Although the news of the Toys ‘R’ Us bankruptcy may have thrown some shoppers into a pre-holidays panic at first, the company will be keeping its stores open and its shelves stocked with toys. Not only because it wants to cash in during its biggest season, but because its suppliers need it to stick around.
In the company’s announcement about filing for Chapter 11 protection this week, CEO Dave Brandon thanked vendors “for their ongoing support” through the important holiday season “and beyond.”
But it’s not just that Toys ‘R’ Us needs toymakers like Hasbro, Mattel, and MGA to stick with it — the toy store will probably survive because those companies need the chain, too, Bloomberg reports.
The survival of the specialty chain is especially important if toy companies want to have any weapons left in the war against big box stores like Walmart and online behemoth Amazon.
“Oh my God, they are very important, and people don’t understand,” Isaac Larian, founder and chief executive officer of MGA, told Bloomberg. “That’s the only place where kids can go and just buy toys. There is no toy business without Toys ‘R’ Us.”
Others agree: Mattel — which had 11% of its sales come from Toys ‘R’ Us last year — called the toy store “one of our most important retail partners,” while the co-founder of Wicked Cool Toys also says Toys ‘R’ Us is essential to their business.
“They have the broadest selection, and they’ve always been the most supportive of entrepreneurial companies,” Michael Rinzler explained to Bloomberg.
There’s no doubt that Toys ‘R’ Us needs its suppliers, of course. A Moody’s analyst notes that the company gets exclusive products from many of its vendors — which helps it stand out during the holidays — as well as funding for promotions to keep it competitive with stores that may sell a lot of other stuff as well as toys.