The restoring of KB

Walk into a growing number of KB Toys' stores these days and you'll find yourself someplace lighter, less cluttered, more brand focused and increasingly shopper friendly compared to what many consumers who haven't visited one of the shops recently would expect.

During the past few months the revitalized retailer—fresh from a bankruptcy-protected reorganization and guided by new leadership—has been systematically making over its shopping experience, literally from floor to ceiling, one store at a time.

“It was very obvious to all of us who came to KB Toys recently that the stores had really fallen into a state of disrepair,” says Ernie Speranza, who joined the Pittsfield, Mass.-based toy retailer last fall as chief marketing officer. “We had two options: Either say let's go with the existing format and clean [the stores] up—paint them, add new carpet…basic maintenance—or you take the approach of looking at the new direction of the company and creating something to fit that.”

KB chose the second route: a more comprehensive make-over that would better reflect management's desire to usher in an updated merchandise mix.

“The direction of the company has changed from years past,” Speranza says. “In the past, the company was basically selling a lot of close-out product, stacking it high in front of the store, not caring too much about customer interaction. It basically said: 'Here's what we have. You go find [what you're looking for].' It was almost like a treasure hunt—in fact, we actually heard those words 'treasure hunt.' And that's not what we wanted to continue.”

These days, Speranza says, the retailer's direction has been towards a store that replaces bins full of close-out product with frontline merchandise—key product from manufacturers that are advertised on television. The merchandising goal is to “really put more emphasis on the key branded items that the major manufacturers offer, plus keep the value issue alive and well, which is close-out items and also make-up (private label) items.”

“What's the worst thing that happens in [the toy] world?” Speranza asks. “It's when a child sees something advertised on TV and says, 'Mom, get me that item,' and they walk into the mall and KB doesn't have it because it's a frontline item and KB is more into closeouts.”

The layout of the retailer's new stores—as of late June there were nearly 25 of them out of a total store base of 604, with a goal of about 50 conversions completed by the end of 2006—looks to simplify the shopping experience while at the same time communicating to the consumer that KB has the name brands and properties their kids are looking for. The floor plan has five “strike points,” says Speranza, where certain properties are highlighted. In a bigger store they'd be called boutiques.

KB's new strike points feature specific properties—Dora, Barbie, Lego or others—in 8-foot sections, aided by brand-specific signage and TV screens, while Fisher-Price and preschool has been given the back wall. In the front of the store there's now more seasonally appropriate merchandise or featured products from properties of the moment, like Cars, Superman or Pirates of the Caribbean. Up front, video monitors help demonstrate product with trailers and other screeners.

“The kids are loving it,” Speranza says of the TVs, “and moms too, because they're seeing the product in action.”

Beyond the boutiques, physical changes to the stores also include wood flooring that “gives the stores a richness,” says Speranza, versus the “horrible, dark carpet” of old; 50 percent more lighting; and new “tower” display racks that showcase categories instead of just specific items, so that entire Superman presentations, for example, can be built on one rack, rather spread out across the store. “It makes it much easier to shop,” Speranza says, “plus, we get credit for having a great selection and the customer appreciates it so much they buy more because they can see all of what's available.”

On the downside for manufacturers, the design changes reduce the store's SKU count by an amount the retailer will not divulge.

The first redesigned stores have “exceeded our estimates,” Speranza says. “We think we're on the right track, but that doesn't mean we aren't going to make more changes. As good as we think the presentation is, we still think we can do better.”