PopCult Rudy Panucci on Pop Culture

The Latest On Toys R Us and KB Toys

 

UPDATED: Today was the day that the Toys R Us liquidation sales were to begin at most locations. I don’t mean to beat a dead horse with this story, but Toys R Us is a huge pop culture icon, and their demise is a pretty big, still-developing story. In a breaking development, many stores have posted signs saying that the liquidation sale has been postponed. We don’t know what this means. Reports are surfacing that they could begin at all locations by Friday, but even that isn’t certain.

Apparently this delay is due the fact that some interested parties want to purchase as many as 400 stores and keep them in operation. Most states have laws on the books that force a business to file a “going out of business” plan, and stick to it. This way consumers are protected from unscrupulous retailers who try to run perpetual going out of business sales simply as an advertising tease. In this case, since some TRU stores may remain open, they have to weigh all their options before starting such a sale.

When the sales do begin I wouldn’t expect any steals in the first week of the liquidation. All the toys will be marked up to their full retail price (or beyond) and initial discounts may only be enough to bring them down to what they were yesterday. In a couple of weeks, when the advertised discounts hit 30% or more, you’ll start to see real bargains.

There are still several bidders that want to rescue part of the chain. Isaac Larian, the CEO of MGA Toys (Bratz, LOL Surprise) is trying to buy the Canadian arm of the business along with as many as 400 of the US stores. That amount seems to be a best-case scenario, but it’s possible that, if his bid is successful, some stores might just halt their liquidation sales in April and attempt to get back to normal operations. That appears to be the hold-up in starting the liquidation sales, and the fact that the sales didn’t start on time is an indication that the court is at least taking these offers seriously.

The other major player that is known in this game is Strategic Marks Inc., who have been getting tons of press since they announced that they have “acquired” the trademarks to KB Toys. I’m still using quotes there because there are so many conflicting reports about how they picked up the trademarks, and there’s a lot of suspicion that their claims of ownership are shaky, or at least shaky enough to draw the scrutiny of the bankruptcy court.

However, it seems they can prove that they legitimately own the KB Toys name since they’ve already announced how they will bring the stores back in time for the holiday shopping season. They plan to partner with a seasonal retailer like Spirit Halloween or one of the many other stores who “pop up” for a couple of months (Party City and Spencers have divisions that handle this sort of temporary store) and open as many as a thousand KB Toy Stores in time for Christmas.

While this sounds exciting to folks who are nostalgic for KB Toys, the reality is that these stores will have higher prices and less selection, and will only share their name with the former national toy chain, which went defunct in 2009. There are conflicting reports about whether or not Toys R Us, who purchased the KayBee Toys intellectual property out of liquidation, really did allow the trademark to slip into the public domain. If they did, then somebody at the company screwed up big time, which at this point would be par for the course. The URLs for the trademark names have expired and no longer point to the Toys R Us website.

Assuming that, since Strategic Marks is a very successful company, their plan is on the level, I hope they put more effort into their pop-up stores than the typical seasonal retailer does. We’ll have to take a wait-and-see approach with this, but it’s looking a lot like we’ll have temporary stores in our local malls in time for the holidays. At least we can be sure that they’ll have plenty of spaces available for them at the Charleston Town Center.

Speaking of Charleston, while it is indeed very sad to Toys R Us go, in the likely event that the Charleston store is not one of the top performers that might be saved, we have to be honest here. Charlestonians over the age of 35 were never “Toys R Us Kids.” We didn’t get our local store until about 22 years ago, and the Barboursville store only opened in the mid-1980s after Children’s Palace shut down at the Huntington Mall.

We had KayBee Stores since the early 1980s, with two locations in the Charleston Town Center, and one in the Kanawha Mall. Those stores and Kid Country Toys made up most of our local toy-shopping world post 1980.

Back to where we stand: many Toys R Us stores could begin liquidation sales this week or next. Should the court accept any of the bids to buy some of the US stores out of banktupcy, it’s not clear how those stores would proceed. They may have to go ahead and liquidate, then close so they can restock those stores and then reopen a week or four later, of they may not be allowed to liquidate at all. KB Toys is preparing to open up to a thousand pop-up stores in time for Christmas, but it remains to be seen how well-stocked those stores will be, since the period for ordering holiday toys is nearly over.

That’s the current update. As the bidding process moves through bankruptcy court, it’s probably going to be mid-April before we have any idea if any of the plans to save any Toys R Us stores will succeed.

This story has been revised more than half a dozen times since it was originally posted early on March 22. Any further updates will be made in additional posts.