Points of Articulation
An Open Letter to KB Toys
Every time a new line of toys comes out, KB Toys' prices are, without fail, significantly higher than your competitors. $5 toys cost seven or eight, and $9 figures are more than $12. Toy fans stay away from your aisles, leaving you to stock merchandise well after everyone else has sold out, gaining you a few customers who couldn't find items elsewhere.
The rest of the stock gathers dust until you put it on a major clearance price, and then things move out quickly. You've still managed to clear your shelves, but so much product sitting stagnant for so long keeps you from the kind of turnaround other stores have.
You may think that by having higher prices, you'll have to move less product to make the same profit as those others. However, since no one shops your stores until clearances, you're ultimately losing money.
Perhaps you're counting on superior numbers to keep you running. After all, there are more KBs than Toys R Us stores, and you often get in figures that big box chains like Wal*Mart wouldn't touch. However, you're not the only game in town any more. Toys R Us sells their toys online through amazon.com, putting their lower prices literally at everyone's fingertips. Specialty stores like Electronics Boutique and Babbages now carry toys at prices that are comparable to or cheaper than yours. In fact, the only major toy outlet with prices higher than KB is Spencer Gifts, and the fan community gives them the same width berth that you often receive.
It could be that toy collectors aren't a target audience; that you want grandparents and harried soccer moms to flock to your easy-access mall locations. If that's your belief, you're in worse shape than anyone knew. While collectors often succumb to the "IT MUST BE MINE!" mindset, buying a prized find no matter the cost, parents and grandparents are avowed bargain hunters. They pore through the coupons in their Sunday papers, looking for the best price in town. And you know what? KB Toys never has that price.
I don't doubt that KB still does brisk business, especially around the holidays. You may do okay, buy you could be doing much better. If you're not afraid to make changes and take a few risks, KB Toys could be the king of retail toy sales by next Christmas.
- This is the big one. There is absolutely no way for you to successfully compete in today's market without lowering your prices. If your competitors sell a figure for $7 and you sell it for $9.99, we won't shop with you. If you then put that same item on clearance for $5, we'll snap it up. Thus, get an early start; if you're willing to sell it on final clearance for five dollars, give it an initial price of $6.50. If you offer the lowest price, people will buy from you. If you consistently beat Wal*Mart's prices, you make them look like the badguys, make them play catch-up with you. Plus, you're already $1.50 ahead of where you'd be financially if that toy had taken up space until clearance.
- A lot of KB stores have narrow aisles. No parent pushing a stroller, leading a walking child and already carrying several large bags would want to attempt to navigate through those tiny byways. Some stores have switched to wider aisles, giving the store an airy feel at first. However, those aisles are often soon divided by a line of boxes and bins that effectively recreates the same problem as before.
- This is just a heads-up: if you implement these changes, business is going to pick up swiftly. You're going to have to have plans in place to restock faster than you currently are, or you'll be facing empty shelves for weeks at a time. And that will just defeat the purpose.
- As in "to the fans," not "provide food." Do things that will draw toy collectors (and their disposable income) to you. Do pre-sells and reservations. Sell figures by the case. Then give the folks who take advantage of these offers a discount, a coupon, a something to encourage them to order again. Fans love to know that their figures are guaranteed - and if they don't have to pay outrageous shipping costs, even better! Get toys into their hands fast and they'll always be there for you.
- Be smart:
- I went shopping the day after Thanksgiving. Toy shopping. The employees at KB stopped me at the door and asked me to wait in a line. When I got to the front of the line, they would shop "for" me. I'm a fully capable adult. I know what I want to buy, and I know where to find it. In, out, money's changed hands. Stay out of my way and don't treat me like a child. I spent money at Toys R Us, Suncoast, Babbage's and Software Etc. that day. I didn't even set foot in KB Toys.
These are just a few ideas. I'm sure if you listen to your customers, you can find some more. If you keep going the way you're going, though, I predict you'll be out of business by the end of the decade. You have the potential to be great, KB. You're the toystore in the mall; you're everywhere. You've got the presence, now deliver the goods. I, for one, will be there when you do.