Will Toys ‘R’ Us stick around in Canada? And other questions, answered

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WATCH: Toys 'R' Us files for bankruptcy protection – Sep 19, 2017

Toys “R” Us has filed for bankruptcy protection in the United States, and plans to do the same in Canada — but it’s assuring customers that things won’t change.

The iconic toy store company, which also operates Babies “R” Us, filed Chapter 11 documents Monday at a U.S. bankruptcy court. Its Canadian subsidiary also sought creditor protection under the Companies’ Creditors Arrangement Act in the Ontario Superior Court of Justice Tuesday.

Consumers shop at a Toys “R” Us store in Miami. Alan Diaz/AP file photo

The company said its stores in other parts of the world, such as Europe and Asia, won’t be affected.

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Here’s what Canadian customers should know about what’s happening with the company.

READ MORE: Toys ‘R’ Us files for bankruptcy protection in US, Canada to follow

Why did the store file for bankruptcy protection?

In a statement released late Monday night, the Toys “R” US explained that they’re filing for bankruptcy protection to “restructure its outstanding debt,” in hopes that it will lead to more sustained long-term growth for the retail company.

“We are confident that we are taking the right steps to ensure that the iconic Toys”R” Us and Babies”R” Us brands live on for many generations,” the company’s CEO, David Brandon, said in the release.

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The company operates 70 stores across Canada, with a total of 885 stores in the United States, Puerto Rico and Guam. It has nearly 65,000 employees worldwide, with its headquarters in New Jersey, but it’s unclear whether there will be changes to the staff.

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When asked about possible layoffs, Toys “R” Us responded to a Global News email saying the bankruptcy protection isn’t about “store closures or staff reductions,” but rather a “proactive step” to improve the business.

READ MORE: What Canadians need to know about Toys ‘R’ Us filing bankruptcy

How will bankruptcy protection affect Canadian shoppers?

Toys “R” Us has been keen to let customers know that the “vast majority” of its approximately 1,600 stores around the world and its web portals will continue to operate as usual.

“The things customers like the most will not be affected,” a separate press release about the bankruptcy protection read. “We continue to offer amazing new seasonal products and great customer service, just as we always have.”

The company has stressed that it will continue to carry the same amount of merchandise through the upcoming holiday season, and products will be delivered “in a timely fashion.”

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Will Toys “R” Us stick around in Canada?

But the retail giant is struggling in Canada, said Robert Levy, president of Toronto-based BrandSpark International.

Many parents are turning to Amazon’s family service, which offers 20 per cent off and free shipping on regular deliveries of diapers, along with other family-centric offers and recommendations. Walmart is also becoming increasingly popular for parents with tight budgets.

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Mark Lee, an associate professor at Ted Rogers School of Retail Management at Ryerson University, added that Toys “R” Us needs to move beyond having expensive toys lined up along store aisles.

“Toys ‘R’ Us has developed a reputation for being expensive retailer for toys,” Lee said.

Lee explained that while a decade ago children were playing with traditional toys, the store needs to adapt to the “new kids on the block” that would rather buy electronics.

One way for the company to adapt would be to have “interactive and experiential” stores, with more opportunities for children and parents to test and play with products.

— With files from Global News reporter Erica Alini, The Canadian Press


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