5 Big Companies That Suddenly Went Out of Business & Why

• Year opened:1948
• Year closed:2018

Toys R Us started as a baby goods store in 1948 and evolved into the first-ever big-box toy store in 1957. Originally created as a “supermarket for toys,” this new model transformed toy shopping from a once-a-year holiday treat to a regular family outing. The idea quickly caught on, and Toys R Us ended up going public in 1978. Business boomed in the ’80s and ’90s, but, ironically, Toys R Us was defeated by the big-box model it had pioneered, with stores like Walmart proving to be a tough competitor in the space. The rise of e-commerce and Amazon further hurt Toys R Us’ bottom line, and the company eventually decided to close all of its U.S. stores in 2018 after declaring bankruptcy, CNN reported.

In 2019, much to the delight of anyone who once considered themselves a Toys R Us kid, the beloved toy chain reemerged — but on a much smaller scale. It now operates two mall stores: one in Houston and one in Paramus, New Jersey.

Watching a company expand and rise to the top of the food chain within its sector is fascinating. But perhaps more fascinating is when these mega companies — that can access the best of everything — fail.

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Such downfalls are particularly interesting when they happen seemingly out of nowhere. Let’s look at five big companies that suddenly went out of business, and explore why they tanked so abruptly.

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Blockbuster

Some of us nostalgic for the good old days miss seeing Blockbuster in town. It was a staple in American communities for decades and emits a strong essence of childhood for Gen X and millennials. It formed in 1985 and within two decades had expanded to comprise 9,000 locations that rented out VHS tapes, DVDs and video games.

That all came to an end in 2013, when Blockbuster practically went extinct (sans a few franchise locations). Experts opine that there was a cluster of factors that contributed to the mega chain’s failure, including poor decisions on behalf of leadership and an underestimation of the formidable force of streaming services.

It was indeed the rise of streaming, Netflix in particular, that was the straw that broke Blockbuster’s back and plunged it into debt from which it would never bounce back.

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RadioShack

Another mega company that can rouse up serious nostalgia for people who grew up buying all their electronics locally and in-store is RadioShack. The once tech sector giant, founded in 1921, was on top of the world for a number of decades. Like Blockbuster, though, RadioShack just didn’t keep up with the times.

In 2015, the company filed for bankruptcy due to declining sales, the rise of e-commerce and mounting competition from bigger retailers like Walmart and Best Buy. It was a relatively quick death from there. Despite solid efforts to save the business, RadioShack was forced to shutter its stores in 2017 or convert them to Sprint-only locations.

But was 2017 really the end of RadioShack? There’s been murmurings, as well as shouts, that the now old-timey seeming electronics retailer is making a resurgence under new ownership.

American Apparel

If you spent any time at all cognizant of advertising in the ’90s or early aughts, you surely remember American Apparel. The business, which peaked with more than 250 stores worldwide and reported annual revenue of approximately $630 million, went bye-bye in 2015.

American Apparel swiftly fell from grace, and then out of the picture entirely, because of its founder. Allegations of sexual misconduct swirled around him and in 2014, the board ousted him. Then came bankruptcy in 2015 followed by the closing of more than 100 stores worldwide in 2017. Gildan, a Canadian apparel retailer, bought the remains of the company for $88 million the same year.

Payless ShoeSource

The famed discount shoe retailer was a popular spot for shoppers on a frugal budget, but the momentum eventually died down to the point where the company couldn’t catch its footing. After more than 50 years in business, the brand failed primarily because it just couldn’t keep up with the overbearing competition, chiefly Amazon.

Though Payless ShoeSource is no longer in existence, a new iteration of the brand was born in 2020 (it now goes by simply Payless). Upon its relaunch, CEO Jared Margolis said in a press release, “Our goal is to open 300-500 free standing stores across North America over the next five years, beginning with the launch of the first prototype store in Miami, FL, the new home and headquarters for the brand.”

Toys “R” Us

The swift collapse of Toys “R” Us broke many hearts, particularly among those who grew up racing around its glorious aisles that teemed with so many gems for kids. The company grew from one shop in Washington, D.C (it opened in 1948) to the biggest toy retailer in the nation, with over 1,400 stores at its height in the ’90s.

The company’s legacy came to an end in 2018, when it closed all its stores after filing for bankruptcy. And yet, as we see with other companies on this list, Toys “R” Us didn’t exactly go extinct.

In 2021, WHP Global opened a Toys “R” Us in the American Dream mall in New Jersey. The following year, 452 in-store Toys “R” Us shops opened in select Macy’s locations, with some spanning 10,000 square feet.

Though no big company is completely resistant to failure, particularly not as the decades go by and technology evolves along with consumer behavior, these mega retailers have a knack for being reborn to better fit in the ever-expanding landscape of shopping.

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