Don Quijote, a major discount retailer familiar to Korean tourists, is set to acquire the Japanese operations of Toy R Us. Despite the Japanese toy market reaching record highs, driven by the popularity of card games and foreign tourist demand, Toy R Us has reported losses for eight consecutive years. The company is expected to withdraw from its store operations in Japan after 35 years, succumbing to low birth rates and the rise of online shopping.
According to the Nihon Keizai Shimbun (Nikkei) on September 30, Pan Pacific International Holdings (PPIH), which operates Don Quijote, is expected to acquire approximately 150 stores, including Toy R Us and the baby products store Baby R Us, by the end of October. The acquisition is estimated to be around 10 billion yen (approximately $86 million).
The Yomiuri Shimbun reported that PPIH will take over the stores and retain employees from Toy R Us Japan's parent company, Toys R Us Asia. Asahi Shimbun noted that Toy R Us Japan employs about 6,000 people, including part-time workers. PPIH declined to comment on the acquisition when asked.
Toy R Us Japan recorded a net loss of 3.7 billion yen in its 2025 fiscal year, marking eight consecutive years of losses. Since the mid-2000s, large electronics retailers have attracted customers with point benefits, while online retailers like Amazon have also taken market share. Despite attempts to adapt by increasing smaller stores, these efforts fell short. The declining birth rate has further strained Toy R Us, which has primarily operated in suburban areas.
The American Toy R Us, once the world's largest toy chain, opened its first Japanese store in 1991 in Ibaraki Prefecture. At that time, the U.S. government was pushing for the relaxation of strict regulations on new large retail store openings in Japan. Toy R Us's entry into Japan became a symbolic case of this market opening. The company operated over 160 stores at its peak, promoting a 'permanent low-price' strategy in a market that traditionally adhered to fixed pricing.
In 2017, the American Toy R Us filed for bankruptcy and closed all 735 stores in the U.S. the following year. However, Toy R Us Japan, a subsidiary of Toys R Us Asia, managed to continue operations despite the bankruptcy of its parent company, only to face ongoing losses exacerbated by the COVID-19 pandemic.
In contrast, the Japanese toy market continues to grow. According to the Japan Toy Association, the market size for 2025 is projected to reach 1.1664 trillion yen, a 6% increase from the previous year, marking the fifth consecutive year of record growth. The popularity of card games and trading cards, which account for about 30% of the market, along with increased purchases by foreign tourists, has contributed to this growth. Nikkei reported that while adult 'kidult' consumers are driving market expansion, Toy R Us has failed to adequately capture this demand. Although the company opened its first kidult specialty store in March last year, it was seen as a late move compared to competitors.
Nikkei indicated that PPIH plans to maintain the Toy R Us brand temporarily after the acquisition, transitioning the stores to focus on toys appealing to adults, such as card games, to target the kidult market. The company aims to expand its reach to family and child customers and leverage this for new product development at Don Quijote. There are also indications that PPIH seeks to strengthen relationships with major toy manufacturers like Bandai Namco Holdings and Takara Tomy.
Other competing retailers are also expanding and renovating their stores to capture the growing toy demand. Aeon Retail, part of the Aeon Group, began operating a dedicated floor combining game and toy stores in July. Yamada Holdings plans to increase its large-scale toy and game stores, branded 'Life Select,' to 80 by March 2030.
* This article has been translated by AI.
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