Digital Transformation

Build-A-Bear Workshop expands its audience

By Dan Berthiaume

Build-A-Bear Workshop is on a roll. The experiential retailer is on track to deliver a double-digit increase in profitability in fiscal 2022 compared to the prior year, which would be the most profitable in its 25 years of operations.

With nearly 500 brick-and-mortar locations, Build-A-Bear remains committed to physical retail. But in recent years, the company has evolved to become a true multi-channel retailer, with its online business contributing to its success.

Chain Store Age recently spoke with Jenn Kretchmar, chief digital officer of Build-A-Bear Workshop, about the company’s ongoing digital transformation efforts. (Editor’s note: This interview has been condensed for clarity and length.)

How and why did Build-A-Bear decide to launch a digital transformation strategy?

In 2017, we were seeing a lot of changes in how customers were experiencing our brand. This included people coming to our website to start to pre-shop to learn more about us. So, we made the decision to invest in a digital transformation to meet our customers where they are shopping.

At the end of 2017, Build-A-Bear went live with a new site in an effort to expand our addressable market. We understood that our customers wanted to have the opportunity to go online, select a bear, select the bear’s sounds or the scents, and then either ship it to themselves for their own personal collection or ship it as a gift to a loved one.

How did customers respond to the new e-commerce site?

The response has been enormous. Up until the time we launched the new site, we had about 4% e-commerce sales penetration. But at the end of 2022, Build-ABear recorded almost 20% penetration of retail sales online. Customers love being able to shop online in addition to our stores, and it truly has been additive to our business.

What are some other transformation projects that you’re especially proud of?

During the store shutdown period of the COVID-19 pandemic, all of Build-ABear’s brainpower was focused on digital, and we had a very fast acceleration of technological capabilities.

For example, we turned on our omnichannel capabilities. Up until the pandemic, all of our e-commerce orders were fulfilled out of our central warehouse and distribution centers. Following the shutdown, however, we were in a position to fulfill from our stores as well.

We started using about 300 stores as micro-distribution centers. Online orders were able to flow out to the stores, where the associates would take care of the orders — assembling the items and then shipping them out.

In addition, we have been leaning into personalization and digital engagement. Leveraging Salesforce Marketing Cloud, we now create specific email marketing journeys and journeys. These could be social, paid search, display ads, or video channels like YouTube or TikTok.

Build-A-Bear collects that data and looks at it, and then addresses our messages accordingly to make sure that we’re serving up the right content to the right customer to promote brand growth.

What type of reduction in fulfillment time do you achieve when you fulfill from a store instead of a warehouse?

What’s great about fulfillment from the store is the way that our system sends out orders to stores based on geography. With the vast majority of customers selecting economy shipping, we can set a shipping point closest to where that package is destined. Associates pull the online orders that have routed out to their stores and assemble it for shipping or in-store pickup that same day. Through our third-party delivery partner, customers can get their order that day.

Build-A-Bear recently launched a metaverse experience. What made you decide to enter the metaverse?

We were participating in digital gaming for years before Roblox existed. We had a Nintendo game and an online multi-player game, so the metaverse was a natural evolution for us.

Customers can build out a virtual workshop on Roblox and then create a town, build furry friends and name them, and then add on clothing and accessories for them. No brand is better suited for an online building experience. Also, personalization is literally in our DNA.

What kind of technology transformation projects are in the pipeline?

Digital transformation continues to be one of our top priorities. In 2023, we expect to continue with amplification of more personalization. The Build-A-Bear Bonus Club loyalty program is an important part of our relationship with our customers and we expect to continue to leverage that tool to add more benefits, perks and engagement in 2023.