Baby stores duel it out in Texas - Baby SuperStore Inc., LiL' Things

Discount Store News, Sept 4, 1995 by James Mammarella

DALLAS/FT. WORTH -- North Texas has become the setting for a sharp battle for share in the booming infant/toddler retail segment. Two red-hot power merchandising formats are dueling here under the unforgiving noonday sun--and yielding clues about their potential for national rollout.

In a provocative move, Duncan, S.C.-based Baby Superstore, known for a take-no-prisoners competitive stance that chairman and ceo Jack Tate calls the "oxygen deprivation" strategy, will open a standard 40,000-sq.-ft. store under the very ramparts of the flagship location of regional rival LiL' Things.

For its part, LiL' Things is expanding that Arlington, Texas, store to 47,000 sq. ft., well above its current 35,000-sq.-ft. prototype.

LiL' Things president and ceo Ron Staffieri told DSN that the chains offer consumers clear choices. "Our stores are much more interactive," he asserted, noting the open play areas for tots attracted by Lego and Duplo blocks, Thomas the Tank Engine and Brio, large ridable toys and the sit-down computer play section. LiL' Things also features a hair salon and portrait studio.

Baby Superstore, if not as warm an environment, offers more skus, with a big head start in consumables, child development goods and furniture.

Similarities include an EDLP policy, gift wrapping and a gift registry for expectant mothers, a prominent display of upscale brands, a broad price-point offering, an active interest in forging robust private label programs and a preference for power-center real estate.

Spurred by a wildly successful September 1994 IPO, Baby Superstore has rapidly expanded, adding 13 new locations in the past year. Baby Superstore now operates 46 stores in 13 states from Florida to Ohio to Colorado, with plans for a total of 61 units in operation by yearend. Over the next few months, it will open its first stores in Miami, Chicago, Kansas City, Denver and San Antonio. Two dozen more units are planned for '96.

Privately held LiL' Things operates 16 units in four states--Texas, Oklahoma, Arizona and Colorado--and will have 20 stores by yearend. Staffieri said the chain will add at least one dozen stores in each of the next three years.

The clash in cowboy country can be seen as a push by Baby Superstore to fully control its Southwestern flank, while LiL' Things fights for forward momentum on its home turf.

Baby Superstore has encountered a smattering of competitors elsewhere, including Burlington Coat Factory's Totally 4 Kids, which operates single stores against it in northern Virginia and Tulsa, Okla. Totally 4 Kids recently announced a leap to California, where it plans to co-site with Jumpin' Jax family entertainment centers in two megamalls. A third T4K/JJ site may open in Phoenix by next year, where it will face four LiL' Things stores and, more than likely, a new Baby Superstore.

In Florida, KidSource is the latest challenger, launched with two units a year ago and having just added a third store.

All this regional feuding takes place against the backdrop of the coast-to-coast dominance of the children's hard lines and soft lines power retailing segment by Toys "R" Us/Kids "R" Us. The upstarts offer sharper niche merchandising, but none boasts a tighter focus than Baby Superstore. Its infant-to-age-3 product range has proven a winner, as has its warehouse-type presentation, the result of two decades of format evolution.

LiL' Things, which offers items from infant to age 6, was launched in October 1993 by chairman Ron Stegall and a group of investors. Stegall was a founder of office superstore Bizmart (since absorbed by OfficeMax). He recruited Staffieri (then ceo of Kay-Bee Toys) to LiL' Things in May '94.

The chain has made strong shifts in its mix during the first two years. In particular, said Lynn Cohn, vp merchandising, "Our hard lines business has become more substantial than our predictions."

LiL' things offers very large assortments in bulky toys from Fisher-Price, Step 2, Today's Kids and the full line by Little Tikes. The chain is also rolling out expanded assortments in H&BC, food and juice, diapers and formula and a very aggressive program in educational software. Recent merchandising changes include wider aisles, added promotional fixtures and pushing infant products to the front of the store and apparel to the center.

Cohn, said LiL' Things has brought out private label merchandise in high-quality core basic apparel items such as jeans, turtlenecks and socks, and in bedding and some H&BC products.

Staffieri pointed to the array of 200 computer diskette and CD-ROM software titles as unparalleled by any retailer.

Baby Superstore's latest innovations include an array of palleted promo goods up front; big, colorful illuminated department signs; better sight lines across the store; an expanded gift corner; and a power wall behind the registers to feature specials on commodities.

The Baby Superstore private label, used in apparel, shoes, bedding, furniture accessories and infant needs, has reached 6% of total sales for the first half of 1995, said Jodi Taylor, cfo. She said the chain would like to achieve 15% to 20% with the house brand, and ultimately make it a national brand for tots.