marketplace disrupter having subsequently been usurped.  In the 1980s, their introduction of giant warehouse stores displaced the traditional high street toy stores which could not compete in terms of product range, price and convenience.  If we fast forward to 2018, it’s ironic how Toys R Us is found wanting on these same 3 measures when compared to Amazon.

It is a fact of life that marketplaces evolve.  In 30 years’ time we will probably be reminiscing about the heyday of Amazon having been rendered obsolete by some yet to be invented sales platform.  It is vital that any retailer adapts to changes in both technology and consumer habits.

Evolution of the business model is vital regardless of the retailer’s size.  Small business owners should ensure they regularly take a step back from the running of their business to review their business’ position.  However, it can often prove difficult for the entrepreneur themselves to see the wood for the trees which is why an independent review by a professional with a fresh perspective can prove invaluable.

Gibson Hewitt are a firm of ICAEW Chartered Accountants and Licenced Insolvency Practitioners.  We can help you review the options for your business.  If you would like further advice, phone Gibson Hewitt on 01932 336149 to arrange a meeting with Lynn Gibson.  The first meeting is FREE with no obligation.