Bankruptcy

Amazon has claimed yet another victim in the retail world as Toys R Us declares bankruptcy, joining a long list of retail chains that have succumbed to the pressure of competition. In its filing, the toy store claimed $5 billion in debt and asked for protection from debtors as it goes into the holiday season, its busiest time.

The toy store will keep its 1,600 Toys R Us and Babies R Us stores open during the bankruptcy proceedings. What ultimately will happen to its 65,000 workers is still unclear. The store has suffered from the disadvantage of having to price too high to outdo competitors such as Amazon.

Analysts have suggested the toy giant needs to find ways to compete with the online retailers, such as in-store birthday parties and doing game demonstrations. Too many shoppers are using Toys R Us to see what the trends are among the country’s younger set while doing phone checks on competitive prices at Amazon, Walmart and other stores.

Toys R Us has lots of company among the corporations that have failed to compete effectively with the online competition. A list of almost 20 includes Radio Shack, True Religion Apparel, Gordmans, Payless ShoeSource, Eastern Outfitters, Rue21, Gymboree and a host of others.

Exploiting its current advantage, Amazon is using a $99 annual Prime Membership to attract shopper loyalty, at the same time offering perks such as same-day delivery in a growing number of markets.