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The Retail Apocalypse Continues: France's #2 Toy Chain In Trouble

The brick and mortar retail Toy Store apocalypse continues, this time in France. French JTA reader Patrice P. send us word of France’s #2 toy retailer in financial woes. Click through for Patrice’s translation summary of the article’s main points.

To add to the bad news about Toys R Us in the USA and the UK, France’s #2 toy retailer is also going under. They don’t mention Star Wars specifically, but they do note that toys sales aren’t being propped by new movie releases like they used to. They also mention a marked interest from kids for gadgets with screens (tablets for kids, Nintendo Switch). On a side note TRU France issued statements that bankruptcy of the USA company does not affect them, suppliers will be paid and orders will be honoured.

Source:
https://www.ouest-france.fr/economie/la-grande-recre-se-place-en-cessation-de-paiement-5610377

Translation:

French group Ludendo, owner of toy specialist retail chain La Grande Récré, declared itself in “défaut de paiement” (the company is unable to pay its debts, think Chapter 11 protection), as confirmed by a well informed source to (news agency) AFP, confirming a previous report from (French newspaper) Le Figaro. The famous toy store chain is facing difficulties, in a sector where sales are down in France.

The toy brand indicated on Wednesday at the Paris Commercial Court that it was going to suspend payment. The Group, contacted by AFP, declined to comment on this matter.

Why is La Grande Récré doing so poorly?

Despite a turnover of 500 million euros in 2016, Grande Récré is in debt to the tune of 100 million euros. To overcome this problem, Ludendo Group decided to open its capital “in order to find a new majority shareholder” in December 2017, to no avail. The group, which has 1,600 employees and 250 stores in France, failed to recover in 2017.

A catastrophic Christmas

The banks therefore decided not to renew their loans, as they did every previous year. (…). While the holiday season accounts for almost a third of the company’s turnover, Christmas 2017 was mediocre.

Toy market decline of nearly 1%

The toy market is indeed ailing. According to estimates by the NPD Group, which provides Europe-wide data on the toy market, it is down 0.8% in France after four consecutive years of growth.

What’s the cause? The “movie effect” no longer drives toy sales as well as before, but above all competition from websites such as Amazon. One of the victims of this trend, US retailer Toy’ R’ Us, filed for bankruptcy in the United States in September, is also driving prices down. La Grande Récré was one of the major European players in the sector with 400 stores worldwide and 2,500 direct employees.

Fewer children, fewer toys

The 2% drop in the birth rate since 2015 has also clouded the picture for toy brands. 

Finally, “screens” are the big winners with children. They replace traditional toys: the Nintendo Switch sold 900,000 copies in France in 2017 and the Storio max, produced by Vtech for children aged 18 months. Faced with this wave of technology, the famous toy brand will have to revitalize itself.

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