Are toy stores dying? Why big-box chains are struggling even as toy sales climb

The much-awaited trailer for Pixar's Toy Story 5 dropped last week, revealing a new toy joining the beloved playtime crew: a tablet.

In the description posted on YouTube, Pixar writes, "The age of toys is ... over?"

Rex the dinosaur and Slinky Dog shake with anticipation as the delivery box arrives. Woody and Buzz Lightyear cling to each other as INXS's iconic Never Tear Us Apart plays in the background.

It's just a movie, but the cartoon scene also dramatizes a real threat. In the age of screens, amid reports of retail stores struggling and studies suggesting that all kids want for Christmas are Robux, what does the future hold for the toy industry?

A number of different forces are at play in the market, said Doug Stephens, a retail adviser, author, and the founder and CEO of Retail Prophet — not the least of which are falling birthrates, where fewer kids means fewer customers compared with the toy boom we saw in the 1950s and '60s.

We also live in a world of saturated distribution, where Amazon or any third-party marketplace can deliver practically any toy to your doorstep, which greatly reduces the need for big-box toy stores, Stephens told CBC News.

But then, there are also screens.

"The whole realm of online and digital consoles have just obliterated the toy category," Stephens said.

"Over the past 20 years, we have just seen a surge in gaming, we've seen a huge surge in the sale of gaming consoles and it's almost become a subculture."

The baby boomer era was, in many ways, peak toy store. Economic prosperity in North America, a soaring birth rate and a more child-focused culture all helped fuel a toy boom, notes the North Carolina Museum of History.

In addition, new types of plastics were more widely available, which made manufacturing toys easier and less expensive, according to the Strong National Museum of Play.

In 1957, businessman Charles Lazarus launched Toys ‘R’ Us, the first big-box toy store, notes the History Channel. That era also ushered in some of the most iconic toys of all time, the History Channel explains, like Mr. Potato Head, Matchbox cars and Barbie.

By 2018, however, things had changed. Plagued by long-term debt, online shopping and the rise of gaming, Toys 'R' Us filed for bankruptcy protection and then liquidated its U.S. operations. By 2021, all of its U.S. stores were gone.

On Sunday, the Edmonton Journal and the Financial Post reported that Toys 'R' Us Canada closed some 38 stores this year and put another 12 up for sale. The national retail chain that once had 103 Canadian locations now has only 40, according to the report.