Retail Roundup: KB Toys Files For Bankruptcy, Toys 'R' Us Struggles, More

KB Toys files for bankruptcy protection -- Although the holiday season is usually the busiest time of the year for toy stores, KB Toys Inc., one of the nation's largest toy retailers, filed for Chapter 11 bankruptcy protection Dec. 12. The chain, comprised of 460 locations, plans to close all its stores and begin liquidation sales immediately. KB Toys, which listed its assets at between $100 million and $500 million, said it will try to find a buyer for its wholesale distribution unit as it begins its going-out-business sales. The chain has tried desperately to compete with bargain-priced rivals like Wal-Mart over the past few months; in October, KB Toys cut the price of 200 toys to $10 or less, besting Wal-Mart's efforts to slash the price of 10 toys to $10. [Source: Reuters]

Toys 'R' Us to go the way of KB Toys? -- Another toy retailer facing challenges is Toys 'R' Us, a $14 billion chain with a future that could be hinged on frugal Americans' spending habits this holiday season. The retail behemoth is heading into Christmas with $6 billion of debt and a business model that's baffling experts. "Its key value to consumers was a much broader selection, particularly of more expensive toys," says Dartmouth professor M. Eric Johnson. But that model clashes with shoppers' current tendency to opt for good deals rather than large selections, especially when the Web's virtual toy store has broader offerings than any one company could ever hope to capture. [Source: BusinessWeek]

Online retailers scramble to promote free shipping -- As competition heats up for retailers looking to snag last-minute shoppers, more and more e-commerce sites are offering free shipping. For the week of Dec. 8, 71 of the 100 top online retailers offered free shipping, up from 65 the week before. Several sites are even offering free shipping as late as Dec. 23 for Christmas delivery. Seven of the top 100 retailers now offer free shipping without a minimum order requirement: Neiman Marcus, Office Depot, Overstock.com, Oriental Trading, Saks, Talbots and Tiffany's. Meanwhile, competitors are frantically lowering the price totals consumers need to meet in order to receive free shipping. [Source: internetretailer]