Texas city still a big player in youth market

By Janice Chamberlain -- Kids Today, 10/1/2006

Kids Today

* Customized shopping: Cat and the Fiddle
* Freed's: Third generation and going strong
* Service, business acumen guide USA Baby
* Exclusive lines spell success at Magic Moon

The Dallas-Fort Worth-Arlington area is a prime target for merchants selling children's products, according to projected population and spending increases by statisticians at New York-based Easy Analytic Software Inc. (EASI).

Among the 934 U.S. metro areas, the greater Dallas area ranks in the upper 15% for its juvenile population. And the number of children 11 years and younger is expected to increase 5% by 2010, compared with a flat growth projection for the U.S. as a whole for the same time period.
Dwarfing the anticipated increase in the number of Dallas children is an even larger projected jump in the amount spent on kids products.

Between 2005 and 2010, spending on kids products in the Dallas metro is expected to increase from 29% to 33%. That compares with increases ranging between 22% and 25% nationwide.

Dallas denizens will have the wherewithal to purchase whatever they want in the way of juvenile products. The expected median household income of $66,206 in 2010 will exceed the national median by more than 14%, and the number of residents with annual income of at least $100,000 is to rise by 70%.

Household formation is burgeoning in Dallas, with an EASI-predicted growth rate over the next five years almost double the U.S. projected growth of 7%. The Dallas overall rate of nearly 14% is easily outpaced by the anticipated growth in Asian and Hispanic households, up 28% and 27%, respectively, offering a unique opportunity for local retailers to expand their businesses.

Dallas is getting ready for more kids. Already in place is a special "kid's corner" on the official City Hall Web site, which links to all kinds of activities for children. These include special programs at the Dallas Museum of Natural History and The Science Place, the mayor's summer reading program at the Dallas Public Library and "Trinity Trudy," a cartoon dragonfly that offers games to educate children about pollution in the city's storm water drains.

Customized shopping: Cat and the Fiddle

Cat and the Fiddle touts its monogramming services with a fun back-to-school window display.

By Lisa Casinger

Kristi Underwood and Jill Lee, friends since seventh grade, always wanted to open a store together. By the time they were ready and had the financial backing they'd become mothers so they opened a children's boutique in the Dallas suburb of Plano.

Now in its seventh year and second location, Cat and the Fiddle has come into its own. The store's average annual sales are $800,000, up 12% from last year, which Underwood attributes to the new furniture lines they've picked up. Cat and the Fiddle has clever vignettes showcasing everything from cribs, retailing at $600 and up, and twin beds to bedding, wall décor, gifts, clothing and more. Clothing, furniture and bedding are the top-selling categories.

Major vendors include Newport Cottage, Bratt Décor, Corsican, John Boyd and Kelly Rightsell, but what really sets this store apart is the plethora of customization options.

"We have a custom furniture line, monogrammed area and custom bedding," Underwood said. "Essentially a customer can come in with their own ideas and we can create whatever they want to include murals, window treatments, growth charts and wall décor."

The duo realized early on that keeping customers was essential so rather than focusing on just baby items, they offer a whole line of monogrammed products including gifts and backpacks and nap mats for the kids heading off to school.

Cat and the Fiddle also offers services like signature gift wrapping, which draws a lot of repeat customers; a baby registry, which has been a huge success; and in-home design.

Underwood and Lee host plate days once a month where customers can bring their children in to make hand-painted plates. They also have lots of trunk shows and advertise in the local magazines like Dallas Child and the Kids Directory.

Plano is an affluent area just north of Dallas and Underwood said it's a well-known shopping destination, garnering customers from Oklahoma and all over Texas. She and Lee shop ABC, JPMA and the Dallas gift market as well as textiles shows, where, she said, they pick up a lot of trends.

"The main trends in our industry center around color schemes," Underwood said. "Right now pink and chocolate and blue and chocolate are big. In our store, lodge and cowboy themes for boys are a favorite but themes for girls change more frequently. After September 11, sales dropped some, but for the most part today parents and grandparents are more than willing to spend more money on their kids. We have a lot of people registering for their bedding for example."

Underwood said customer service sets Cat and the Fiddle apart from other retailers, an essential ingredient especially when it comes to all of the custom services the store offers.

"We build relationships with our customers; we follow up," she said. "Jill and I are very hands on owners. Product can be the same from store to store, but it's the service that sets you apart."

Being hands on requires a lot of time and effort, and like most retailers, Underwood said there are never enough hours in the day to complete all the tasks, but splitting them up seems to help. Underwood handles most of the paperwork and business aspects while Lee takes care of the decorating and merchandising.

"I think the most important thing in our business is increasing customer awareness and customer service," Underwood said. "Many women coming in are pregnant with their first child and they don't know what they need. You might spend three months with a customer before she buys the first thing, but it's important to start that relationship early on."

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Freed's : Third generation and going strong

Modern looks in furniture and bedding help capture the tween customer at Freed's Homefurnishings.

Freed's Homefurnishings is the largest furniture store in Dallas, with 110,000 square feet of furniture and accessories and average annual sales of $15 million to $20 million. Owner Howard Freed, who took over the business in 1991, is a third-generation retailer whose grandfather started the company in 1938.

"We try to be a category killer in every department," Freed said. "We have the largest selection of home theater chairs, curio cabinets, bedrooms, dining rooms, entertainment centers, home office and youth out of all the full-line stores in town."
Freed's youth department carries furniture and accessories from Legacy Classic, Palliser, Sealy, Lea Inds., Powell, Riverside, Standard and Pulaski. Freed shops the High Point, Tupelo and Las Vegas markets for product.

Twin beds typically retail for about $299-$599 and loft beds are $1,099.
While its sheer size and selection are draws for the retailer, Freed also does a lot of marketing and advertising to promote his store.

"We have two tent sales each year to draw traffic," Freed said. "We advertise on TV and radio for Martin Luther King Day, President's Day, Memorial Day, July 4th, Labor Day, Thanksgiving, Christmas and New Year's, and we've also sent out direct mail offers."

Freed also has an informational Web site, www.freeds.net, and offers delivery and design services.

"One of our most effective marketing efforts stems from our location and our membership in the North Dallas Design District," Freed said. "We're a group of several stores who promote events together to bring traffic to the district. We pool our dollars and efforts and it's been a great success."

As a large furniture retailer with years of experience, Freed has noticed lots of changes in the industry. Furniture prices have come down because of the "China influence" while the cost of freight has escalated thanks to the increase in container and fuel costs. He's noticed that the next generation of shoppers doesn't like much of the opulently carved merchandise coming out of China. Instead they prefer smaller scaled furniture and cleaner, more modern looks.

Freed's biggest day-to-day challenge is keeping his inventory flowing. He has containers arriving from overseas and said it's often either feast or famine.

"My warehouse is full but I'm often out of the items our customers want," he said. "It was much easier to flow goods when they were produced domestically."

A self-proclaimed category killer, Freed advises those going into retailing now should either specialize and stay small or plan to be big because "the day of the mom and pop furniture store is long gone."

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Service, business acumen guide USA Baby

USA Baby/Child Space offers lots of selections for babies as well as kids in everything from furniture to toys and more.

Mike and Karen Schaul opened their first USA Baby/Child Space store in Dallas in 2001 after deciding they wanted to open their own business. Schaul was looking for a franchise that had a market he could develop and grow to include more than one location, and USA Baby in Dallas fit the bill. Since then, the Schauls have opened a store in Arlington in 2002 and another in Frisco in 2004.

Each store is about 12,000 square feet and together they have average annual sales of $7 million and $8 million. Schaul said business is up about 24% so far this year compared with 2005.

The Schauls carry furniture from Baby's Dream, Munire, Bonavita and Stanley; gear from Graco, Britax, Peg Perego, Chicco and Combi; and textiles from Cotton Tale, Kids Line, Nina Selby Designs and CoCaLo.
Furniture, gear and bedding are the three top selling categories and price points on cribs range from $299-$899 and twins retail for $399-$599. They shop for at JPMA and ABC.

"People shop our stores primarily because we have a great selection and great pricing," Schaul said. "But we also have outstanding customer service. Our employees listen to what the customers want, either in the store or through e-mails. We pride ourselves on educating the customers; when we educate them about the product, they're going to come back to us."

His stores offer delivery and set-up services and the Frisco location features a Party Room that customers can reserve for birthdays. Schaul said it has been a great idea for the store because parents can rent the room for an hour and a half and choose from either the Castle Room, with an indoor clubhouse play center or the Sports Room, which has a basketball goal for shooting hoops. The Party Room drives traffic to the store by capturing a consumer who might not realize the retailer isn't limited to baby products.

"The Party Room is great, particularly in Frisco where there's a more affluent consumer," Schaul said. "The parents don't have to worry about having a lot of kids in their homes and cleaning up after them."
Schaul hosts events, like the Graco Mobile Express program, which is like a traveling mini Graco showroom where consumers learn about the products and get safety tips from Graco experts. He also has one-day sales four times a year including one targeting the growing Hispanic market.

Though Schaul advertises in local publications like Dallas Child and the Kids Directory and has used TV, he said it's not as effective and has lost its importance for ads. Instead, he's found the Internet to be a great resource.

"The Internet has picked up where television has dropped off," Schaul said. "Our Web site has been up since last September and it does drive traffic to our stores. Our industry really needs to embrace the Internet and realize there are more ways we can do things through the Web."
Schaul said the biggest changes he's noticed in the industry center on the Internet. He's been collecting customer e-mail addresses since he opened his first store and uses them to communicate. Consumers also are relying more and more on the Internet not only for purchases but also for research, especially in the juvenile market where there's such an abundance of product.

His best business idea has been something fairly simple, but often overlooked, and that is to run your business like a business and that means realizing the importance of the back office.

Schaul's advice to fellow retailers, aside from knowing and understanding your customers and competitors, is to stock your product.
"Today, customer expectations are so much higher," he said. "They don't understand that if they want a crib in blue it will take eight to 10 weeks. Stock your most popular items. Also it's incredibly important to understand your cash flow; don't try to do too much when you don't have enough funds to pull it off."

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Exclusive lines spell success at Magic Moon

Shoppers can customize everything from bedding and lighting to furniture. Magic Moon offers about 35 different finishes and a plethora of color combinations on its beds, cribs and dressers.

Cary and Jenny Brabham opened Magic Moon in 1996. Today they have two stores in the Dallas metro area and two in Houston and their average annual sales are about $2.5 million. Each store is about 2,200 square feet and carries high-end furniture, lighting, bedding and accessories for kids and babies.

What sets this retailer apart is its product.

"We carry Magic Moon furniture, an exclusive line manufactured in the U.S.," Cary Brabham said. "Our lighting is also exclusive and it's from Jubilee. We own both manufacturing companies as well as the retail stores."

While the furniture is only available in his stores, Brabham does wholesale Jubilee lighting to other retailers and exhibits with Jubilee at the ABC Expo. Having such control and resources allows Brabham to offer his customers truly unique product and also nearly endless options for customization.

"Our customers can chose from 35 colors to make their furniture unique, from stripes to checks; whatever they want," he said. "We also offer custom bedding and fabrics."

Product is arranged in themed vignettes and both crib and twin beds, ranging from $900 to $1,000, are on display. There's an area in the store where employees work with clients on their custom options and fabric selections and design services are offered.

Brabham has advertised in local and national magazines, but because his stores are so different he doesn't have to rely heavily on marketing.
"The mere fact that we carry Magic Moon Furniture and we are the only place to get it brings in a lot of customers, not just from our area but also from around the country," Brabham said.

The top selling categories are cribs, changing tables and chandeliers, but the store is filled with everything from wall décor and rugs to plush, picture frames, gifts and more.

Brabham said he's noticed a change in trends over the last year. For example, black was the hot color the last two years but it's being replaced by brown and pink and brown and green combinations in everything from furniture finishes to bedding.

He considers the fact that they manufacture their own line of furniture, create their own bedding and purchased Jubilee to give them their own lighting, as one of his best business ideas, but managing three companies also is his biggest day-to-day challenge.

Exclusivity is the key to Magic Moon's success and Brabham advises retailers to find at least one product or line to keep exclusive. He follows through with this philosophy on the wholesale side of things by giving exclusives to Jubilee retailers.

"This way they're loyal to us and we will always be loyal to them," he said.

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