Build-A-Bear Workshop 2012 Annual Report Download - page 14

BUILD-A-BEAR WORKSHOP, INC. 2012 FORM 10-K
we comply with governmental toy safety requirements specific
to each country where we have stores. Packaging and labels
for each product indicate to our guests the age grading
for the product and any special warnings in accordance
with guidelines established by the Consumer Product
Safety Commission.
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.
In order to increase store visits and give guests additional
reasons for purchasing at our stores, we expect to expand our
product assortment and our leadership in the toy industry by
offering additional products other than our core plush animals
and related items that are consistent with our interactive and
hands-on experience, some of which are proprietarily
developed and some that come from other toy and accessory
companies. We believe the addition of complementary toy
and accessory products will allow us to increase our sales
and overall profitability.
MARKETING
We believe there is value in promoting and advertising the
Build-A-Bear Workshop store and brand as a family-friendly
destination that provides fun, affordable experiences
appealing to a broad range of age groups and
demographics. This gives us a competitive advantage and is
critical to our business strategy. Our advertising expenditures
were $23.0 million (6.1% of net retail sales) in fiscal 2012,
$19.3 million (5.0% of net retail sales) in fiscal 2011 and
$18.5 million (4.8% of net retail sales) in fiscal 2010,
reflecting the continuation and further refinement of marketing
initiatives. We believe our adjusted marketing strategies
contributed to a significant improvement in sales trend in the
fourth quarter of fiscal 2012 in the United States with
comparable store sales increasing 2.4%, a significant
improvement from the third quarter sales decline of
11.6%. We will continue to adjust our marketing programs
and expenditures as we move forward.
In 2013, our goal is to continue to build top of mind
brand awareness through fully integrated marketing
programs. Television advertising is a key strategy to reach
and acquire new guests and gives existing guests new reason
to visit. Since February 2004, we have aired nationally
televised advertisements in the United States. In the fourth
quarter of 2010, we expanded our television advertising to
the United Kingdom. In 2012, we rebalanced our advertising
strategy in the United States to showcase the unique
Build-A-Bear Workshop brand and experience in addition to
featuring new products and selected seasonal promotions.
Build-A-Bear Workshop has a community of highly
engaged advocates, both adults, primarily moms, and kids. In
2012, we continued to expand our use of social media to
reach and market to these brand advocates. As of March 8,
2013, nearly 2.5 million Facebook users have “liked” the
Build-A-Bear Workshop brand, we had nearly 40,000 Twitter
followers, 8 million views on YouTube and over 1.2 million
downloads of our Build-A-Bear App. Digital media and social
media have allowed us to measure success of products,
events, and other initiatives and to gather their feedback so
we can focus on the programs that our guests value most
highly. In 2013, the digital space will continue to be an
important component in our marketing efforts because it is an
important part of where our guests spend time and engage
with brands they support. Since the digital space is constantly
changing; we continue to evolve our online strategies to
maximize our relevance. Our child-centric Web site,
bearville.com, is targeted at kids, primarily ages six to
fourteen and continues to be a tool to increase brand
engagement, promote our brand and raise awareness of
in-store products and events. Our mobile app is also an
important brand touch point for both moms and kids and
we continue to increase our capabilities and presence in
mobile technology.
We also leverage our database of nearly 4.5 million
active members of our Stuff Fur Stuff club loyalty program. The
program offers shoppers the opportunity to earn awards
based on purchases as well as receive other member-only
benefits. In 2008, we launched a version of the program in
the United Kingdom that did not include reward certificates,
but served to gather guest data and maintain contact with our
guests. In 2012, we refreshed our Stuff Fur Stuff program to
increase guest retention metrics. Members earn awards for
every 50 points, including, for the first time our guests in the
United Kingdom. The guest and transactional data that is
collected provides insight into the overall purchasing history of
members including visit frequency, items purchased and
amounts spent on each visit and cumulatively over time. We
continue to leverage this information and our database to
market products, promotions and store events.
LICENSING AND STRATEGIC RELATIONSHIPS
We have developed licensing and strategic relationships with
some of the leading retail and cultural organizations in
North America and Europe. We believe that our guest base
and brand strength make us an attractive partner and our
customer research and insight allow us to focus on strategic
relationships with other companies. We plan to continue to
add partnerships with companies that have strong,
family-oriented brands and provide us with attractive
marketing and merchandising opportunities. These
relationships for specific products are generally reflected in
contractual arrangements for limited terms that are terminable
by either party upon specified notice.
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