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Kids know absolutely nothing when they are born but they generally have a strong instinct to play with certain kinds of toys regardless of their short life experience. There is not much reason to force innovation in this sector.

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It's not toys that need innovation but the Toys R Us business model. I loved going there as a kid too but it had been surpassed by WalMart in toy sales volume long before it went private. Target was probably close if not surpassed it, and video game sales were taken over by more convenient (and way more fun) GameStops. TOY stock had dropped a ton, and really was only hanging in there due to Babies R Us. All of this before Amazon was a serious retailer of anything besides books (meanwhile toysrus.com was a disaster that they took offline). It's a fun place to remember but I'm pretty sure if you walked into a replica Toys R Us from 1998 today you'd immediately be overwhelmed by suckiness - the horrible fluorescent lighting, zero customer service, lack of furnishings (Costco stores look nicer), nothing to actually try or play with, prices that weren't too competitive.

It does kinda make sense to me that the various non-US subsidiaries that survived did so at least in part because those places didn't have anything like Walmart.

Whether they'll be able to continue to survive in a world containing the current incarnation of Amazon is a different question and I've honestly no idea how that will turn out.

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