The toy business: Not all fun and games

By Barbara Spector

The news that the Toys R Us chain had filed for bankruptcy hit me hard.

My family was in the toy business from the mid-1950s to the late 1970s. Like many family businesses, ours evolved through the ingenuity of a perceptive entrepreneur.

My paternal grandfather, who immigrated to the United States from Russia, established a wholesale housewares-distributing business in Philadelphia. When my grandfather decided to retire, my father, who had worked in the business since his return from service in World War II, acquired the remaining inventory. My father and mother, who had recently married, started their life together by selling off the housewares (a motley collection of items such as mismatched pots and lids) and transforming the business into a toy store.

Ultimately, my father grew the company into a 14-store Mid-Atlantic chain, including stands in discount marts (his first foray into the toy industry) and stores in enclosed shopping malls, then a new concept. The business was prosperous enough to enable my mother to stay home and raise her children. Our family had a comfortable lifestyle in the suburbs. My father loved sharing jokes with manufacturers’ reps and marveling at the new products that were unveiled at the industry’s big annual convention, the Toy Fair.

The prosperity came at a price. The toy business, though centered on fun, is highly stressful. Inclement weather in December can turn a good year into a bad one. During hard times, parents made dramatic cutbacks in the amount they spent on toys for their kids. My father also sold children’s furniture and holiday decorations as a way of filling in the gaps.

Our family’s stores were open seven days a week, and my father worked all seven days. He was constantly traveling from one store to another -- and also to his office/warehouse. At the close of business every evening, he called each of the stores to get the day’s final sales figures. He entered each number manually on his ledger, occasionally looking up from his paperwork to glance at the sporting event playing on our TV.

Competition was intense, and even in those years before the electronic age, consolidation in the industry was taking its toll on independent retailers. My father’s main competition, a larger regional chain called Kiddie City, was eventually acquired by Lionel, a manufacturer of toy trains. Retailers who couldn’t afford TV commercials found it hard to keep up.

When Pachinko, a mechanical game from Japan, became popular in the U.S. in the mid-’70s, my father decided he’d had enough. He preferred to sell classic toys. (He would have intensely disliked video games -- though he likely would have been thrilled to find that computers could shorten his workdays.) A national chain, Kay Bee Toys, made a good offer for our family’s mall stores.

Since then, I’ve watched from afar as the industry has continued to consolidate. Lionel Kiddie City liquidated in 1993. Kay Bee changed its name to K-B in 1997 and went out of business in 2009; Toys R Us acquired its assets. Meanwhile, Toys R Us was itself succumbing to intense competition from Walmart and Amazon.

It’s not only the independent retailers like my family that are the losers in this new market reality. A September 28 article in the Washington Post noted that the Toys R Us bankruptcy is causing “widespread panic” among toy manufacturers -- from the giants like Mattel and Hasbro to the small, entrepreneurial toymakers who are turning out playthings they hope will catch on with kids.

My father didn’t live to see what happened to his industry. He died suddenly and unexpectedly in 1981. Before his death, he had bought a small hardware store, which my mother and brother ran for a few years, boosting its sales and eventually selling it at a profit. The proceeds from the Kay Bee acquisition enabled my mother to enjoy a long retirement after the hardware store was sold. The decision to sell the toy stores served us well.

Even so, I mourn for the days when independent retailers like my dad knew their customers personally and stocked each store with items they knew would most appeal to people in that neighborhood. These store owners were willing to take a chance on a cute new item made by a small company with a clever sales pitch.

Small family businesses like ours used to be the foundation of the U.S. middle class. Entrepreneurs like my father did business with other entrepreneurs, and each helped the other along.

Growing a family enterprise into a category-killing powerhouse is certainly an impressive accomplishment. But what has happened in the toy industry makes me question whether bigger automatically means better.