Bombay reaches out to parents with launch of Kids concept - new Bombay Kids home furnishings stores - Brief Article

DSN Retailing Today, April 22, 2002 by Debbie Howell

DALLAS -- A booming market for children's home furnishings has caught the eye of specialty retailer The Bombay Company, which recently launched Bombay Kids. The new concept, which features bedroom sets, accessories and other furnishings for children, launched its first unit in a shopping center in an affluent section of North Dallas. The store is the first of six Bombay Kids units the company will test this year in various locations; two will be in strip malls, two will be adjacent to Bombay stores and two will be stand-alone.

A colorful array of whimsical and traditional bedroom sets and coordinated accents set the stage for the store's March 29 soft opening. About 90% of the items are exclusive designs of Bombay. One differentiator between Bombay Kids and rival concepts is that the store sells no infant products; furnishings target toddlers to teens.

The target market is a departure for Bombay, whose typical shopper is an affluent, highly educated female aged 45 to 60. With Bombay Kids, the retailer wants to expand its reach to younger families of moderate to upper income.

"The kids' business is one of the fastest-growing areas in home furnishings," said Steve Woodward, senior vp of merchandising. "That was one of the final frontiers for us."

Woodward, who provided DSN Retailing Today a tour of the 3,267-square-foot store on April 2, said the concept is a match for Bombay's competency in sourcing and design. The company comes up with its own proprietary design themes, such as sports, airplanes, fairy princesses, divas, flowers and bugs. From pillows and quilts to night lights, curtains, stuffed animals and bedding suites, items can coordinate for a full-room look or mixed with similar sets.

The pricing position is mid-tier, neither opening price point nor upscale. A sampling of furnishings ranged from $129 for a rocking chair to $749 for an armoire. The best-selling bed is the "Betsy," a white daybed that sells for $499. Woodward characterized the positioning as "an upscale look for a low price."

Fifteen different textile groups and three major groups of furniture clearly delineated between boys and girls are available. Coordinated accent pieces range from a giant stuffed frog prince to airplane mobiles and themed drawer pulls. Although the focus is on bedroom furnishings, Bombay Kids also sells pint-size leather chairs, bookcases, video stations, desks and decorative shelves.

The bright, airy store has a centralized cash wrap and an area where children can read or play video games. A family restroom is stocked with free emergency diapers.

Bombay first tested customer response to children's furniture with a Bombay Kids catalog that debuted in September, as well as through online sales. This store, which had been in development for about a year, was the next step.

Woodward said the other five test stores would open this fall in varied markets. If successful, he anticipated a quick rollout across the country. Bombay now operates more than 400 stores in the United States and Canada in its core home furnishings format. Most of these stores are located in malls, though Woodward said Bombay is opening more units in strip centers.

Competition in the estimated $8 billion children's furniture market has been heating up in recent years. Pier 1 Imports in early 2001 purchased Cargo Furniture, a 21-store children's furniture chain, and is tweaking the concept to grow into a potential base of 300 stores across the country. Williams-Sonoma expanded into kids' furniture in late 2000 with the debut of its first Pottery Barn Kids store. Now there are 30 units in the United States and Canada, and about a dozen more are in the works to open this year. Another competitor, Rooms To Go, launched its Kids To Go concept in early 1997, which has grown to 18 locations in the Southeast, Texas and Puerto Rico.

Bombay doesn't seem overly worried about competition, however, considering all three rival concepts can be found in the Dallas market. To a lesser extent, full-line furniture stores and mass retailers also compete in this niche.

Ironically, the new Bombay Kids and connecting Bombay store are located in a space vacated by Pier 1 Imports, which moved to a larger site in the vicinity. The rival retailers are both based in Fort Worth.

A success with Bombay Kids would be a much-needed shot in the arm for Bombay Company, which, unlike many of its home furnishings competitors, hasn't had a great year. For the fiscal year ended Feb. 2, Bombay reported revenue up 4% to $437.3 million, but comp store sales down 2%, blaming a soft fourth quarter, elimination of a winter sale catalog, lower levels of clearance merchandise compared to last year and fewer new product launches. Net income dropped 57% to $3.7 million.

While a profitable new growth concept in Bombay Kids won't have much of an immediate impact on earnings, it does enable Bombay to enlarge its customer base and tap into new revenue opportunities for future growth.