Letter from America - Rick Derr

Opening a new toy store in 2024 in America

After 20 years working at A.C. Nielsen/D&B Research Company, Rick opened the first Learning Express Toys franchise in the Chicago area in 1996, and then became a sub-franchiser, opening nine more stores. Although leaving the corporate environment behind, he has combined his expertise in data and numbers with a passion for the toy retail space. This month, Rick takes Toy World readers behind the scenes of his latest Learning Express store opening.

By the time you read this, the grand opening of our new store will have taken place on May 17th in Naperville, Illinois. A suburb of Chicago, this area had a Learning Express from the mid-2000s until early 2021, but we closed this location after a death in the franchisee’s family was followed by the pandemic, along with unviable rent increases. Coming out of this uncertain period, I was in no hurry to sell a new franchisee on retail in the toy business. Then the ‘squidgets’ craze happened, and 2021 and 2022 flew by with record sales in our indie channel. Finally, at the beginning of 2023, I began vetting potential candidates who could reopen a successful Learning Express store in an aboveaverage demographic area. This process takes time: in fact, it took nine months before we finalised a franchise agreement and started to look for a location. Space became available in a high-traffic strip centre in an area we knew. We jumped at the chance and finalised a lease in just three months.

Once we obtained the space, a retrofit needed to occur, based on our specifications. In the US, permits are a major time drain. Each community sets their own standards of construction requirements: demolition permits, electrical and sewage permits, framing permits, sign permits, etc. At the time of writing, we have a sign permit outstanding as well as a final inspection - I guess they want to check that we do actually sell toys.

So, what is our Learning Express process? Once our build-out design is completed, we submit purchase orders to approximately 120 vendors for an opening order. Our standard opening order runs to around $150,000 and the first order is guaranteed for the franchisee. We submit the orders about five weeks before the opening date, with products arriving three weeks before the grand opening. Prior to the opening, I dispatched 2-3 team members to work with the new owner, who has also hired and trained local team members. During these three weeks we receive products, merchandise products by category, build displays and double check all barcodes for quality and easy check out. We teach our computer POS system and begin analysing data. The marketing machine, which has already been set up - Facebook, website, TikTok, Instagram, etc. - also ramps up as we collect emails and offer raffles online, as well as other incentives, to build a database of potential customers before we open the doors.

Why do customers choose Learning Express? We have unique products and services in both fun and convenient locations.

Products/services

We canvas the globe to find the finest merchandise selection - the toys kids want and surprising gifts for all ages. We jump on hot product quickly and have established Learning Express as the best place in the US to find trending items, through our active and engaging social media programme. Kids and shoppers love our birthday gift registry and our knowledgeable team members wrap presents free of charge, making each shopping experience a reason to come back.

Shopper profile

We attract an affluent family demographic with disposable income and a demand for quality. Our typical shopper has 1-3 kids or grandkids and a lot of birthday parties to organise and attend. And of course, kids love shopping with us, too!

• $120,000+ - Average household income

• 100,000+ - population within a 5-mile radius

• 20% - Children aged 0-14

Our locations

Our development team delivers innovative, fun and cost-effective store designs. We typically target shopping centres featuring an upscale grocery anchor and high foot traffic that customers visit multiple times per week.

• 1,500 – 3,000 square feet - typical store size

• 30 feet - typical store frontage

Investment

In the US, a franchise must update the Franchise Disclosure Document each year with the most relevant data. Learning Express estimates the initial investment for new Learning Express stores to be $200,000-$400,000 in 2024, with the two biggest unknowns being leasehold improvements and opening inventory value. Our newest location will be well within these ranges as the franchisee starts their journey with 37 years of support from the largest chain of toy stores in the US (90 locations and counting).

Our business model is simple but powerful: the ‘owner’ is the key. Even above location and product mix, they are the engine. Our strategy is known as T, P, W: hire the best team, curate the best local selection of products, and provide a wow in all you do, both in-store and online, with social media a key component of your success. Wish us luck, as nothing is a given. But with good research, solid planning and flawless execution, as well as delivering on our passion for serving our local communities and their children, we have a good chance of success. Stay tuned for updates on our newest store’s journey.