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Toys 'R Us getting out of the toy business.... and what is K-Mart doing?

By Andrew Pollack on 08/12/2004 at 08:25 AM EDT

Toys 'R Us not selling toys? K-Mart not selling anything? What's going on?

The economy in our country is getting stranger and stranger. I'm an avid listener of "Marketplace" on our local public radio station and I've heard two stories recently that to me seem connected. The first was hearing that although K-Mart made a profit for the first time in a long time, it wasn't by selling merchandise. It turns out they're selling real estate. All the land they hold in all those cities is more valuable than their stores, so instead of trying to engage with consumers they're selling the land. A lot of economists think they're heading toward being a holding company that makes money simply by having money and investing it. This has worked for others in the past. Now, this morning I've heard that Toys 'R Us will likely sell its toy stores and keep only its profitable stores focused on supplies for parents of newborns and toddlers.

Is it me, or does it seem more and more like we've gone through an "outsourcing" processes -- first with manufacture and then with services line workers -- and now more and more we're going to see less retail sales operations. This is happening as toy sales are more and more mail order. Mail order itself is consolidating around "fulfillment houses". When I purchase something from Cyberguys for example, it gets shipped from another company who apparently handles all the acquisition and warehousing as a service to on-line retailers.

What's the pattern? Employment. It is expensive to hire people as line workers. People stocking shelves, running registers, cleaning isles, and if you can find anyone still doing it -- helping consumers make choices. True, these people aren't making enough money to live on -- but their cost is still too high to compete with the mail order houses. Apple Computer seems ahead of this curve. They've opened stunning boutiques that feature their products in a luxury environment, and yet they sell most of their products through on-line resellers. Look for more and more of this model.

There are  - loading -  comments....

My own thoughts on this are...By meeko on 09/04/2004 at 08:39 PM EDT
I just want to know is Toys-R-Us shutting down or what? In my community it is
the only toy store for quite some distance. Am I going to have to resort to
purchasing toys for my daughter on the internet? I know in the 80's when I was
a kid I enjoyed walking through the toy stores. I remember being disappointed
when Childrens palace shutdown. What are your thoughts??

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