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Fifty-year-old toy retailer gears up for growth

Toy retailer Kidstuff opened its first store in Paddington nearly 50 years ago. For the past few decades, its footprint has expanded slowly, but in the last three years, Kidstuff has more than tripled its store network from 18 to 57.

The upmarket toy retailer has also grown rapidly online, where it does around three to four per cent of total sales. While e-commerce currently represents Kidstuff’s third or fourth biggest store, it is on track to be the biggest within a year.

At the same time, this sudden growth spurt has put a strain on the business, and the retailer has needed to reexamine its systems and processes. Myles Fleming, business manager of operations, IT and marketing at Kidstuff, told Internet Retailing that the website, until recently, was nearly impossible to upgrade.

“It was built with a lot of plugins that were hard coded. Everything we added broke something else. We spent 90 per cent of the time trying to fix things rather than sell things,” Fleming said.

The problem came to a head right before Christmas last year, when Kidstuff typically does around 65 per cent of its yearly sales. The website couldn’t handle the increased traffic and suffered a major outage. That was when Fleming knew it was time to make a change. He began the search for a new e-commerce platform – no easy task.

“It actually took longer to find a partner than to deploy the software,” he said.

“A lot of people didn’t understand that we’re a bricks and mortar store with a website that wants to add value to stores. They would talk about speed to conversion, but I actually want the customer to spend time on our website. I want them to read the articles and see what our brand is all about. The aim of our website is to encourage them to go into store.”

Mobile first

Kidstuff ultimately chose to use BigCommerce and completed the replatforming with support from Randem at the end of June this year.

One of the biggest improvements to the website is its functionality on mobile, a crucial channel, since most Kidstuff customers are mums who end up browsing the site on their phones.

“It allows customers to go on and research in store, get more info about products. We’ve also got a really strong store locator, with all the public transport. I think the website is a very strong acquisition piece,” he said.

But the website is just one of several investments Kidstuff has made to cope with its recent growth. The retailer also brought its standalone POS, merchandising and accounting systems under one roof and introduced a new business insights tool.

“All our software talks to each other now. We’re going down the track of automating accounting, rather than getting [data] printed and passed around,” Fleming said.

“We know as retailers we have to be quick. We have to find ways of doing things more efficiently. The big headache is managing inventory. It’s that balance of forecasting. We’re building some really strong systems in the business to deliver that.”

A is for Amazon

These systems will be even more important, as Kidstuff looks to continue on its growth trajectory. According to Fleming, the retailer has registered to sell through Amazon Marketplace when it launches in Australia and is in the process of integrating its ERP system with the platform.

“We’re pretty excited about Amazon coming to Australia. It gives us an opportunity to sell and promote our goods,” he said, noting that Kidstuff stocks about 30-40 per cent private label products. Its focus is on educational toys.

“The things you don’t find at a Kmart or Target,” he said.

Fleming is not too concerned about the potential pitfalls of selling on Amazon, such as increased competition or downward pressure on price from.

“We have a focus on service. We offer gift wrapping in store, we teach staff about our products. You go into the big box toy retailers and they don’t offer a lot of service beyond pointing at a shelf. We think that’s lacking,” he said.

“If we continue to deliver exceptional service in store, I think it will be a positive thing for us. We won’t be able to compete with some brands, but I think we’re in a good space. We’re not a price sensitive business. We sit at the top end of pricing.”

But in the meantime, Fleming is focused entirely on the Christmas shopping season. While he said there’s more positivity than in previous years, he believes it will be a very late Christmas.

“From a store perspective, sales will come in the last week. We won’t know where we are until we get to Christmas Day,” he said.

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