Specialty stores expect sales to rise

By Judi Fulbright -- Kids Today, 10/1/2005

High Point— According to retailers responding to Kids Today's exclusive Juvenile Specialty Store Operations survey, 2004 was a good year for sales, and they expect 2005 to be even better.

Almost half of retailers reported higher sales in 2004 than in 2003; for 2005, two-thirds expect to have higher sales than in 2004. For both years, about one-fourth of retailers said sales were about even with the year before. As for how much up or down retailers said their 2004 sales were or are expecting their sales for 2005 to be, retailers estimated a median of 10% across the board.

Open for business a median of 53 hours each week, these juvenile specialty stores typically serve 150 customers each week, with six out of 10 customers leaving with a purchase. This compares with a close ratio of less than 40% for the average full-line furniture store of similar sales volume, and 70% for the typical gift store, according to surveys conducted in 2005 by Furniture/Today and Gifts & Decorative Accessories magazine.

To get consumers in the door, kids specialty retailers allocated a median of 5% of sales to advertising and promotions last year, and expect to hold their ad spending to that again this year. This amount parallels what furniture stores and gift and decorative accessories stores spend.

Nearly three-fourths of retailers go beyond bricks and mortar with an Internet site, but only 37% of retailers with a Web site accept orders online, adding a median of 5% to their sales volume.

Only 8% of retailers offer their goods through catalogs. For these retailers, catalog sales contribute a median of 10% of total sales.

Retailers can compare their own sales, selling practices and product mix against the industry norms identified from this survey to see where they may want to make adjustments. Tables and graphs on these pages show the merchandise mix in kids specialty stores, the number of lines carried, average markup and best-selling price points for selected products. Also included is how advertising dollars are allocated and spending for staff and for capital improvements.

Terms

Administrative/office staff reported includes store managers, assistant managers, merchandising or advertising managers, buyers, etc., and owners that work in the store.

Close ratio is calculated by dividing the average number of customer visits per week that result in a purchase by the average number of customer visits per week.

Fringe benefits reported include all payroll taxes, workers' compensation, retirement, group health, disability, etc.

In-house credit consists of deferred payment plans offered and managed by the store.

Medians are the middle point for any range of figures. When medians are given, it means that one-half of the stores reported figures above the median and one-half reported figures below the median. Unlike averages, the median is not distorted by unusually high or low figures that may be reported.

Part-time employees are defined as those working fewer than 30 hours per week.

Payroll expenses reported include all payroll costs, salaries, bonuses, and commissions; exclude fringe benefits.

Private label products are products branded with the store's name.

Toys includes books, games and CDs/DVDs/videos.

Kids Today Juvenile Specialty Store Operations survey for 2005

Behind the numbers

Nearly 90 retailers responded to the Kids Today exclusive survey of children's specialty retailers, representing more than 150 juvenile specialty stores. Most retailers (96%) are small independent stores, producing under $5 million dollars in annual sales; 67% belong to a buying group or are affiliated with a franchise operation or association. The majority of the retailers, 77%, operate only one unit; 20% have two to three units. Only 3% of the retailers operate four or more units.

By region, responding retailers are located in:		Sales volume for the responding stores was:
South	34%	Less than $500,000	22%
Northeast	25	$500,000 up to $1 million	23
West	23	$1 million up to $3 million	47
Midwest	18	$3 million or more	8

This year's survey contains details on stores' merchandise mix, including what products are carried and best selling price points for selected products. It also concentrates on the nuts and bolts of store operations such as staffing, capital improvements and advertising.

The 2005 Kids Today Juvenile Specialty Store Operations survey was conducted by Research Specialist Judi Fulbright and Market Research Director Kay Anderson, with assistance from Database Coordinator Cynthia Myers and Research Assistant Patrice Rahming.

Sales comparisons

% of retailers

	2004 compared with 2003	2005 compared with 2004
Up	47%	67%
About the same	23%	24%
Down	30%	9%

Selling practices

In an average week ...
the median hours store(s) are open to consumers	53
the range of hours store(s) are open to consumers	35 – 80
median number of customers who visit store(s)	150
close ratio	63%
Percentage of stores that ...
offer a gift registry	89%
sell through a catalog	8%
have an Internet site	72%
sell gift cards/certificates	93%
median face amount of gift card most often purchased	$50.00
Percentage of customer sales that are ...
made with a bank or credit card	73%

Spending for advertising and promotions

5% of gross sales projected for 2005

median

	% of ad spending
Other	27%
Yellow Pages	15%
Direct mail	15%
Newspaper	18%
TV	25%
Other includes local/regional/state magazines, radio, the Internet, sponsorships, in-store events, national magazines, billboards and inserts

Percentage of retailers using

Yellow Pages	74%
Internet	72%
Direct mail	62%
TV	45%
Newspaper	38%
Local/regional/state magazine	27%
Radio	25%
In-store events - demos, open houses	20%
Sponsorship - charity/sports	17%
National magazine	7%
Other	6%
Other includes billboards and inserts

Percentage of Web sites that have...

Store info-hours directions, etc.	93%
Product photos	81%
Brand names or lines carried	79%
Gift registry	30%
Online catalog	25%
Links to educational info/sites	18%
Registration	16%
Financing information	14%
Blogs	4%

Staffing

Median percentage of total revenues going to ...

Payroll 13%

Fringe benefits 3%

		% of total employees*
		Full time	Part time
Administrative, office	27%	83%	17%
Sales	56%	56%	44%
Warehouse, delivery	16%	66%	34%
Janitorial/maintenance	1%	67%	33%
*Combined full- and part-time workers

Sales staff compensation
% of retailers paying sales staff ...

	Full time	Part time
Hourly only	39%	43%
Hourly + commission	25%	24%
Salary only	31%	5%
Commission only	1%	2%
Salary + commission	9%	0%
Performance bonus	29%	13%

Capital improvements

Median percentage of total revenues going to capital expenditures

2004	2%
2005	5%

Improvements or expansions

For 2004	% of retailers	Planned for 2005
14%	Open new store	8%
15%	Renovate existing store	19%
9%	Expand existing store	15%
4%	Landscape improvements	13%
	Expand parking area	2%
	Other	2%

Merchandise mix

Products shown are carried by 10% or more of the retailers surveyed

Products carried are for these age ranges

	% of retailers carrying
Infant-2 years	92%
3–4 years	71%
5–7 years	65%
8–10 years	54%
11–13 years	40%
14 years or more	30%

Cribs and other furniture

63% of sales

	% of retailers carrying
Cribs	92%
Crib mattress	89%
Dresser, chests	89%
Toy chests	89%
Changing tables	88%
Bookcases	86%
Glider rockers/rockers	86%
Bassinets	86%
Nightstands	86%
Beds — twin, full, queen or king	84%
Play table, chairs	81%
Desk and desk chairs	81%
High chairs	76%
Mattress — twin, full, queen or king, bunk, etc.	73%

Children's apparel

7% of sales

	% of retailers carrying
Infants to 24 months	43%
Layettes	43%
Toddlers 2T–4T	21%
Kids 4–6x	12%

Decorative accessories

9% of sales

	% of retailers carrying
Lamps/lighting fixtures	87%
Mobiles	83%
Photo frames	83%
Mirrors	74%
Posters/prints/other wall décor	73%
Other accessories/gifts	57%

Infant gear

7% of sales

	% of retailers carrying
Strollers	68%
Carseats	61%
Play yards	46%
Feeding equipment	42%
Swings	39%
Bouncers/carriers	34%
Exercisers	26%

Textiles

8% of sales

	% of retailers carrying
Crib linens*	93%
Other bed linens**	93%
Comforter/spread/duvet/quilt	89%
Throw blankets	81%
Area rugs	77%
Decorative pillows	71%
Includes sheets, covers, bumpers * Includes shams, dust ruffles, blankets

Toys/books/games/CDs

5% of sales

	% of retailers carrying
Plush	67%
Developmental toys	55%
Infant/children's books	49%
CDs/DVDs/videos	37%
Child-rearing books	36%
Games	27%

Sale by product category, 2004

% of total sales

Apparel	7%
Accessories	9%
Other	1%
Toys/books/games/CD's	5%
Textiles	8%
Gear	7%
Cribs	29%
Other furniture	34%
Other includes candy, snacks, invitations, announcements and shoes

Median number of lines carried

Area rugs	2
Bed — twin, etc.	5
Bedding sets — (twin or larger beds)	5
Carseats	4
Crib linens	8
Crib mattress	1
Cribs	5
Developmental toys	4
Dresser/chests	6
Glider rockers	2
High chairs	2
Lamp/lighting	4
Layettes	3
Mattress — twin, etc.	1
Photo frames	3
Play table, chairs	2
Plush toys	3
Sheets	3
Strollers	4
Throw blankets	4

Average mark-up

	% of retailers using mark-ups
Less than 2 times	65%
2 times	30%
2.5 times	5%

Selling space by product category, 2004		Changes in selling space, 2005
		% of retailers saying selling space ...
% of total selling space		decreased	increased
Other	2%	10%	10%
Toys	6%	16%	16%
Apparel	6%	10%	26%
Accessories	8%	9%	30%
Textiles	5%	10%	23%
Infant gear	7%	19%	14%
Cribs	28%	11%	22%
Other furniture	38%	11%	25%

Percentage of retailers offering private label products

Cribs	19%
Other furniture	14%
Infant gear	5%
Textiles	14%
Accessories	12%

Best-selling price points

Sell MOST at ...

	medians
$20 or less
Developmental toys	$20
Plush toys	$20
Photo frames	$20
Sheets	$16
$21–$50
Throw blankets	$35
Layettes	$30
$51–$100
Area rugs	$80
Lamp/lighting	$65
$101–$150
Crib mattress	$120
$151–$200
High chairs	$170
Bedding sets for twin or larger beds	$200
Carseats	$200
Strollers	$199
Mattress - twin, etc.	$189
Play table, chairs	$179
$201–$300
Crib linens	$230
$301–$400
Cribs	$400
$400–$500
Bed - twin, etc.	$499
Dresser/chests	$455
Glider rockers	$425

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