Does anybody remember Geoffrey the Giraffe? To be honest, until this morning I’d completely forgotten he existed. Even reading the articles about how Toys R Us is finished didn’t prompt me to remember. Only when I started to write this post did I recall.
Here’s the backstory. In 1948 following service in The War, Charles P. Lazarus descended into the African jungle in search of nothing but the highest quality products he could sell to the people, namely bicycles. He employed the finest in German explorers (unemployed since May 1945), coolies, and technology. After getting lost in the bush, soon only Lazarus remained alive. Soon to expire, he awoke from his pre-death slumber held in the firm embrace of one Geoffrey the Giraffe.
As he was slowly nursed back to health over many months, Geoffrey explained to Lazarus that the real money was in selling toys and baby products to the Boomer generation. Lazarus agreed to implement Geoffrey’s plan, but only on the condition that Geoffrey ended his self-imposed three-thousand year isolation and rejoin the known world. And so for near seven decades Toys R Us existed and Geoffrey delighted millions with his special powers.
Well, that was fun, but now the ride is over. Geoffrey is said to have tried to make a break for it. He’d procured tickets on a tramp steamer bound from Brooklyn to Kinshasa. But assassins in the pay of Kohlberg Kravis Roberts Bain Capital (who own Toys R Us) got him on the quay at 3am as he was trying to sneak up the mooring line. Rather than rejoin the jungle to wait for three-thousand years again, Geoffrey’s getting taken to the woodshed. At KKR Bain’s exclusive Adirondack retreat. But KKR Bain’s Masters are merciful, the deed will be done quickly.
It’ll be hard for future generations to understand just how central Toys R Us once was to the American experience. Now, gone. Any coincidence that it’s end came as a result of a private equity firm mismanaging it and filling it up with endless debt? I think not. I’m sure KKR made billions in profit off Toys R Us’ demise. But it still doesn’t change the long term dive in retail.
Six months ago after a personal experience with bad stores, I predicted the doom of retail. I thought this would take decades. But perhaps the rout has already begun.
Maybe in less than a decade there will only be the following physical stores left:
– Ultra Cheap Retail (Dollar Tree, Family Dollar, etc)
– Cheap Retail (Walmart, Target, etc)
– Niche Rich (Starbucks, Small Bookstore, Craft (of any variety), etc)
– Home Improvement
And in the end, maybe it won’t be that bad after all. I took a look at the top 50 retailers in America. Of all those 50, here are the ones that don’t fit into my list:
Bed, Bath, and Beyond
Toys R Us was #62. So that’s roughly 15-20% of all stores are doomed. That’s a lot, but it’s not like it’s 50%. So I guess the rout / realignment has already started.
Poor Geoffrey, RIP.