Nurturing families, friends and success at Sprout

About three years ago, a group of friends and moms got together and decided there was a need for a full-service boutique in their small, upscale community of Manhattan Beach, Calif., and Sprout was born.

While there are investors and other employees, a core group of four women are partners in the store. Jill Lamkin is the president and in charge of marketing, Andrika Sorokolit is the business operations manager, Hilary McDonald handles store operations and works the floor and Teresa Fourticq is the CPA.

Lamkin said from the beginning people told the foursome their business model was "made for disaster" but she said it works because the women know each other so well and they have a great store manager who's been in the children's industry for years.

"We all brought unique experiences to the table—accounting, marketing, operations and mostly consumerism!" Lamkin said. "We cobbled together a work group that now thrives on the different abilities we all have and are all very proud of what we've created."

Sprout's tagline, "where kids grow up," reflects the partners' goal of creating a shop where parents can find everything they need for children from birth to age 7.

The store carries youth and juvenile furniture, accessories, gear and textiles, with furniture and bedding being the top-selling categories. When it comes to trends, Lamkin said the fascination with celebrity babies and the popularity of the products they use hasn't escaped their attention.

"We're probably especially susceptible to this trend being near Los Angeles, but we've learned that the latest In-Style photo may produce our hottest sellers," she said. "Needless to say, we've all become entertainment media hounds."

Sprout has three major sales events a year based around the local downtown sidewalk sales and Lamkin said they are "extremely analytical about inventory" and decide monthly which items should be marked down based on how quickly the items are turning.

The biggest day-to-day challenge is what Lamkin calls a "double-edged sword,"— looking for the latest hot new item and then trying to get the quantity and timing just right. If you bring the item in too soon and then run out you lose sales when its being reordered; if you get into the cycle too late you can end up with a large supply of "yesterday's news."

"We try to keep the boutique mentality, though — pick a few of the best things and order them in limited quantities," Lamkin said. "I'd much rather run out of an item because it was so hot than be stuck with extras to discount later in the game."

Being involved in the community and sponsoring events is an integral part of Sprout's success. Lamkin said though the store carries unique, high-quality items, the fact that people enjoy being in the store sets it apart from other shops. Kids are encouraged to play and "mess things up a bit because it wouldn't be a children's store if they didn't."

"We've found parents enjoy coming to events even more if you focus on making it enjoyable for them too," Lamkin said. "For example, for our first birthday, we provided Sprout logo t-shirts and kids and parents came to tie-dye them into their own wearable art. They had fun creating the shirts and we got advertising mileage out of folks wearing their Sprout shirts around town."

Other events include story time, an arts and crafts day, social events for moms and a holiday open house. The store also offers design services, gift selection and wrapping and more.

The design center staff can help parents create nurseries or kids' rooms, taking it from an empty room to magazine-level finish.

"Not only can we provide the furniture, bedding, lighting, rugs, artwork and every other accessory, we've also spent the last two years building our Rolodex of reputable vendors that we can recommend to help with everything from re-painting to furniture re-upholstery to incredible mural painting," Lamkin said.

To reach customers, Lamkin uses everything from direct mail and school events to cross marketing with other local business with a similar customer base. One of her best business ideas has been using e-mail to communicate with customers.

"I know this sounds obvious, but e-mail has become increasingly important as our business grows," Lamkin said. "Our preferred customers now number in the thousands and we have e-mail addresses for a good chunk of those. We e-mail a monthly newsletter advertising store activities, new products, special offers and pre-sales that are only available to customers on the e-mail list. We send out mailers to customers several times a year, but postage costs run thousands of dollars and we can e-mail the same customers with the same information for free."

Lamkin spends about 5% of the total budget on advertising, down from a high of 10% spent during the first year of business when the majority of the budget was spend on building brand-name recognition. They track advertising and marketing by tying source codes to ads, coupons and postcards to learn which venues work best for them. They now use more targeted marketing around specific events or promotions like they will this fall when they'll start carrying shoes.

"We'll spend a good chunk of our budget on building awareness of that new line including a special evening event, a direct mail postcard, bag stuffers, cross-marketing with other businesses as well as traditional advertising," Lamkin said.

As with any business, the good decisions go hand in hand with bad ones. When Sprout first opened, the group hired a buyer who had decades of experience in the industry but wasn't familiar with the local market and not in tune with Sprout's customers.

"That proved exceptionally challenging and, in hindsight, a terribly costly decision," Lamkin said. "The merchandise we carried the first few seasons experienced many challenges in terms of price points, seasonality and style, which forced us to take significant losses in many categories."

Lamkin and her partners learned their lesson though and realized they needed to be analytical about buying and that it wasn't just about having great taste and liking the product. Now they rely on information like the profitability and turn rate for every item, category and vendor when making their buying decisions.

"If a particular item is doing well, we find other similar items; if a manufacturer is doing well, we'll expand," Lamkin said. "And though we only experienced a 7% growth between 2004 and 2005, the profitability of those dollars showed a remarkable improvement."

Sprout is growing and garnering attention from the local media. The store recently was selected as one of the fives best children's stores in L.A. by Los Angeles Magazine and Lamkin said they'd be spending some marketing dollars making sure they promote that message.

This summer the shop is growing its Web presence as well. It currently has an information Web site, sproutkids.com, but soon it will offer online shopping. Lamkin looks for this arm of the business to do well, especially since they have the right technology in place.

"When we first started out we over bought a system, knowing in the long run we'd need it," she said. "It supports real time inventory so we'll be able to fulfill our online orders."

Lamkin said they will backstock some items but not a lot starting out until they figure out how much business the Web site will generate. The site will offer custom furniture (both custom furniture and bedding are a big part of the store's business) though not bedding.

"We're optimistic about the site, but you really control that business with the resources you allocate to it," Lamkin said. "You have to photograph the products, write descriptions, etc. and we have to figure out the cost benefit of the site."

Watching the company grow is the most enjoyable part of Lamkin's job.

"We've gone from a group of moms and friends who didn't know anything about retail to being a very savvy group of business owners," Lamkin said. "We're even contemplating opening a second location — the possibilities seem endless!"

The Newport Cottage bunk bed features Beep! Beep! and Ship's Ahoy! custom bedding by Mudge & Molly.

Art from Oopsy Daisy and Goodnite Moon hang above the Nurseryworks crib and Little Castle glider.

Surf's up with accents from The Rug Market, Art Classics, Waterlogged and more.

A sweet crib from Vintage Kids is dressed in House Inc. bedding and accompanied by a custom-made glider from Maria's Designs.