Kids Central USA: a one-stop shop children can grow up on - includes related article on children's superstores

Discount Store News, Dec 6, 1993 by Arthur Markowitz

Service Merchandise launched Kids Central USA because toys and juvenile products has always been a good category for the retailer. The stores, providing one-stop shopping for parents with newborns, infants and toddlers, are an attractive market opportunity which has not yet benefitted from the buying power and experience of a large chain retailer.

Toys and juvenile products seem to have a fascination for Service Merchandise chairman and president Raymond Zimmerman.

The jewelry/hard lines specialty retailer first probed the toy store format in September 1980 with two 40,000-sq.-ft. units located in Nashville and Louisville, Ky., called The Toy Store, that were modeled on Toys "R" Us. The venture grew to six units of The Toy Store by mid-1982 prior to being phased out when they failed to meet Service Merchandise's expectations.

In 1982, Service Merchandise was involved with more important business than toys; it acquired cataloger Sam Solomon and its seven showrooms, then launched Zimm's as a fine jewelry and giftware test and eyed other diversifications. One of these was the burgeoning warehouse home center field that Service Merchandise would enter in 1983 by acquiring two stores that became the base of its Mr. How chain. That year, Service Merchandise acquired The Computer Shoppe, a computer specialty retailer, and opened three of The Lingerie Stores.

The various diversifications weren't successful and they hurt Service Merchandise's core showroom operation. The reason, as explained by Zimmerman himself, was that they caused top management to take its eye off the company's basic business while draining off capital into less productive operations. Three years later, Mr. How was sold off, to be followed by The Computer Shoppe. Meanwhile, The Lingerie Store was closed. Zimm's lingered on until just last year.

Service Merchandise's acquisitions and diversification in the 1980s severely impacted the company's earnings. It wasn't until 1991 that the turnaround engineered by Zimmerman was successfully completed. With Service Merchandise's base firmly re-established, Zimmerman was able to again respond to the siren call of toy and juvenile merchandising--but with a difference.

The toy store concept was expanded from just a basic toy store featuring "merchandising for infants and preschoolers," Zimmerman stated in Service Merchandise's 1992 annual report. "The stores aren't just targeted at a product market like toys. Our target is a consumer market: families expecting a child, or with children up to school age." The stores are called Kids Central USA and carry merchandise for children up to age 6.

"For the first two test stores I told my buyers, 'I don't want to see any infant or toddler product in any store that's not carried in Kids Central. I wanted every conceivable product available,'" Zimmerman recalled earlier this year. He added, "Then, as we prepared to unveil the prototype unit for Kids Central, I asked those buyers which products they reordered. The products they reordered are the ones we put into the prototype unit."

Service Merchandise launched Kids Central USA because toys and juvenile products has always been a good category for the retailer and because the venture offers the company an opportunity to develop a new profit center. Zimmerman said stores providing one-stop shopping for parents with newborns, infants and toddlers are an attractive market opportunity "which has not yet benefitted from the buying power and experience of a large chain retailer."

The test units, each one about 65,000 sq. ft., were planted in Franklin, Tenn., and Pharr, Texas. Each is only a few miles away from a full-line Service Merchandise showroom.

The prototype was opened last month in Atlanta in a former Lionel Leissure as a scaled back 36,000-sq.-ft. unit that still merchandises more than 20,000 skus as well as offering special services like a computerized gift registry system. Expectant mothers can register for baby showers and children for birthdays and preschool graduations.

The prototype modified and refined the basic concept introduced through the test stores with such moves as "the drastic expansion" of the Smart Kids Learning Center (consisting mostly of electronics and books), the scaling back of the stroller mix from 115 skus to 75 skus and the reduction of room vignettes in the home furnishing department to slightly over half of the 99 presented in the initial displays for the section dubbed Baby Nurseries.

Kids Central USA has been positioned as four stores for apparel, toys, home furnishings and juvenile necessities--all under one roof. Each "store" has sections for specific merchandise.

The apparel store, for example, includes a Baby Dior Shop along with Layette & Infants, a Grandma's Corner featuring gifts and party goods and a nearby department for jewelry and collectibles. The juvenile necessities store has Diaper Depot and Little Necessities. The toy store includes traditional toys, as well as bikes and trikes, strollers, car seats, high chairs, play yard goods and swings, the Smart Kids Learning Center and Big Top of Huggables.