For many in the US, Canada and in some European countries the Toys “R” Us chain of stores was an important part of growing up. Therefore, the iconic chain’s decision to shut all 735 of its US stores earlier this year has shocked many. This outcome was the culmination of many factors, such as the growing preference to buys toys online, the ability of competitors to offer superior “experiences” and the chain’s own poorly-made strategic choices of price as the go-to-market plank and not investing adequately in e-commerce capabilities and experiential retail (and of course, the burden of debt).

Analysts expect that in the short-term, rival retail chains will benefit from the closure of Toys “R” Us stores. Target is seen as a particular beneficiary because more than 90% of its stores are within five miles of Toys “R” Us stores. But by no means will Target be the only chain to benefit. Ollie’s Bargain, The Children’s Place and others see themselves gaining from the situation.

But the really savvy retail companies will look beyond such immediate benefits. Like every other business, the toy industry too is going through major change. Innovation and technology are driving not just new products but also customer experience during the purchase- whether in-store or online. The medium- and long-term beneficiaries of this shake-out in the toys and sporting goods retail industry will be those companies that understand the emerging contours of the business and focus on the new drivers of growth.

Some companies have themselves been at the cutting edge of these changes. Not surprisingly, they are doing well- for example, Build-a-Bear, which allows consumers to customize stuffed animals by offering a range of animal skins, clothes, accessories and even scents. Watching the “stuffer” working to create the stuffed animal of their choice is truly an amazing experience. And because adults love stuffed animals, the company has expanded its target customer segment beyond “kids” and “toys”. By opening stores in popular holiday destinations, Build-a-Bear now enables customization of stuffed animals with clothes and accessories that will always remind buyers of their holidays. In other words, they have ensured the longevity of the experience by creating a tangible memory aide.

Large toy manufacturers such as Lego, Hasbro and Mattel are also being impacted by the industry trends as well as the bankruptcy of Toys “R” Us, a major brick and mortar retail partner for these companies. They will perhaps use this disruption to realign their business strategies and embrace digital capabilities that enable new ways for these toy-makers and their brands and products to engage with customers and consumers around the world.

Despite all these winds of change, it is fair to say that certain things will remain the same going forward: kids will want to touch, feel and experience a toy before buying it. Earlier, walking into a toy store was the only option; now, technologies make it possible for kids to do almost exactly that from the comfort of their homes. Toy-makers and retailers will rely more on “unboxing” videos and pop-up stores to attract kids to their products and brands and thus drive growth and profits. And of course, they will need social media smarts to direct and harness influencers in the form of other kids who can make a certain toy cool (or not).

With the government’s emphasis on Make in America and cutting the trade deficit with China (the world’s largest manufacturer of toys), American companies such as Crayola (crayons, silly putty etc.), Beka (building blocks) and DirtKing USA (tricycles) are expected to do well. So too could niche players like Green Toys and Begin Again. The former recycles milk jugs to make its vehicles and playsets, while the latter uses sustainably harvested rubberwood and plant-based dyes to make its interactive toys (including replica John Deere tractors). But the future could just as well be shaped by start-ups like GoldieBlox or Tiggly or littleBits, that cleverly combine STEM learning or robotics with fun. And that might just be the new engine of growth the industry needs to bounce back.

Companies such as MGA Entertainment too seem to have found the magic sauce. Though they have been around for many decades, they were not as well-known as say Mattel or Hasbro. But as CEO Isaac Larian recently said, “Clearly our innovative product, packaging and marketing is hitting a chord with consumers around the globe, especially in the UK”. The company’s name may not be top-of-mind recall, but its franchises and brands sure are- Little Tikes, L.O.L. Surprise, Bratz etc. are already names to reckon with in the US and UK; they are expanding rapidly in Europe and Latin America. The company has tied up with Amazon as well with retailers like Walmart and Target. For overseas markets, it has tied up with local players. It thus melds ecommerce with brick-and-mortar presence.

The history of business is full of examples where nimble and innovative newcomers have got the better of established players. A similar story is likely to play out in the toy retail sector as well. Whether you are part of a company that’s being threatened or are in a company that is perceived as a threat and wishes to push home its advantage, you need the right talent to win this war. Clearly, no child’s play, this, but then, even toys are serious business.

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