Letter from America - Rick Derr

Have you initiated your modifications, Indies?

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 10 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 shares the steps he is taking to boost trade in 2025

Well, what are you waiting for? The year is 12.2% completed using my forecast model and by the end of April, we pretty much know how the year is going to trend. Learning Express has used correlation models and one of the most accurate has been sales correlated to the first four months of a year—especially as the Easter season continues to gain in popularity and importance here in the states.

It’s interesting to hear from other indie stores what they have changed, invested in, trained or modified in-store to start the year. Here’s what action I have taken:

• We have implemented a ‘$15 and under’ Value section to capitalize on a weak spot we have identified online. In many cases, selling a $20 and under item online is a losing (or at best breakeven) situation. Say an item has an RRP of $16.99, by the time you have paid Amazon a fee ($10-$12), then your Cost of Goods say $3-$4 and freight costs, there is little or no margin in these items. Selling such lines in-store is much more profitable, which is why we’ve introduced a ‘see it, buy it, take it home today’ strategy within our surprise section. Lines that fall into this category in terms of value include our Candy Shop and trending tween themes – both strong categories that encourage instore purchases and repeat visits.

• Customization projects are underway to create products and services that can’t be purchased online. Last month, we mentioned examples such as the Dope Slime Sundae Station, where kids can make their own slime. To expand in this area, several more projects are in discussion with current vendor partners as well as with a national brand. Plans are still in development, but the research is done, and implementation will start to roll out in May 2025.

• We are launching smaller, more intimate events. The first of these will be ‘The Rain Forest’, teaching children the importance of the rainforests as “the lungs of the earth”, all while engaging them. We will be streaming these smaller events live on our social channels, and they can be played back for those who cannot make it live in-store.

• Our primary capital investment this year is to begin constructing the infrastructure to stream and sell live on any social channel. We selected a marketer that some of you might know, Lee Parkhurst of Parkhurst Marketing, as our lead strategist to research, plan and implement this project by the end of 2025. Lee is best known for his work on pioneering the first toy line to be marketed and blown up on the TikTok shop - Kanoodle. We have selected a platform and are now planning, developing and testing it with carefully curated and specific products. We aim not only to sell, but to drive and increase traffic to our store, as we inform, entertain and reinforce our position as the “pharmacy of toys in Lake Zurich”. This should make us more efficient on our slower days during the week (e.g. Tuesday) by streaming directly to our audiences. I look forward to sharing our progress and updating you on this strategy to fight online sellers; it’s a major investment and one that we expect to pay off.

Besides these four key initiatives, our team has been out and about, visiting regional toy and gift shows selecting new vendors (mostly small startups) and restocking with newer products from our traditional vendor partners. Next on the schedule is the New York Toy Fair; by the time you read this we expect to be winding up a successful trip to NYC - celebrating the industry, meeting up with old and new friends, as well as learning about toy safety, tariffs and the TOTY (Toy of the Year) winners.

Here is a snapshot of actual sales and product vendor rankings up to mid-February: dollar sales YTD are up +5%, and the average sale per transaction is $42.20 versus $41.40 in 2024. Our top five suppliers in value terms are: Jellycat, Lego, Pokémon/ Mattel (through ACD Distribution), Schylling and Dope Slimes.

Finally, a call out to the amazing team at Learning Resources, which understands and supports our company’s mission to grow in this challenging retail environment amongst the giants of Amazon, Walmart and Target. One of our key team members posted this saying on our employee wall: “Change is inevitable. Growth is optional. Let’s all purposefully choose growth” - a sentiment shared by us all.