Liquidation sales at Toys R Us offer another reason to doubt the survival chances for any and all stores you walk into rather than visit online.
But the end of the greatest store of my childhood isn’t the whole story. We’re again about to witness a tantalizing test of brick-and-mortar’s future: seeing what happens to hundreds of soon-to-be-empty Toys R Us stores once the bankrupt “I-don’t-want-to-grow-up” retailer closes or sells all its stores.
Much of the space won’t stay vacant for more than a year. At least that’s what I’m told by metro Atlanta shopping center landlords and others in the industry.
E-commerce gut punch
Who hasn’t caught glimpses of shopping centers with empty spaces or noticed big retailers such as Sports Authority and HHGregg shrink or disappear? Brick-and-mortar growth has been punched in the gut by Amazon and other online outlets. And some malls are faltering badly, including one in metro Atlanta where a woman’s body went unnoticed for two weeks near the mostly vacant food court.
Federal estimates show U.S. retail e-commerce sales are growing far faster than those of retail overall.
But retail as a whole is also growing, and physical-world sales still account for the vast majority of what we buy.
Overall vacancies declined for shopping centers last year. Meanwhile, some retailers got their groove on, like Atlanta-based Home Depot, which posted nice sales growth, though it added hardly any new stores.
“It is not as bad as everyone expects,” shopping center guy Jay Baker told me about the impact of Toys R Us closings. “This whole idea of a retail apocalypse is really dramatic and probably overdone.”
He’s marketing space at the South Point, a big Henry County center where Toys R Us is one of several anchors.
Lots of places have too much shopping center space, but not his, Baker told me.
That might help him in the short term. In the long term, he’s betting people will continue to want to get out of their homes to shop. He told me he expects retailers will need less space as they use stores as more of a showroom than a way to stock lots of any one item. But, he said, “if Amazon comes up with one-hour shipping, I’m in trouble.”
For now, he’s waiting to see if anything comes of last-minute attempts by a billionaire toy company executive to raise funds and keep at least a portion of the Toys R Us chain alive.
It’s a long shot.
A double whammy for some
The more likely scenario is at least temporary pain for landlords if Toys R Us stores close. For some, there will be a double whammy. In addition to losing rent from the toy retailer, some anchors have clauses in their leases that call for sharp rent cuts if other major anchors are no longer operating in the same center.
Some shopping center owners already were wrestling with other vacancies, such as one with a Toys R Us near struggling Gwinnett Place in Duluth.
I didn’t hear back from representatives of that center.
“There are definitely going to be some losers where they scrape the building and start over,” said Leo Wiener, who is part of a group that owns a shopping center down the street.
He’s already been pushing to fill an HHGregg store that closed last year. “You are going to have to be creative.”
The phrase “shopping center” is becoming a misnomer. Because landlords are increasingly turning to things you wouldn’t consider a store: fitness centers, government offices, bouncy entertainment places.
“There is no option that is not on the table for us,” Billy Harvin told me.
His Roswell-based company, American Star Development, owns some shopping centers, including one near the Mall of Georgia in Buford that includes a large Toys R Us.
“It’s not going to be a fun process,” in the months ahead, he told me.
He’s considering breaking the store into smaller retail spaces, with the idea that there are relatively few big-box retailers looking for big spaces these days.
And he’s talking to people interested in medical offices. He’s also considering tearing the building down and putting a hotel on the land and some adjacent property.
Some shopping center owners insist that in the long run they may see greater financial benefits and generate more traffic to their centers with something other than Toys R Us.
“This disruption in retail creates tremendous opportunities for us,” said Brian Finnegan, executive vice president of leasing for Brixmor, which owns nearly 500 U.S. shopping centers, including one beside an Alpharetta Toys R Us.
He said this year he sees lots of expansion plans among big chains he tracks, particularly for groceries, value apparel, fitness and stuff for homes.
What killed Geoffrey the giraffe
One thing I didn’t hear a lot of people talking about: another toy store.
There just aren’t many of those options left out there in the wake of Amazon, Walmart and Target. My Google search for toy stores around part of Atlanta’s northern suburbs turned up two tiny mom and pops.
And an adult sex toy store.
Not what I was looking for. I swear.
Toys R Us, just for the record, wasn’t undone solely by Amazon. The chain’s owners took on more debt than the stores and their Geoffrey the giraffe icon could handle.
The store themselves didn’t generate much magic with customers any more. I heard some former shoppers gripe about high prices. Harried parents talked about the insanity of bringing kids into a store with aisles of pressure to buy.
“I use to get my GI Joe guys there,” Harvin told me wistfully. Toys for his own kids came from elsewhere.
Times change. Retailers better, too. Same for “shopping” center owners.
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