RIP Toys R Us: What Happened & 3 Reasons for Failure

TL;DR: Toys R Us dominated the toy retail market from the 1960s through 1990s, controlling up to 12.5% of the US toy market by 1983. However, starting in the late 1990s, competition from big box stores (Walmart, Target) began eroding market share. In 2000, instead of building their own eCommerce platform after a failed 1999 launch, Toys R Us partnered with Amazon, paying $50M/year for 10 years. When Amazon violated the contract and worked with competitors, Toys R Us was left with no online presence just as eCommerce became dominant. A 2005 leveraged buyout increased debt from $1.86B to $5B, consuming $400M/year in interest payments and leaving no capital for reinvestment in stores, technology, or competitive initiatives. Meanwhile, the toy industry itself was declining as children's entertainment shifted from physical toys to video games and digital entertainment. By holiday 2017, competitors were selling toys at prices Toys R Us couldn't match - Walmart, Target, and Amazon could subsidize toy losses with other merchandise. The company filed bankruptcy in 2017 and closed all stores by 2021, though the brand has since returned through partnerships with Macy's.