Retailers plan comeback as entertainers

DSN Retailing Today, Feb 7, 2005 by Doug Desjardins

It used to be that toy retailers just had to build a few displays and keep hot products in stock to get kids and their parents into stores. But these days, they need to find ways to engage and entertain kids in a business where the bar is constantly being raised.

Nearly a half-dozen retailers are now testing retail concepts that provide kids with some sort of interactive experience in stores. The activities include live shows, rides, games and assembly lines where kids can create their own toys. Though the idea is to create a more entertaining atmosphere for kids, the primary goal is to give retailers new ways to make money in an era when margins on toy sales are razor thin.

"They're mainly designed to give retailers a way to diversify their revenue streams," said toy industry analyst Chris Byrne. "From the moment you walk into these stores, you're presented with a lot of different ways to spend your money."

He says the redesigned FAO Schwarz flagship store in New York City is a good example. The store, which reopened in November, has several new elements, including a candy shop and a motion simulator that customers pay to use. "The motion simulator is probably the biggest revenue generator in the store," said Byrne.

One of the best known--and most widely copied--players in interactive retail is American Girl Place. The American Girl brand, founded by Pleasant Co. in 1985, was bought by Mattel in 1998 and has since been extended to two retail locations in Chicago and New York City. In addition to stocking a full line of American Girl dolls and accessories, the stores feature a doll hair salon--the American Girl Theater, featuring daily live shows--and the American Girl Cafe for meals, afternoon teas and birthday parties.

The Walt Disney Co. exited the retail business last year when it sold its Disney Stores chain to The Children's Place, but it held onto its flagship store in Manhattan and converted it into the first World of Disney store. The primary change Disney made was to renovate the third floor into an entertainment center where kids can sample the latest Disney movies and music, watch live shows and take part in Disney-themed activities.

"We redesigned it to create space for entertainment offerings like magical meetings, Cinderella's princess court and the friendship room," said John Pierce, director of marketing, communications and creative content for Disney Regional Entertainment. "The strategy is to bring the Disney experience to an audience outside our theme parks."

Yet another new retail concept launched last fall was Friends 2B Made, a spin-off of the popular Build-A-Bear Workshop chain. The first two stores, which opened in November in Pittsburgh, Pa., and Columbus, Ohio, allow kids to create their own dolls and give them personalities with an array of clothes and accessories.

Company founder Maxine Clark said the idea was to "take the best parts of Build-A-Bear Workshop and use these concepts to create a fun place for girls to make their own doll and best friend." The retailer is hoping to duplicate the success it's had with its 165-store Build-A-Bear chain, which generated a double-digit increase in same-store sales over the holidays and recently went public.

Even traditional retailers such as Toys "R" Us are adding interactive elements to their standard stores. In addition to its flagship store in Times Square, which features an indoor Ferris wheel, Toys "R" Us operates its hybrid-concept Geoffrey Stores in several markets.

The Geoffrey stores are smaller than standard stores and put more emphasis on in-store entertainment and activities. They include play areas alongside a small cafe, where parents can sit and watch their kids, and a party room where kids can hold birthday parties. The success of the party rooms prompted Toys "R" Us to launch a Geoffrey's birthday club program last summer in select stores.