It is not easy selling toys and games these days — even at Christmas time — and eCommerce platform Amazon is not making things any easier, Toys R Us CEO Jerry Storch told CNBC’s closing bell. In fact, the rise of online shopping is only making things harder.
“It got a lot worse when Amazon got in,” he noted.
According to Storch, Amazon has a similar strategy to Toys R Us: keeping its prices generally low and strategically time the raising of those on a few of the top trending toys.
“The internet’s a perfect vehicle for trashing the margins on those products,” Storch said, adding that Toys R Us’ baby business is also struggling against competitive pressures.
Storch is not totally bereft of hope, though, and he believes the toys and games retailer will “survive in some form” as it evolves to take on the Walmarts and Amazons of the world. He admitted it will require an investment and a company-wide willingness to do things very differently than it has in the past, however.
“It’s going to take tremendous investment on the internet and in stores to be a retailer in the future,” Storch said, noting that Amazon and Walmart were likely the winners of the holiday 2017 shopping season. “There’s going to be significant consolidation ahead. There’s going to be more store closings. Those that are best capitalized are the ones that are going to survive.”
In light of those comments, Storch did note that some pockets of physical retail are better suited to hold out against Amazon’s online machine. Home improvement supplies-focused retailers like Home Depot and Lowe’s will be harder for pure-play digital to compete with profitably. Off-price brands such as apparel and home goods retailer TJX and department store retailer Burlington also likely have a strong future — but by no means a guaranteed one.