A look at store operations, merchandising mix
By Judi Fulbright -- Kids Today, 10/1/2007 12:00:00 AM
Most juvenile specialty retailers report increased sales for 2006 compared with 2005 and appear upbeat about prospects for 2007. Products for the infant to 2-year-old age group remain the stores' bread-and-butter, representing the age range that accounts for the most sales as reported by three-quarters of retailers. But retailers are increasing products they carry in all other age ranges. The 5- to 7-year-old age range now accounts for the most sales in 15% of stores.
Twin beds, bunk beds, high chairs, glider rockers, toy chests, changing tables and other furniture pieces dominate both sales and the sales floor, appropriating about a third of both. But it's cribs and crib mattresses that retailers report as being the most profitable. Asked about which three products were the most profitable, nearly one-quarter of responding retailers reported it was cribs, closely followed by crib mattresses. And more furniture products — glider rockers, bunk beds and twin mattresses — round out the top five products with the highest profit margins. The same three, bunk beds, glider rockers and cribs, also have the highest ticket prices on the sales floor. Retailers expect the sales and space ratio for these products to hold through this year. Apparel is the only product category retailers predict will drop in percent of sales for 2007; for all other major product categories, they're anticipating sales increases.
While advertising does not consume a large portion of the expense pie — running between 4% and 5% rather consistently — it plays a vital role in the success of the store. Retailers can choose from a long list of media on which to spend those ad dollars, too, most of which is spent to promote the store's image or brand as opposed to low prices or financing options. A majority of retailers use the Yellow Pages or direct mailings with slightly less than that number also using newspapers, the Internet and television. But it's the Yellow Pages, newspapers, direct mailings and television ads that grab the biggest share of the ad budget, at about 15% each. When juvenile specialty retailers were asked about their ad budget two years ago, TV commanded the top spot, consuming one-quarter of the ad budget. Advertising on the Internet now takes about 7% of ad dollars, nearly doubling the amount spent on it for 2004 and 2005.
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