Toys ‘R’ Us to shut down US stores, put 33,000 workers out on the street

By Brian Williams
April 2, 2018

Facing stiff competition from retail giants Walmart and Amazon, whose head-to-head battle for top dog is hitting other retailers hard, Toys “R” Us announced March 15 that it is closing all 800 of its U.S. stores, throwing 33,000 workers to the curb.

The company declared bankruptcy in September, saddled with a more than $5 billion debt from a leveraged buyout in 2005 by Vornado Realty Trust and private equity firms Bain Capital and KKR & Co. The new owners hoped to see company bosses return the company to profitability by “cutting costs” — code words for going after workers’ jobs, wages and conditions.

“With debt payments siphoning off cash every year,” the New York Times reported, “Toys ‘R’ Us could not properly invest in its worn-out suburban stores or outdated website. Sales plummeted, as Amazon captured children’s desires — and their parents’ wallets.”

In aggressively pushing its toy sales, Amazon set up a comprehensive, online showroom. Seeking not to be outflanked, Walmart has been dropping its prices to capture more of the market share. In 2016, Toys “R” Us controlled 13.6 percent of the U.S. toy market, with Amazon at 16.3 percent and Walmart at 29.4 percent.

A number of other retailers who were taken over in leveraged buyouts also “collapsed in recent weeks,” the Times reported. One of the biggest, Southeastern Grocers, LLC, which took over the 582-store Winn-Dixie supermarket chain in 2012, filed for bankruptcy March 15. It says it will close 94 “underperforming” stores. The company has almost 50,000 workers.

Toys “R” Us officials said that the company is likely to liquidate in France, Spain, Poland and Australia, and intends to sell its operations in Canada, Central Europe and Asia. Its U.K. affiliate also filed for bankruptcy and will close more than 100 stores. Worldwide, the company has some 1,600 stores, employing 60,000 workers.

When jobs are eliminated, the U.S. company says, workers will be cut off from benefits in about two months.

Walmart expands grocery deliveries

Walmart, the largest purveyor of groceries nationwide, is taking further steps to solidify its position in its cutthroat competition with Amazon. Walmart officials announced March 15 plans to expand its grocery home delivery services to more than 100 cities by the end of the year, up from the six now in operation. According to the company, this service would then be available to more than 40 percent of U.S. households.

Orders will be fulfilled at more than 800 Walmart stores by 18,000 worker “specialists,” who will face more strictly imposed speedup conditions. For a $9.95 fee, deliveries will come within four hours of orders by drivers contracted through Uber, Deliv and other services.

Walmart also announced that it’s expanding curbside grocery pickup services to 1,000 more locations this year, in addition to the 1,200 where it’s currently available. You drive to the store’s parking lot and a worker comes out to hand you your groceries.

In addition, Walmart filed a patent for robot bee drones that would pollinate crops just like real bees. By expanding its operations into farming, the Walton family-owned company hopes “to grow more of the food it sells to ensure greater control over its food supply chain,” said the New York Post.

Both Walmart and Amazon have gone up against each other on patents for futuristic delivery schemes. Each has filed designs for blimp warehouses that would hover over cities and release drones to carry packages to your door.

Amazon, which purchased Whole Foods Market in an effort to compete with Walmart in groceries last year, is also looking to expand fast delivery services. Amazon officials say it hopes to expand grocery delivery from the current six cities to the rest of the country later this year. Contract drivers will be required to make deliveries within two hours after your order is placed.

But Jeff Bezos and Amazon’s other bosses have been ineffective in breaking through Walmart’s domination of the grocery business.

As the U.S. capitalist economy continues an uptick today, with some more and better paying job opportunities open, retail bosses feel pressure to find ways to keep workers. But they’re also forced to push harder against each other, and here the key to success is to squeeze the most for less from their workers.