Like a big kid belly-flopping into a kiddie pool, the Toys R Us Inc. bankruptcy sent massive waves through the toy industry this year.
After filing for Chapter 11 bankruptcy protection in September 2017, Toys R Us shuttered its remaining 735 U.S. stores in June. The everything's-gotta-go pricing at the closing stores gave a sugary rush to the domestic toys market.
Retail toy sales in the first four months of the year climbed a healthy 7 percent to $7.9 billion from the year-before period, reported Port Washington, Pa.-based market research firm NPD Group.
"A significant amount of children's products were sold at extremely low prices throughout the first half of 2018, flooding the market and thereby reducing price points," wrote Jim Miller, president of Simplay3 Co., in an email interview. The Streetsboro, Ohio-based firm uses rotational molding to make sit-in and ride-on toys.
The Toys R Us-quake also poured rocket fuel on the sector's ongoing shift from bricks-and-mortar to online outlets.
Toys R Us's demise, though stunning, was not unexpected to industry grandees such as Richard Gottlieb of New York-based consultancy Global Toy Experts.
"The United States has been over-stored for years and part of the reason for bankruptcies and store closings is therefore due to too many bricks and mortar locations for the number of consumers," Gottlieb wrote in an email to Plastics News.
U.S. e-commerce sales are expected to represent 8.9 percent of total retail sales this year, up from 8.3 percent last year, according to Farmington Hills, Mich.-consultancy Invesp.
In the short term, Toys R Us's bankruptcy was most definitely not kid's play for some of the biggest names in the business.