Kiddie City’s 27,000 Square Ft Discount Toy Manhattan Project
Everyone across the nation knows what Toys R Us is, but what about Lionel’s Kiddie City? Unless you’re on the east coast you may not be familiar with the chain of toy stores. They’re known for offering toys for less, and have expanded into the Nintendo market where you can find most Game Paks for a few bucks less than most other toy stores. Just don’t expect to find many copies of Super Mario Bros. 2 or Zelda II: The Adventure of Link! They’ve opened a sprawling store with 28 registers in Manhattan, a place not know for discount stores of any kind. The New York Times published this piece, and all of the wonders you can find inside:
”WE weren’t sure what to expect,” Marvin Katz was saying as he stood in Manhattan’s new Kiddie City store next to a kangaroo bigger than him (there was nothing to worry about, since it was made out of Lego blocks). ”People wouldn’t be coming in cars. They’d be riding the subways and buses. We decided not to stock many big items like bicycles. But people have been lugging some bicycles out of here.”
Mr. Katz, the chief operating officer of the Lionel Corporation, Kiddie City’s owner, was discussing the prospects of doing something that nobody has done – make a go of a big toy supermarket with marked-down prices in Manhattan, where rents and labor normally are marked up.
Kiddie City opened at the end of August in the old space of the Franklin Simon department store on West 34th Street, down the block from Macy’s and alongside Herman’s Sporting Goods. So far, things have been a little slow, but holiday Christmas shopping hasn’t started yet.
Marvin Katz was visiting the store the other day and took the time to lead a tour through its 27,000 square feet and past its 28 checkout registers. A pale-complexioned man with a broad face and steely eyes, he had an astounding understanding of what individuals 30 or 40 years younger than him were interested in.
Unlike the conventional toy supermarket of Kiddie City and competitors like Toys ‘R’ Us and Child World, the store was a duplex. Right at the entrance was the big Lego kangaroo. (The kangaroo is Kiddie City’s symbol.) The bottom level was compact and filled with some of the newer and fast-moving items, including Looney Tunes hand puppets, a Roger Rabbit doll and a gas-powered Bugatti toy car (3.5 horsepower engine, rack-and-pinion steering, fully carpeted interior) that was priced at $3,999.99. Somebody would have to be awfully good about bedtime to get that.
Upstairs on the second floor was a crazy quilt of shelves and sections where the bulk of the toys were. The store stocks something on the order of 14,000 different toys.
”We find people buy the same things here as anywhere else,” Mr. Katz said on the escalator to the second floor. ”How they get it home is another story. I suspect that a lot of our customers used to go in cars outside Manhattan to buy toys.”
A petite woman nearly sideswiped Mr. Katz with a shopping cart heaped high with acquisitions and a shrieking girl. ”All right,” the woman said to the girl. ”We’ll get the Vlobb doll.”
”At first, we didn’t know if we should bother having shopping carts,” Mr. Katz said. ”We didn’t think people would buy that much at one time, since they’d have to take things home on the subway. But we’ve definitely needed them.”
Kiddie City anticipates it will need to sell $10 million to $15 million worth of toys a year to produce a profit. Plentiful volume is important because prices are 15 to 50 percent below the suggested retail levels at fancy New York toy stores like F.A.O. Schwarz or Macy’s. The store is part of a 90-store chain owned by Lionel. It operates in 16 states and is the fourth-largest toy chain in the country. (Toys ‘R’ Us, with 358 stores, is the biggest.) The company is the one that used to make the famous Lionel electric trains, but it sold that business more than a decade ago and now runs only the toy stores. (The trains are now made by a Chicago company, but can be bought at Kiddie City stores.) Six years ago, Lionel fell on hard times and filed for protection under Federal bankruptcy laws, but it subsequently straightened things out and last year earned $5.8 million on revenues of $343.6 million.
Lionel decided to bring Kiddie City to Manhattan two years ago, but it took a while to find a big enough space at the right price. It has settled in Manhattan in large part to achieve visibility for an invasion of the New York metropolitan area, where it has been absent and where its chief competitors have long been conspicuous.
”We are very serious about entering the New York area in a major way,” said Michael Vastola, Lionel’s chairman.
Why hasn’t Kiddie City been here before then? ”Stupidity,” said Mr. Vastola.
How well the Manhattan store does is critical to the chain’s expansion plans. ”That’s why we have to do all we can to make it work,” Mr. Katz said.
He thinks there’s an obvious opportunity, since most toy shoppers have been forced to journey to discount stores in the suburbs or pay much higher city prices. The Christmas season ought to tell Lionel a lot about the store’s prospects, since the chain sells 60 percent of its toys in November and December.
”We think it will be a good Christmas,” Mr. Katz said. ”Good but not great. Last year was not good. But this season we’ve got two extra selling days between Thanksgiving and Christmas.”
The main reason the Manhattan store exists is because Lionel got an attractive deal on rent. Mr. Vastola said it is paying less than $30 a square foot. Other space it examined was fetching more than double that. It got a break on 34th Street because the landlord is the same person it struck deals with for two stores to open next week in the Bronx. Another store opened last year in Edison, N.J., and one just opened in Hanover, N.J.
Competing toy chains are expected to keep a close eye on Kiddie City to determine whether they should try to sell stuffed goats and Pee Wee Herman dolls in Manhattan. There have been reports that Toys ‘R’ Us has been poking around for a Manhattan location, though the chain would not comment on its plans. Child World, the No. 2 chain, is looking for new sites in the metropolitan area, but not specifically in Manhattan.
To pull in toy buyers, Lionel has been heavily advertising Kiddie City and getting personalities like Freeman McNeil, the Jets’ running back, to appear in the store. It also is betting on sheer visibility. It has determined that something like 600,000 people go by the place each day.
Mr. Katz swept past the board games. ”They’re the third-biggest category in the store,” he said. ”Video games are far and away the biggest category. No. 2 is boys’ action figures. There’s no really big toy this year, same as last year.”
He took a fast look at the tiny die-cast cars. ”The big thing in cars is the Hot Wheels racers from Mattel. They’ve got this new process this year where if you dip the cars in water they change colors. We think they will be one of the hot items for Christmas.”
Mr. Katz spied a small loose truck and picked it up. ”In New York, these things are great,” he remarked. ”In a 700-square-foot apartment, there’s no room for the big trucks.”
He threaded his way further down the aisle to where the guns were. ”The gun business is down from last year,” he said. ”People just seem to be anti-gun. They’re not anti-violence, because the action figure business is doing just fine and it’s all space creatures, monsters and lots of violence.”
Mr. Katz moved past a huge display of Lazer Tag games, which had been marked down to $9.91 from $19.97. A sleepy-faced shopper interrupted him.
”Excuse me, how many do you have of these?” he asked. ”I may need a lot.”
”I have 98,000,” Mr. Katz said.
”Oh, well, that’s enough,” the man said. ”See, I use them in commercials. I may need about 30.”
”That doesn’t look like a problem,” Mr. Katz said.
Action figures ruled the next aisle. Several shoppers were homing in on them. ”A new line this year is the Turtles,” Mr. Katz pointed out. ”They’re based on the comic strip characters. They’re neat characters – turtles which live in the sewer and eat pizza and stuff. Ghostbusters, which came out last year, are going to be the biggest action figures, with G.I. Joe second.”
Because of space limitations and the fact that shoppers wouldn’t have cars, Mr. Katz said that some categories of sizable merchandise in its other stores were barely represented. There were no boxes of diapers, very few bicycles and hardly any juvenile furniture.
He hurried on to radio-controlled vehicles. ”The average price is about $35 to $40 and the category has grown a lot in the last few years,” he said. ”It’s promoted heavily by Tyco. It’s not doing as well as last year, but it’s still a good category. All the boys’ categories are down this year and the money has gone straight into video.”
At the expansive video game counter, several youths were playing the sample Nintendo games. One tow-headed boy was trying to batter Mike Tyson in a boxing game and was getting bloodied. The video game market was practically dead a few years ago. Now it is surging again.
”Something like 90 percent of the video business is Nintendo,” Mr. Katz said, referring to the Japanese system that has swamped the Japanese market and is now captivating American game players. ”Video has doubled from last year. The software is much better and there’s far more variety.”
In the doll department, Mr. Katz picked up a Lil’ Miss Make-up doll from Mattel, which he said should be the biggest-selling doll this year. ”When you wet her cheeks and lips, the makeup comes out,” he said. ”Afterward, you can wash it off. It’s the TV dolls that do all the business, the ones that get promoted on the tube. The Cabbage Patch doll just about killed the basic doll business, but now that it has slowed down, the basic dolls are starting to come back.”
Mr. Katz took a whirl past the activity row. This was where old staples like finger paints and Play-Doh could be found. ”This is one area that hasn’t changed,” Mr. Katz said. ”The best items are the same ones that were the best items 20 years ago: Play-Doh, Etch-A-Sketch, Crayolas.”
He glanced at the paint-by-number sets. ”Even those are the same,” he said. ”When I got into this business, ‘The Last Supper’ was the best-selling set. It still is, more than 20 years later. It’s always struck me as odd, though, that I’ve never seen anyone hang one up.”
[Source: N.R. Kleinfield via The New York Times]
Craig has been covering the video game industry since 1995. His work has been published across a wide spectrum of media sites. He’s currently the Editor-In-Chief of Nintendo Times and contributes to Gaming Age.
