Well times certainly are a changin... as they always are.

But I don't believe that the reason for this is that children are not that interested in physical toys anymore. Other factors such as the ones you mention, economy and amazon may play a role, but these wouldn't be critical tipping points for a company that knows what it's doing. Just look at the resurgence of board games and pen-and-paper roleplaying games, they were both supposed to be dead and extinct by now an yet...

Imho, the biggest problem is that Toys 'r' Us are a big dinosaur corporation. And that's pretty much it. They didn't adapt, they kept sneering at new trends and products. For example, in the realm of board games (a subject dear to my heart) a cursory examination of their shelves would have revealed that they were groaning with ancient crap games whose names are now used as term of derision at places like boardgamegeek (Monopoly? Are you kidding me?!). And what about all that Star Wars junk no one really cares about anymore?

I'll now peer into my crystal ball and make the same prediction I made about board games about 10 years ago: Quality physical toys will be back, and they'll be bigger than ever. It is only when the dinosaurs die off completely that the new players will step in and fill the void.