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Toys R UsWe live in challenging times for the retail industry.

We vividly remember the spectacular collapse of BHS, which was put into liquidation in the U.K. in April 2016 after years of under-performance on the market – now dominated by online retailers – and a dubious sale for £1 to a former bankrupt with no experience in retail.

With reference to this case, in Summer the industry regulator concluded that the main purpose for the sale of the department store was to prevent the previous owner, Sir. Philip Green, to take on liability for the pension scheme. While the failure of the company left a pension deficit of £571m, Sir Philip Green agreed to hand over only £363m in cash to rescue the BHS retirement scheme.

The challenges of the market partially explain the collapse of another retail giant, while this time on the other side of the pond: Toys ‘R’ Us. Similarly to BHS, an ill-conceived acquisition worsened the financial feasibility of the company. In this case, the responsibility for the financial woes has to be attributed to an ill-conceived leverage buyout, which took place in 2005, some two decades later than the buyout frenzy which hit the U.S. in the 80s. Much of the toy merchant’s debt is the legacy of the 2005 US$7.5 billion leveraged buyout in which Bain Capital, KKR & Co. and Vornado Realty Trust took the company private.

It is hard to deny that the brick-and-mortar retail industry facing incredibly tough times to convince customers from abandoning their stores for the lower prices (sometimes) and convenience of the click-of-a-mouse online shopping. In the U.S. alone, more than a dozen major retailers have filed for creditor protection this year, including Payless Inc., Gymboree Corp., and Perfumania Holdings Inc.

The situation is equally grim in the U.K., where companies like Marks & Spencer and ASDA are facing tough times to win back customers and investors. Even successful department stores such as John Lewis are issuing warnings and reporting halved profits this year, albeit in the latter case their directors blame primarily the increase in prices caused by inflation and the uncertainty associated with the Brexit process.

There are however success stories. Tesco turnaround efforts seem to be promising, thus shedding a more positive light on the future of the largest retailer in the U.K. More generally, the sector continues to offer plenty of opportunities for sellers who are able to differentiate their products and services from the standardised offer that is found on the internet, as the Retail Week magazine proves.

In the end, what cases like Toys ‘R’ Us and BHS prove is that it is not the model of the “traditional” brick-and-mortar retail industry that is under threat. Customers are still willing to walk the floors of shopping malls and outlets, as they enjoy the ‘shopping frenzy’ that cannot be transmitted by a click on the mouse on their computers. What they need, however, is to find proper incentives to buy in person rather than online. The crisis of these retail giants has much more to do with sub-par offer and questionable financial operations rather than with a sluggish demand from customers.