Toys R Us will potentially be closing over 700 stores and 33,000 employees are at risk of losing their jobs. Full report in WSJ.com here. Please do read for some of the reasons for its closure, including the most important one, stronger competition. Whenever people lose jobs, naturally the property market shakes because some of these workers may not be able to keep up with their mortgages. It may not be just the Toys R Us workers. What about their vendors and their vendors’ workers? Hopefully, something positive soon because there are some plans that is now being discussed that may save a lot of these stores and the jobs that come with it even if not all. For this part of the world, Asia, maybe a white knight to take over the brand? Who knows?
When some company or brand is closing down, do we see it as an issue of competitiveness or just the bad economy? In Malaysia, just weeks ago, someone pointed out that her favourite brand, GAP will be closing down their stores in Malaysia. One of her friend remarked that the economy is getting worse especially for the retail. There are too many malls. Well, for everyone’s information, GAP is ALSO closing down their stores in Singapore. (Oh no…) and they have also closed all their stores in Australia. (Oh dear…) By the way, GAP is closing 200 stores worldwide but it intends to open 270 new stores of which many would be Old Navy. (Yes… it has opened one in 1Utama)
Everyone wants to look good but no one wants to pay high prices anymore. That’s the reason why many new, bright and great looking apparel stores have nice designs and good materials but at prices which are easily 30-40 percent lower than many of these ‘branded’ brands. Their service is still very good. Many brands start to realise that they should be selling more to earn more instead of selling with a high margin like yesterday. If we are to generalise a bit, it meant that even if I were buying the same number of shirts and pants as last year, I am actually spending lesser! Frankly, I remember I used to pay RM189.90 or more for the usual jeans brands in the mall. (not Levis lah…) Today, I can get a pair of new jeans from Old Navy for 30 percent lesser. If we look at Brands Outlet, then it’s even lower.
Everyone kept harping on the depreciation of ringgit in 2016 (yes, it recovered in 2017), well, if the ringgit was getting smaller by double digits but the retail is still up by a single digit, do you get the meaning? As for too many malls, let’s get this straight, one more time. Too many malls meant the ‘not-so-competitive’ ones will suffer. It is not likely to affect the big five: Suria KLCC, Pavilion, Mid Valley, Sunway Pyramid and 1 Utama or cause them to start lowering their rental for example. Here’s an earlier view. Getting a car park is still going to be tough every weekend. My kids love Toys R Us even if I have bought very few items from them. Buying toys online is cheaper too. Just this month alone, I have purchased 6 items from shopee. I think the trend is really changing. There’s no ‘safe’ brands, only continuously evolving brands. Perhaps a white knight would save Toys R Us soon. Happy following.
written on 15 March 2018
Next suggested article: Online shopping to kill malls? Not during my generation, for sure