L'il Things making big plans - Company Profile

Discount Store News, May 1, 1995 by Pete Hisey

ARLINGTON, TEXAS -- Eighteen months after the debut of its first children's superstore, L'iL Things has grown to 13 stores (20 by yearend), named former Kay-Bee Toys president Ron Staffieri president and ceo, and adjusted its mix to appeal morg strongly to a mass market shopper.

Staffieri has taken over day-to-day operations of the company from founder Ron Stegall, who continues as chairman of the board. Stegall founded BizMart, an office supplies superstore chain that was acquired by OfficeMax two years ago.

The baby superstore chain has made several major changes recently in its assortment and merchandising, all driven by customer comments. Originally, L'iL Things concentrated on high-margin, department-store apparel, toys, giftware and domestics, avoiding the more commodity-type products like diapers, low-end apparel and similar products.

"But when customers came in, they didn't just ask if we carried diapers, they asked where they were," Staffieri said. The same was true of formula, child development products like baby bottles, baby-proofing supplies and bibs, and, surprisingly, storage items. All now have major shelf space, with development products nearly doubling to 1,000 skus in the past year.

L'iL Things has also adjusted its price points storewide, taking over its once-leased shoe department to hit more value price points and nearly eliminating its upper-end porcelain gift department (judged to be too high-priced for the chain's core shopper).

The chain initially viewed itself as competing with department stores, but quickly found that discounters are its primary foe.

"We like to be near a major linens player, a book superstore, a Target or a Service Merchandise," Staffieri noted. "They appeal to the same customer we do."

The customer has been L'iL Things' best consultant. "She knows what she wants and what she wants to pay," Staffieri said. During an April store tour, shoppers regularly approached Staffieri and vp merchandising Martin Kresge with questions and comments, to which both replied at length and with great patience.

"We get some great ideas from our customers," Kresge noted. Comments have led the chain to expand its interactive playground around the store> "Mothers told us that while they loved the playground idea, they felt uncomfortable shopping out of sight of their children," Kresge said.

Despite the large number of parents with kids shopping L'iL Things, the No. 1 customer group is often a nonparent. Expectant moms, Staffieri said, are L'iL Things' most important shoppers, and the company caters to them with a gift registry, special services for baby showers, and even a "multiple mom" discount for those with or expecting twins or triplets, in which a second identical item purchased is discounted 10%.

L'iL Things has also become high-tech, doubling its computer software selection and adding CD-ROM products. It expects to double the sku count again to about 200 this summer.

"At first, we thought our kids would be too young for computers," Staffieri noted. But customers requested more software, and when L'iL Things added live computer to try out new games an educational software, lines quickly developed. "It got so ad that when I bring my daughter in, I have to limit the time she can play at the computer," Staffieri noted. "We assumed that the kids were too young for real software, and we found out fast that we were wrong."

Kids are getting into computers at a younger age, and demand quickly grew for games skewed to shoppers' older children. The company also carries quasi-computer educational toys, like a line of V-Tech children's laptops. "The whole Toys to Learn section has done really well for us," Staffieri said.

Another major growth area has been the expanding market for safety-oriented juvenile goods, which have formed a subcategory among more traditional playpens.

The safety category pops up storewide, including a full 20-ft. run of products like toilet seat locks, as well as higher-tech items like The Sitta, a pager that sounds an alarm if the child wanders too far from the parent's base station.

Perhaps the oddest of the changes is a large storage department. "A lot of it is driven by the need to organize kids' things," Staffieri said.

The company has also expanded its toy selection considerably. Early on, L'iL Things concentrated on exclusive and upscale products like custom train sets. Since then, the chain has expanded kiosks dedicated to hot licenses, pulled in lower-end toys like action figures, and sprinkled bins of 69-cent "shut-up" toys around the store.

In infant and juvenile bedding, vignettes have been cut back to conserve space and create more of a selection message for products like wall art, mattresses and children's tables and chairs.

There have been changes in store layout as well, particularly a move to wider aisles and more play space for kids.

But the major changes have been in boosting interactivity storewide. L'iL Things makes at least one of nearly everything it sells available for kids to play with and parents to inspect, and Staffieri sees that as a major competitive advantage.

With only 18 months under its belt, L'iL Things seems well on its way to national chain status, Staffieri said. The company has expanded out of its Dallas base to neighboring Texas markets like Austin and Houston, as well as Denver, Oklahoma City, Tulsa and Phoenix.