Build-A-Bear Workshop 2012 Annual Report Download - page 15

BUILD-A-BEAR WORKSHOP, INC. 2012 FORM 10-K
Product and Merchandise Licensing. We have key
strategic relationships with select companies, including
Disney®, Sanrio®, Skechers, Justice, Star Wars, MLB, NBA,
NFL, the NHL®, and World Wildlife Fund US and Canada, in
which we feature their brands on products sold in our stores.
These strategic relationships allow both parties to generate
awareness of their brands. We have also offered selected
character and media-oriented products including Sanrio’s
Hello Kitty, Disney’s Muppets, Minnie Mouse and Shake It Up
themed bears, Fremantle’s Rebecca Bonbon, Fox Studio’s Ice
Age, and holiday classics Rudolph the Red-Nosed Reindeer
and the Grinch.
Promotional Arrangements. We have also developed
promotional arrangements with select organizations. Our
arrangements with Major League Baseball teams, including
the Chicago Cubs®, St. Louis Cardinals™ and Pittsburg
Pirates®have featured stuffed animal giveaways at each
club’s ballpark on a day in which our brand is highly
promoted within the stadium. In 2012, we partnered with
McDonald’s®for the fourth time to feature limited edition,
collectible mini Build-A-Bear Workshop animals in
Happy Meals®. We also have had arrangements featuring
product sampling, cross promotions and shared media with
companies such as Dairy Queen in North America and
Betty Crocker’s Fruit Roll-ups. We continued to partner
with teen celebrity, Victoria Justice, who was our brand
ambassador through July 2012. The arrangement also
featured Victoria Justice 4 BABW branded merchandise
available in our stores. In October 2012, we announced
our next brand ambassador, pop star, Cody Simpson.
Third Party Licensing.Wehavecontinuedaseriesof
licensing arrangements with leading manufacturers to develop a
collection of lifestyle Build-A-Bear Workshop branded products
including children’s furniture, fruit snacks, girls play sets and
novelty toys. We believe that each of these initiatives has the
potential to enhance our brand, raise brand awareness, and
drive increased revenues and profitability. We select companies
for licensing relationships that we believe are leaders in their
respective sectors and that understand and share our strategic
vision for offering guests exciting and interactive merchandise.
We have policies and practices in place intended to ensure that
the products manufactured under the Build-A-Bear Workshop
brand adhere to our quality, value and usability standards.
We have entered into or maintained licensing arrangements
for our branded products with leading manufacturers including
Playmates Toys, Pulaski Furniture, ConAgra Foods and Enterplay.
INDUSTRY AND GUEST DEMOGRAPHICS
While Build-A-Bear Workshop offers consumers an interactive
and personalized experience, our tangible products are
stuffed animals, including our flagship product, the teddy
bear, a widely adored icon for over 100 years. According to
data published by the Toy Industry Association and The
NPD Group, sales of the traditional toy market were
$21.2 billion in the United States (excluding video games) in
2010 with plush and doll sales having a combined 18.7%
share of the traditional toy market. According to further
estimates provided by The NPD Group, worldwide toy sales
topped $83.3 billion dollars in 2010.
Our guests are diverse, spanning broad age ranges and
socio-economic categories. Major guest segments include
families with children, primarily ages three to twelve,
grandparents, aunts and uncles, teen girls who occasionally
bring along their boyfriends, and child-centric organizations
looking for interactive entertainment options such as scouting
organizations and schools. Based on information compiled
from our guest database for 2012, the average age of the
recipient of our stuffed animals at the time of purchase is nine
years old and children aged one to fourteen are the recipients
of approximately 80% of our stuffed animals.
According to the estimates by the United States Census
Bureau, in 2009 there were over 62 million children age 14
and under in the United States. The size of this population
group is projected to remain relatively stable over the next
decade. Industry sources estimate direct spending by children
in the United States at over $50 billion annually and that
parents and family members spend an additional $170 billion
annually on children. In addition, children influence billions of
dollars in other family spending.
EMPLOYEES AND TRAINING
In January 2013, we were recognized by FORTUNE
Magazine for the fifth consecutive year as one of the 100 Best
Companies to Work For in the United States. We believe that
this honor is the result of our commitment to providing a great
experience for our diverse team of associates as well as our
guests. We have a distinctive culture that we believe
encourages contribution and collaboration. We take great
pride in our culture and feel it is critical in encouraging
creativity, communication, and strong store performance. All
store managers receive comprehensive training through our
Bear University program, which is designed to promote a
friendly and personable environment in our stores and a
consistent experience across our stores.
We extensively train our associates on the bear-building
process and the guest experience. In fiscal 2012, we hired
approximately 3.5% of applicants for store manager
positions. We focus on employing and retaining people who
are friendly and committed to guest service. Our high
employee retention rates contribute to the consistency and
quality of the guest experience. Our store teams are evaluated
and compensated not only on sales results but also the results
from our regular guest satisfaction surveys. Each store has a
recognition fund so that exceptional guest service can be
immediately recognized and rewarded. We are committed to
providing compensation structures that recognize individual
accomplishments as well as overall team success.
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