The Bear Necessities: Unveiling Build-A-Bear's Cuddly (and Profitable) Kingdom
Build-A-Bear: A thriving specialty retailer with record sales, attracting adult shoppers and innovating store formats Their holiday movie adds to the excitement Discover the magic of creating the perfect cuddly companion
Alyssa Karpinski, a 25-year-old, approximates that she possesses around 150 to 160 Build-A-Bears. Her passion for collecting them ignited during her childhood when she created her inaugural bear alongside her father.
"I vividly recall every detail," she reminisced. "Walking into my mother's workplace back then, she exclaimed, 'Oh my God, you've initiated something. And it won't cease.'"
Karpinski is not the only one pursuing this interest. She is part of online communities and also has an Instagram account solely dedicated to her collection of Build-A-Bears, Pokémon, Squishmallows, and Jellycats. Surprisingly, she has managed to gather over 1,400 followers on her account.
Peter Danzig, a psychotherapist, toy analyst, and researcher, explains that a key factor contributing to Build-A-Bear's success is their ability to create items that elicit feelings of comfort in people. According to Danzig, the emotional response these toys generate and the sense of calm they provide are more important than their playability.
Build-A-Bear is defying the trend seen by other specialty retailers, who blame macroeconomics for their declining sales. Instead, Build-A-Bear is thriving with impressive numbers and an expanding customer base. Despite a period of reduced sales at the beginning of the pandemic, the company is now experiencing a significant turnaround. Build-A-Bear had its most profitable year in history last year. CEO Sharon Price John stated during an analyst call in late August that their record-breaking results in the first half of 2023 build upon the success of both 2021 and 2022, showcasing the brand's ability to grow and sustain higher profitability levels.
There’s something about that cat
The specialty toy company that revolutionized retail in the late ‘90s by offering experiential shopping experiences has not only continued to exist, but has also flourished. By creating viral moments, developing merchandise that capitalizes on popular culture intellectual property, and establishing a range of store formats, this beloved retailer may indeed be constructing an empire.
The highly sought-after Pumpkin Kitty has become the must-have item for dedicated Build-A-Bear collectors this fall 2023. Priced at $35, this plush cat is part of the retailer's Vault Collection, which features a revival of a beloved design from 2008.
Acquiring one, however, is no easy feat. The limited-edition nature of the item caused a viral frenzy among collectors, resulting in a scramble to secure this plush toy. Build-A-Bear had to enforce a purchase limit of four per customer due to its overwhelming demand. Unfortunately, Pumpkin Kitty is now out of stock, safely returned to Build-A-Bear's vault.
For those who still wish to own one, online marketplaces offer the option to purchase, although at significantly higher prices. The current going rate for a Pumpkin Kitty can reach upwards of $300.
Pumpkin Kitty
Image courtesy of Build-A-Bear
According to James Zahn, editor-in-chief of The Toy Book, going viral is something that every toymaker and retailer desires, as long as it happens for a positive reason. Zahn mentioned that numerous toy products have gained popularity on social media platforms, and independent toy store owners are currently gaining a significant number of followers on TikTok. These owners or their staff showcase new items in their store to generate excitement around a toy and increase brand recognition for a specific product.
Build-A-Bear has a distinct advantage as the sole seller of the viral product, explained Zahn. Therefore, customers are compelled to seek out Build-A-Bear, whether through their online platform or their physical stores. This strategic emphasis on both avenues has been a focus for the company in recent years.
The grown-ups are taking over
While some people may still associate Build-A-Bear as a store for kids, the company has a growing adult following.
The company's physical locations primarily cater to families with children. However, instead of solely focusing on digitizing the in-store experience at Build-A-Bear, the company aimed to expand its market reach. This involved targeting teenagers, adults, brand enthusiasts, and collectors through its website and licensed relationships. As a result, approximately 40% of the company's total sales now come from teenagers and adults.
The retailer revamped its website last year, enhancing its checkout process, payment system, and product display features. Moreover, it created an age-restricted online store within its platform, known as "The Bear Cave," offering edgier merchandise. Additionally, the retailer provides a variety of gift choices, including romantic presents. Notably, Build-A-Bear collaborates with renowned franchises such as Star Wars, NBA, NFL, Marvel, DC Comics, and Disney, among others.
“If you happen to be a fan of a particular fandom that Build-A-Bear caters to... and if you're interested in that... well, now they've got something just for you," Zahn remarked. This even includes an assortment of costumes for the plush toys. "It's like having a teddy bear dressed up in full cosplay attire."
The right product at the right time
Despite being in the industry for 26 years, Build-A-Bear has managed to offer a product that perfectly caters to the current needs of a public still experiencing the aftermath of a pandemic.
"Even prior to the establishment of Build-A-Bear, the concept of a teddy bear or a source of comfort greatly resonates with the majority of individuals," stated Danzig.
The plush market within the toy industry is thriving, with a significant growth of 20% compared to 2019, as reported by Circana. In 2022, sales of plush dolls reached an impressive $2.3 billion. The popularity of the plush category has remained strong, unlike other sectors in the toy industry, and Build-A-Bear has successfully capitalized on this trend.
Amidst the pandemic, nostalgia experienced a significant increase. As people indulged in the activities of exploring, decluttering, and arranging their homes, the longing for a less complicated era became prevalent, according to Danzig.
Regarding Build-A-Bear, they expressed that the individuals who were once the primary target audience, now in their 40s, are not only making purchases for their children but also for themselves, particularly of their beloved character. This resurgence indicates a renewed acceptance and normalcy in embracing these playthings once again.
Build-A-Bear dolls have the ability to create lasting memories by representing a specific place and time. These dolls have become a popular choice for date nights, as couples can visit the store together and create their own stuffed animal. Additionally, experts have noted that adult shoppers view these products as decorative items for their homes or holidays, or as a way to commemorate special occasions.
One collector, Karpinski, has created numerous Pokémon bears with her boyfriend. She appreciates the chance to share this experience with her significant other, especially since they are physically far apart. She finds it meaningful to have a reminder of her boyfriend through the stuffed animal, providing her comfort and a connection to him despite the distance.
Danzig claimed that the target market for purchasing and engaging with Build-A-Bear primarily consists of very young individuals. However, for consumers beyond that particular age group, the allure lies in the comforting presence of the product and the overall experience of visiting a brick-and-mortar retail establishment.
The future (holiday) for bears
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Obtaining a Build-A-Bear can be achieved by building a plush animal at a traditional mall location. Alternatively, the retailer is considering different approaches for customers to discover their products. These include tourist locations, a Walmart model, a concourse model, seasonal locations, vending machines, event and temporary locations, a cruise ship model, and a recently introduced format known as Build-A-Bear Adventure, which incorporates an arcade and party rooms.
Build-A-Bear has succeeded in actively engaging with their consumers by placing themselves in the same spaces as their target audience. This approach has proven effective in reaching the consumers at their desired destinations. According to Zahn, Build-A-Bear has successfully executed this strategy.
Moreover, the company has discovered that offering a variety of formats enables physical stores to function efficiently with less overall space while maximizing productivity per square foot.
Image courtesy of Build-A-Bear
In addition to its presence across multiple locations, the company is further expanding its reach by creating original content. This holiday season, Build-A-Bear partnered with Cinemark to release a movie called "Glisten and the Merry Mission."
The film centers around Marzipan, an elf who must embrace the magic of the season in order to save Christmas. It features a star-studded voice cast including Dionne Warwick, Freddie Prinze Jr., Chevy Chase, and Billy Ray Cyrus. Additionally, the company has released a collection of plush toys based on the film.
"They have created a holiday property that captures the essence of Christmas and winter. With their well-developed characters and compelling storytelling, they are now able to offer accompanying products," Zahn explained. "This could potentially become a franchise. If the movie performs well this year and becomes a beloved holiday tradition for families, they will have the opportunity to expand their brand with additional content, including more films and animated productions. And, of course, there will be more toy offerings."
"It is truly a fascinating journey to witness as Build-A-Bear seamlessly combines the roles of a retailer, manufacturer, and now, an IP company," remarked Zahn.
