Build-A-Bear Workshop 2009 Annual Report Download - page 16

BUILD-A-BEAR WORKSHOP, INC. 2009 FORM 10-K
In response to an emerging trend of kids’ interaction
and play increasingly occurring in the online space, in 2007
we updated our virtual world Web site used primarily by
children, buildabearville.com®, and we continue to enhance
the site. The site is highly complementary to our store
experience and positively enhances our core brand values
while offering activity options and features that are tied back
to in-store events. We believe that the launch of our “virtual
world” Web site is a critical business strategy to further
enhance our brand appeal with children and grow our store
sales and that we have a unique competitive advantage over
other virtual world products due to our ability to provide both
real world and virtual world experiences. We also believe the
virtual world platform enhances our entertainment options. For
example, in 2008 we introduced our stuffed animals Holly &
Hal Moose®and their storybook. While the book was
distributed through our stores and e-commerce websites, the
virtual world allowed us to promote the characters and feature
animated “webisodes” of the story for children to view
throughout the holiday season. In 2009, the webisodes were
expanded into a full length holiday TV special that aired on
national television in the United States exposing our brand to
millions of viewers.
We also believe that we will be able to generate revenue
directly related to the sale of products used exclusively on line
in the virtual world space. Our research has shown that one
out of every three guests visit Build-A-Bearville before visiting
our store and that over 40% of all animals registered in our
stores by our key demographic come on-line at
Build-A-Bearville, enhancing value for parents and
engagement for kids. In 2008, we introduced the first virtual
world products which are sold on-line and in our stores and in
2009 we expanded the offerings to include additional game
cards as well as monthly and annual subscriptions to the site.
Game cards can be used to buy exclusive virtual items,
including rides, homes, furniture, clothing and accessories.
Online subscriptions provide monthly credits and bonuses to
members.
PRODUCT DEVELOPMENT
Through our in-house design and product development team,
we have developed a coordinated, creative and broad
merchandise assortment, including a variety of animals,
clothing, shoes and accessories. We believe our merchandise
is an integral part of our concept and that the proprietary
design of many of the products we offer is a critical element of
our success, while the authentic and fashionable nature of our
products greatly enhances our brand’s appeal to our guests.
Our product development team regularly monitors current
fashion and cultural trends in order to create products that we
believe are most appealing to our guests, often reflecting
similar styling to the clothes our guests wear themselves. We
test our products on an ongoing basis to ensure guest demand
supports order quantities. Through our focused vendor
relationships, we are able to source our merchandise in a
manner that is cost-effective, maximizes our speed to market
and facilitates rapid reorder of our best-selling items.
Our stuffed animal skins and clothing are produced from
high quality man-made materials or natural fibers such as
cotton, and the stuffing is made of a high-grade polyester
fiber. We believe all of our products meet Consumer Product
Safety Commission requirements including the Consumer
Product Safety Improvement Act (CPSIA) for Children’s
Products. We also comply with American Society for Testing
and Materials (ASTM), EN71 (European standards) and
Canadian specifications for toy safety in all material respects.
Our products are tested through an independent third-party
testing lab for compliance with toy safety standards. We
believe we comply with toy safety government requirements
specific to each country where we have stores. Packaging
and labels for each product tell our guests the age grading
for the product and any special warnings in accordance with
guidelines established by the Consumer Product Safety
Commission.
Plush animals are not likely to contain lead, which is
found in paint and surface coatings. In rare instances, a plush
animal may be airbrushed or have painted eyes, and in some
cases our bear clothing and accessories have screen prints
that are paint. In all cases, we take steps to assure that our
products meet or exceed all toy safety standards. The CPSIA,
EN71 and Canadian Toy Safety Regulations specifically limit
lead content in products. We believe we comply with these
regulations.
We notify guests when a product contains a magnet with
our “I have a magnet” product hangtag or sticker. In most
cases, the magnets utilized in our products are embedded
inside a toy (animal, scarf or plush accessory). They are not
loose or easily detached as free magnets.
Our products have earned the Good Housekeeping Seal
of Approval. The Good Housekeeping Seal, introduced in
1909, is earned by products that pass Good Housekeeping
Institute review and is one of America’s most trusted consumer
icons assuring consumers of a quality product. Seal-backed
products are covered by Good Housekeeping’s two-year
money-back warranty.
We expect to expand our product assortment and our
leadership in the toy industry by offering toy products in
addition to our core plush animals that are consistent with
our interactive and hands-on experience to increase guest
visits and give guests additional reasons for purchasing at
Build-A-Bear Workshop stores. We believe the addition
of complementary toy products will allow us to drive sales,
transaction value and overall profitability.
6