Small toy stores can’t compete on price against mass
merchandisers, which have economies of scale and far more storage space. So
instead of offering steep discounts and door-busters, many independent toy
stores emphasize service, special events, small perks and community-minded
events, like fund-raisers, in an attempt to draw shoppers and build customer
loyalty.
Mary Tague, owner of Toy Town in Key Biscayne, Fla., offers
free coffee in the morning—and wine in the afternoon—during December. And for
the past four years she has thrown a party complete with Santa and elves, and
expects to attract about 600 people to her store for this year’s party on
Thursday.
The holiday season is a crucial time for many specialty
toy-store owners. The period from Black Friday to Christmas can account for as
much as 50% of a small toy shop’s yearly sales, and the season can make up for
losses during the rest of the year. But overall lackluster holiday sales are a
major concern this year, as is “showrooming,” the phenomenon when customers
browse in a physical shop but actually buy the item at Amazon or other big Web
retailers, hoping to save money.
Total retail spending over the weekend after Thanksgiving fell
11% compared with last year, according to the National Retail Federation,
a retail industry trade group. And, while more consumers shopped on Small
Business Saturday this year, spending per consumer at small businesses fell
11.5% to $162 that day, according to estimates by the National Federation of
Independent Business, a small-business lobbying group.
Toys have long been a hypercompetitive category.
Three-quarters of the estimated $22 billion in U.S. toy sales come from four
big retail chains and online powerhouse Amazon. Toys “R” Us, a company that
helped create the “category killer” retail model, has a 16% market share of the
toy retail industry in the U.S., according to Needham & Co. toy analyst
Sean McGowan. The number of small toy stores plummeted 40%, to 1,500 from
2,500, over the past 10 to 15 years, estimates Kathleen McHugh, the president
of the American Specialty Toy Retailing Association.
Jonny Girson, the owner of two toy stores in the Kansas City
area, says he has seen dozens of owners go out of business in his 18 years on
the job because of inadequate cash flow at the end of the holidays.
The biggest advantage touted by specialty toy-store owners
over big-box and online retailers is more personal customer service. Steven
Aarons, the owner of Barstons Child’s Play, a chain of four specialty toy shops
in the Washington, D.C., area, has three-month training for new employees,
focusing on child development and learning the features of the products they
sell.
Last Saturday, to cap off Black Friday weekend, Mr. Aarons
invited 10 local children’s book authors into his stores. His tactic seemed to
help: This year, his sales during Black Friday weekend were up more than 10%
from the same time in 2012.
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