Build-A-Bear thrives—Toys R Us dies.

What happened

  • Build-A-Bear has posted four consecutive years of profitability and remains debt free in an era when brick-and-mortar retail is deteriorating for former industry giants, often because of private equity-induced debt loads.
  • The workshop’s success is particularly stark compared to Toys R Us, which announced in March 2018 that it would shutter all 735 of its stores. Build-A-Bear has even grown its brick-and-mortar stores by 12% in the last five years.

Why it matters

  • While other brick-and-mortar retailers, whether in the toy sphere or not, are striving to update their in-store experiences as foot traffic and sales get swallowed up by ecommerce, Build-A-Bear has been keeping it experiential since its founding in 1997.
  • Toys R Us, a main Build-A-Bear competitor, sought to stay afloat by slashing prices and reducing inventories—Disney, which saw its retail sales dip 10%, down to $1.21 billion in the first nine months of 2017, seriously remodeled its stores to incorporate movie theater-sized screens that bring its theme park entertainment to brick-and-mortar locations. But the Build-A-Bear workshop has always considered itself a retailer of memories, rather than a retailer of toys—and it’s point of departure has always been an experience, something that’s inherent to its own name.
  • Though Build-A-Bear isn’t immune to the changing retail landscape—revenue has decreased over the years—the experiential component in its stores has maintained a pliable real estate strategy. Over time, the company has evolved away from traditional mall locations to build customizable sites and establish workshops in AMC movie theaters, Caribbean resorts and on Carnival Cruise liners, meeting its target customers—often tourists—where they already are. It also continues to sell experiences that appeal to children and adults alike, a strategy that other companies are sure to increasingly adopt in the future.