ies to reinvent itself in a new format, only to find the reality of retail less forgiving than anticipated. But this time, the collapse of Toys R Us reveals a deeper insight: that even globally recognised brands can falter without the fundamentals of retail strategy, particularly when relying too heavily on digital operations. Global marketing communications professional and executive director of VML Global, Jon Bird, pointed out that Toys R Us is a victim of three Cs – competition, culture and connection.  “It’s been squeezed on all sides by superior online players like Amazon, emerging online competitors like Temu, discount department stores – Kmart and Big W in particular – and specialty retailers [like] Toyworld,” Bird told Inside Retail. “Culturally, toys generally are losing out to digital devices, so the category itself is under threat, and in terms of  ‘connection’, Toys R Us feels about as relevant to today’s consumers as Blockbuster Video,” he added. “That shows in its decline in revenue, down 65 per cent in financial year ’24 over financial year ’23. It’s hard to see what its reason for being is going forward.” A brand reborn, then rebound After first entering administration in 2018, the toy retailer was acquired by ASX-listed Funtastic, which rebranded itself as Toys R Us ANZ.  Under the Hobby Warehouse Group, the business relaunched in 2019 with a purely online model, which was reportedly leaner, asset-light and betting on the strength of its iconic name. By avoiding the costly overheads of physical stores, the business homed in on a digital strategy, hoping to streamline operations and focus on e-commerce growth. However, in reality, the pivot to a digital-only model may have hastened its demise. E-commerce executive Penny Cox, who took over as CEO in 2023, had ambitions to revitalise the brand’s online experience. But by the middle of this year, the company’s balance sheet had deteriorated too far. With financial year ’24 revenue collapsing to just $7.7 million and losses totalling $19.4 million, the business was no longer deemed viable.  The ASX suspended the company’s listing, citing an inadequate financial position. Toys R Us and its associated brands, Babies R Us, Hobby Warehouse and Riot, now face an uncertain future as administrators attempt to restructure or sell the business. Why the online-only bet didn’t work Retail expert and Inside Retail contributor Brian Walker summed up the misstep in a recent LinkedIn post: “Toys aren’t a purely digital purchase. This is a category built on tactility, theatre and discovery. Children and parents alike want to see, touch and feel the magic.” Walker’s commentary highlights a crucial truth: while some retail categories lend themselves to a seamless online transition, toys are not among them. Unlike books, electronics or fashion staples, toy shopping is inherently sensory. It’s about excitement, imagination and play. Experiences that are hard to replicate through a browser window. “What this collapse tells us is that legacy brand equity is not a strategy – especially when the execution lacks the retail fundamentals: deep customer engagement, differentiation and omnichannel investment,” Walker noted.  The wider trend: global brands, local challenges Toys R Us isn’t alone. The Australian retail landscape has proved treacherous for many global brands, from Starbucks and Gap to Topshop and Borders. Despite their global fame, each struggled to localise its offerings, adapt to Australian consumer behaviours and build meaningful engagement. Australia, while geographically vast, is a small market in population, value-conscious, service-sensitive and unafraid to abandon brands that fail to deliver. Many international retailers have underestimated the complexity and nuance of the local market, falling back on brand recognition instead of building relevance. As Walker pointed out: “The Australian market is deceptively complex. It’s smaller in scale, value-driven, digitally savvy and built on trust. Customers expect personalisation, speed, experience and above all, authenticity.” What could have been done differently? The Toys R Us name still carries weight globally, but in Australia, nostalgia alone was not enough. Success would have required more than an aesthetically pleasing website and imported branding.  Strategic partnerships, gaming tie-ins, family events or interactive retail spaces might have brought the magic back. Instead, the brand remained largely invisible, operating behind screens while competitors like Kmart, Target and Big W offered the one thing Toys R Us couldn’t: omnichannel presence. Legacy brands entering the Australian market, or relaunching within it,  may need to do more than recycle a logo. They need fresh thinking, customer-first execution and the flexibility to meet the unique demands of the local market. Without that, even the most iconic names risk becoming relics.