"If your toys are selling this well in a place that's this far off the beaten track, just think of the volume you'd do if you were in our mall."
The question echoed through Roy England's mind late one afternoon as he locked the front door of his family's toy store, Toad Hall Toys, in downtown Winnipeg. The enterprise, which had been in business since the late 1970s, was a one-of-a-kind specialty retailer that had successfully carved out a niche selling toys in a retail world where they had often become loss-leaders. Still, when it came to increasing the store's volume, was it time to rethink the store's location?
Roy and Ann England launched a specialty toy store in downtown Winnipeg in 1977. Mr. England, who had a PhD in planning and had worked in government, decided he wanted to do something different with his life. It eventually led him to pursue a lifelong dream of owning and operating a toy store.
Together with his wife, who was an expert in early childhood education, the couple opened Toad Hall Toys. The store initially began operations in a 1,000-square-foot space that had been part of an old sewing factory in Winnipeg's Garment District. Getting the space ready for retail traffic was quite the experience, and it included pulling hundreds of straight pins out of the floor, as well as giving the place a fresh coat of paint.
While the couple knew toys, they knew nothing about retail. A fortuitous encounter changed that. More specifically, Mr. England, who had started attending toy fairs in Toronto and Montreal, happened to meet Nancy Ross, who owned a specialty toy store in Toronto. Ms. Ross quickly became the couple's key mentor, offering them advice on everything from setting target margins to developing a supplier list.
The couple managed their new store very prudently and did not take a cent out of the business for the first five years, instead reinvesting all profits in building up inventory. Not surprisingly, the store quickly outgrew its space, leading the couple to relocate to a larger spot a few blocks away. The new location, which included more than 4,500-square-feet of retail, provided an excellent display space and adequate storage for their increasingly diverse inventory.
Toad Hall Toys sought to be different from the outset. The company's product strategy was characterized by uniqueness, excellent quality, and what Mr. England termed "good play value." Where the average big-box toy retailer might have 9,000 to 15,000 stock-keeping units – or distinct retail items – sourced from about 200 suppliers, Toad Hall Toys had more than 57,000 SKUs from more than 1,000 different suppliers around the world. This was not your average toy store.
The couple developed their diverse offerings through an equally diverse network of suppliers, which evolved from attending industry trade shows such as New York's American Toy Fair and, of course, the mother of all toy-trade shows held every February in Nuremberg, Germany. A simple set of criteria guided the Englands at those shows: find toys that were not only rare and of high quality, but were not licensed or highly promoted, as these were most vulnerable to heavily discounting, an image game Toad Hall Toys did not want to play.
Toad Hall Toys is fundamentally different from most mainstream toy retailers. This was especially evident during a recent visit Mr. England had paid to a big box's toy department – in his informal inventory count he found exactly three items that were carried by both the retailer and Toad Hall Toys. Even more remarkable, Mr. England's store sold all three of them cheaper.
However, Mr. England was repeatedly approached by real-estate agents about getting into the "big leagues" of mainstream retail. The pitches were driven by a understandable "logic of volume."
"If your toys are selling this well in a place that's this far off the beaten track," the agents would says, "just think of the volume you could sell if you were in our mall." It did, at the very least, get Mr. England wondering what Toad Hall Toys could accomplish if it relocated or opened a second location in one of the city's malls.
Mr. England and his family quite intentionally sought to forego mainstream retail logic. Instead, they chose to "be a different kind of toy store in a different kind of place." As Mr. England recalls: ""Everyone I have known who has tried to sell toys in a major mall has failed."
Instead, Toad Hall Toys seeks to make itself a retail destination, in the process becoming "a specialty store of specialties." At last count the store had more than 40 different departments, including model railroads, dinosaurs, arts and crafts, dollhouses, and even a counter for aspiring magicians. In addition, drawing on Ms. England's expertise as a child educator, the store's book department features more than 15,000 children's titles.
A fascinating and eclectic shopping experience that brings out the inner kid in every customer.
Special to The Globe and Mail
Reg Litz is a professor in the Asper School of Business of the University of Manitoba.
This is one of a regular series of case studies by a rotating group of business professors from across the country. They appear every Friday on the Report on Small Business website.