Target, Aldi, Big Lots eyeing Toys R Us real estate
Correction: A previous version of this article misstated the number of Toys R Us stores up for auction Thursday.
- As it shutters its domestic business, Toys R Us is set to sell off more than 30 of its company-owned and some leased store properties in a bankruptcy auction Thursday morning, according to court filings.
- Among the bidders for the properties are some major retailers, including Target (which is bidding on a store in Florida), Big Lots (which is bidding on five properties), Ashley Furniture, Aldi and Shoe Station, as well as other retailers and several real estate companies.
- The bankrupt toy retailer is in the process of winding down its U.S. business, and hundreds more stores are set to go on the market. Amazon has reportedly been mulling taking over some properties that Toys R Us will vacate, to use as showrooms for Amazon-branded devices and as logistics nodes.
The retailers interested in Toys R Us' properties, in a way, illuminate some of the toy seller's troubles in recent years.
The massive stores are attracting a grocery store, furniture showrooms and a mass merchant. Toys R Us had to fill those spaces with toys, a product sector that makes three-fourth of its sales in the fourth quarter, that is targeted as a loss-leader by mass merchants and is fairly easily transferred to e-commerce.
"Remember about toys, you don't have to try them on. Kids know what they want," Alan Behr, a partner with Phillips Nizer's corporate and business law practice, said in an interview with Retail Dive. "You don't need to shop, you just need the toys, so you push the button."
Potentially all of Toys R Us' 800 stores that it operated when it went into bankruptcy will be on the market this year. Some could be taken over by other retailers, but there aren't many in expansion mode, at least with those sorts of size needs, as Marc Landis, a partner with Phillips Nizer's real estate practice, pointed out in an interview. Some former Toys R Us stores could be repurposed into experience-based centers, such as small movie theaters, Landis suggested.
The toy seller, as it goes through the motions of liquidating its U.S. presence, is simultaneously trying to salvage 200 of its best-performing stores as part of a bid for its Canadian business, which goes up for auction in April. The CEO of MGA Entertainment, maker of Bratz dolls and LOL Surprise!, is also scrambling to put together a long-shot bid for major chunks of Toys R Us' U.S. assets.
Along with its stores, Toys R Us' market share is also up for grabs. Walmart and Target — two mass merchants that played starring roles in the toy retailer's decline — stand to take much of the $1.3 billion in domestic toy sales, according to recent research. Jeffries analysts have also noted that Bed Bath & Beyond (which competes with Babies R Us) and Ollie's Bargain Outline stand grab Toys R Us' lost sales.
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