Monday, October 08, 2018

A Brand Wrapped In Bankruptcy Inside An Enigma

The weekend of July 4thToys ‘R’ Us shut all 700 of their stores. They announced they were going to conduct a bankruptcy auction of its brand name, Babies R Us, and their website domains. They were betting their giraffe on it!

It turned out the auction bids they got were not deemed to be superior to a plan to revive the brand because auctioning them did not offer “probable economic recovery” to creditors or stakeholders. 

There’s equity in them thar brands, so the top lenders decided to cancel the bankruptcy auction and are going to maintain the brands as a new independent U.S. business. 

They plan to revive the Toys ‘R’ Us and Babies ‘R’ Us brand names and run a branding company that will maintain existing global license agreements. Oh, and will invest and develop new retail shops.

BOTTOM LINE: As we’ve pointed out in the past, most of the time it is easier to take an old brand & leverage the values of the established brand rather than create a new brand with new brand values. 

Identifying new brand values is both difficult and painful. And most of the time isn’t as cost-effective as leveraging values consumers already value. Unless, of course, you have access to emotional engagement insights, which makes an often byzantine process more efficient and graceful.

Talking about developing new retail stores in any category complicates an already complex process, particularly when trying to revive a failing brand.

In this case, the enigma is that in the next few years nearly 85% the toys purchased will be sold online. So toy stores, not so much!

And while there’s a whole lot of shoppers out there who can still hum the “I’m A Toys R Us Kid,” tune, when they get to the line, “They got the best for so much less,” consumers are more likely than not going to flip their lids for likes of Amazon!


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