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September 2010 | Vol. IX - No. 9

Tools:

How to Start a Toy Store, Part II: Find the Right Toys

Research, Customers and Geography Help Make Your Mix Unique

By: Alison Marek
9/1/2010

Click here to read How to Start a Toy Store, Part I.

If you're opening a toy store, you probably love toys, and so you might assume that choosing the right ones for your store would be easy. You might be wrong.

RESEARCH

Ed Evans admitted that he and his wife didn't do enough research into the toy market when they started All Things Fun, and they were surprised at how difficult it was to source products accurately. Even when you do manage to locate the manufacturer of an obscure or newer product, you'll have to act quickly; the window of opportunity on an innovative, high-quality item can be quite small.

Nearly one-fourth of the retailers who spoke with TDmonthly indicated they prefer catalogs, reps or face-to-face time with customers as research methods. But those who have made the Web their discovery ground for great, new products know to look for a site like TOYDIRECTORY.com and TDmonthly.com that has all the pertinent information — including photos and videos— in one place.

“We especially like to see what [TDmonthly] found at the different toy shows,” said Fiedler.

JUMP FIRST

Sharon DiMinico, founder and CEO of the Learning Express specialty toy-store chain, shared with TDmonthly why smaller retailers don't have time to second guess when they spot a hot toy or game: "It's becoming increasingly more difficult to offer unique products not carried by the big-box retailers. What used to be a 10-percent crossover is now a 50-percent to 60-percent crossover," she explained.

"A lot of ‘specialty-only' manufacturers are now selling into other channels. Manufacturers have to grow their businesses, too, but the smart ones are separating their lines for the mass market and specialty, developing unique packaging for each," she continued. "Many products are introduced in specialty stores, but go to the mass market the following year. It means that small, independent retailers need to get creative to compete."

Be Consistent

"I believe our toy selection reflects my personal values about good play," said Sally Lesser, owner of three Henry Bear's Park stores in Arlington, Brookline and Cambridge, Mass. She's been selling toys for more than 30 years. "I really look carefully at the play that is inherent in each toy, and try to decide if this meets a need at an appropriate price."

Lesser pays more attention to her own analysis than she does to kids' immediate reactions to a toy: "They like everything!" she told TDmonthly, but that doesn't mean it will sell.

AVOID HYPE

The top-10 toys lists promoted on television, the Internet and in newspapers are often funded by the companies cited on the lists. The toys themselves are backed by heavy advertising and movie tie-ins, and sold so cheaply in big-box stores that you won't be able to compete on price.

While awards can also be helpful in identifying high-quality and innovative playthings, most awards programs charge entry fees to the manufacturers who submit their toys, and bestow an inordinately large number of awards.

"Most of [the awards] feel like paid advertising. I don't put a lot of credence in them," said David Campbell, owner of Amazing Toys in Great Falls, Mont.

It's therefore crucial to research the criteria used for the award before trusting that it has any real value.

TURN TO THE TRADES

New toys from smaller manufacturers that could turn into sleeper hits can be found in local toy trade and gift markets, the basement booths at the American International Toy Fair in New York, and by exchanging information with other specialty retailers. You can also use TOYDIRECTORY.com and TDmonthly.com to learn what toys sell well for specialty retailers, which new products offer outstanding quality and play value, and what standards your store should have to guarantee steady and robust sales.

Check online at www.tdmonthly.com every few days to see the new specialty toys and videos we've uploaded, and to get retailer, kid and parent feedback on products you're considering for your store.
Use Reps

Manufacturers' sales representatives usually have a broad grasp of industry trends and, if they know your store, can help guide you to products that match your needs.

"I rely on my reps to answer questions and tell me about toys," said Greg Larson, owner of Larson's Toys and Games in Upper Arlington, Ohio. He's been selling toys since 1981.

USE CUSTOMERS

"Be flexible and listen to your customers," advised Evans, summing up his business philosophy. "Don't purchase things that you like, but things your customers will like. Use data from your POS [point of sale] system to help make informed purchasing decisions."

Almost all of 29 retailers that spoke with TDmonthly in Spring 2009 said direct communication with customers in the store is their primary way of staying in touch with customers' wants and needs. A few retailers are also taking advantage of social networking tools such as Facebook and Twitter to solicit feedback. And a very lucky few have built-in market research tools — their own kids.

PAY ATTENTION TO GEOGRAPHY

Nationwide top-10 lists have little value for most specialty toy-store owners. What sells in North Carolina may be a dud in El Paso. You also need to be careful when getting advice from your local colleagues.

"Even on a state level, there are items that sell well in our Newton, Mass., store that won't sell as well in our Needham, Mass., store — only four miles away — and vice versa!" pointed out DiMinico. "Our owners have to tweak their merchandising mix based on their demographics and the taste of their customers."

Spy on other toy stores and see what's selling in your area. When reading about products recommended by specialty retailers in TDmonthly and other publications, remember to look at where their store is located to help evaluate if the product will work for you.

And to stay ahead of the trends in your area, suggested DiMinico, keep an eye on the major metropolitan centers.

"A trend will typically start in the L.A., Atlanta or New York market," she said.

PLAY OUTSIDE THE BOX

Twelve Tips for the Right Mix

Here's a summary of what retailers have told TDmonthly about how to find the toys that make their stores unique:

Find outrageous toys … quickly, via trade shows, online sources such as TDmonthly, meetings with sales reps and trips to Europe.
Listen to what customers are asking for, and then get it.
Choose complementary items that can be sold together, such as books and plush.
Sell a few treats for grownups, too, such as higher-end candy.
Have plenty of quirky, inexpensive items near the cash register for impulse buys.
Be picky: If an item's overexposed or isn't selling, get rid of it.
Keep top sellers in stock — no matter how "dated" they may be.
Analyze your toys. If one item is selling better than something similar, find out why and use the info for future purchases.
See what's moving in nearby specialty toy stores.
Exploit your reps: Ask for their top sellers over the past year and use as a guide for your purchases.
Trust your gut. If the little kid in you says, "Buy it," then try it.
Watch your numbers. Once you're open, keeping close track of what moves and what stagnates will help you find the balance that will work for your market.

Despite the challenges, successful specialty retailers devise a number of ways of finding the right product mix. [Sidebar: Twelve Tips for the Right Mix]

Europe can be a source of unusual toys and games. The high-quality products Ziegenhagen found at the Nuremburg Toy Fair in Germany inspired him to open his first Playmatters store.

Owner Kathleen Tutone of Treehouse Toys in Portland, Maine, and Portsmouth, N.H., and her business partner, Robert Leuchner, were so impressed by the toys they saw on a European buying trip that they decided to expand their business model. They formed sister company Magicforest, which imports toys from Europe and is the exclusive U.S. distributor for the Italian plush company Trudi.

Other retailers who have become distributors for European toy lines include JoAnn Farrugia of JaZams in Pennington and Princeton, N.J. (she distributed Wow Toys before Ravensburger took over), and Eric Masoncup of Geppetto's Toy Box in Oak Park, Ill. (Woodland Magic Imports).

Greg Bonner of Heights Toy Center in Little Rock, Ark., sometimes eschews traditional methods of finding toys, but it doesn't mean he doesn't try to figure out what kids want. He just tries to figure it out before anyone else.

He was among the first to carry child-sized luggage and purses in his toy store. His store also sells luxurious, high-end sleeping bags by Kelly Kouture for décor-loving tweens, and the cheap "junky jewelry and nail stuff" they love, too.

DiMinico also buys items outside the toy industry, such as stationery, jewelry and personalized gifts.

"For us, they are impulse purchases, but they contribute significantly to our top line. By merchandising items that are suitable for moms, or older brothers and sisters, we're surprising them with items appropriate for all ages — which in turn, expands the age of our customer base," she explained.

Keep your focus on what makes you unique, advised retailers. Fiedler embraces a philosophy someone presented to her years ago: Never worry about the competition. Use all your energy to make your store the best possible.

“I love the big-box stores, because they make our stores look so great!” she told TDmonthly. “When Target began a specialty toy section I was very concerned, until I visited their ‘upscale toy department.’ It was a mess. When I did find a sales clerk, they had absolutely no idea what they were carrying."

BUY ENOUGH … BUT NOT TOO MUCH

Even after you've begun establishing your identity by deciding on a product mix, how do you know how much to buy … and when? And how/what do you reorder when your stock has been cleaned out?

"Not having previous retail experience, I had too much inventory," Hackney noted about her first years in business. "I got myself into an inventory hole financially. That's a hard thing to climb back out of, but we're getting there. I hired a financial specialist, and that has made a tremendous difference for me."

When it's time to order, Powell Phillips of Phillips Toy Mart in Nashville, Tenn., looks for areas where he's "light." He'd stayed away from books for years, for example, but when he brought them in as add-ons they did "really well," he said. He placed a comics rack near his hobby area, which attracts older kids.

Scholl said she tends not to focus on specific items that are selling well, but instead looks at her most popular categories and vendors. Twice a month, she analyzes her sales versus what she has on hand, and adjusts her order to bring more products into the categories that are moving.

Kazoo & Company owner Diana Nelson, in Denver, Colo., determines what to order by "just following the trends," she said. Her store was rated one of the Top 5 Specialty Retail Toy Stores in North America by the Toy Industry Association from 2003 to 2006, and No. 1 Toy Store in Denver by Denver's 5280 Magazine from 2003 to 2007. "I live and breathe by numbers, so we're totally computerized. … We look at the numbers by department — how's the infant department doing and the toddler department and puzzles and Playmobil and LEGO — everything is driven on numbers."

READY FOR THE BIG TIME?

If the challenge of running a toy store still excites you, the rest of "In the Black" and frequent trips to www.tdmonthly.com should help ease you into the race. And as you're pulling up to the starting gate, remember Bob Breneman's advice to new owners: "Be prepared for a lot of work."

Read Part I: Locations, Teams and Business Plans

^{Other contributors to this article may have included: Julie Adrian · Michaele Birney Arneson · Leigh Au · Christina Chan · Julia Ann Charpentier · Elizabeth Chretien · Virginia Davis · Laurel DiGangi · Zan Dubin Scott · Lisa Durante · Cicely Enright · Margaret H. Evans · Doug Fleener · Diane Franklin · Janie Franz · Dennis Foley · Dennis Furlan · Rosette Gonzalez · Elizabeth Greenspan · Mort Haaz · Sharri Hefner · Terri Hughes-Lazzell · Kyle Hall · Pennie Hoover · Sheri Jobe · Julie L. Jones · Candyce Kornblum · Christine Lebednik · Susan Ledford · Chris Lundy · Susan Maddela · Hans C. Masing · J.D. Meisner · Adeena Mignogna · Catherine Jo Morgan · Claudia Newcorn · Willow Polson · Marie Raven · Kara Revel · Andrew Robinton · Greg Rock · Brenda Ruggiero · Tamara Schuit · Brent Turner · Vanessa VanderZanden · Jodi M. Webb · Stacy Wiebe· Mark Zaslove · Alex Zelikovsky}

Writer's Bio: ALISON MAREK is an award-winning writer, director and cartoonist whose work has been published by Fairchild Publications and DC Comics (Piranha Press), broadcast on Showtime and other cable networks, and viewed worldwide in film festivals. See her short films and print work on www.alisonmarek.com. Watch her nefarious villains in the web series www.MuggsMovers.com. Get inspired by her cartoons "Daily ARFFirmations to Unleash Your Inner Fido" at www.ARFFirmations.com. Phew! And then ... Read more articles by this author