Build a Bear Workshop - An Enduring Star Business

A few months ago, I'd taken my daughter to the Build-A-Bear Workshop at Hamleys in London. The moment you enter the store within the store, you know that you're looking at a star-business. So I decided to learn more about them and analyze the main reason for their success.

Build-A-Bear Workshop (NYSE: BBW) is an American retailer that sells customizable teddy bears and other stuffed animals. It is the largest create-your-own animal service, with the other companies in the business consisting of regional and/or locally-owned operations. It had sold 50 million stuffed animals within 10 years of launch!

The company was founded by Maxine Clark in 1997, and opened its first store in the Saint Louis Galleria. Ten years later, over 400 stores operate worldwide: in Australia, Canada, Denmark, France, Germany, Japan, South Korea, The Netherlands, Norway, the Republic of Ireland, Russia, Singapore, Sweden, Taiwan, Thailand, the United Kingdom and the United States (including Puerto Rico). While the majority of Build-A-Bear stores are in shopping malls, as of August, 2008, the company has opened five stores in Major League Baseball stadiums.

Maxine Clark while telling the story behind the company says "Every adult I asked about the idea said it would never work – why would anyone ever want to make their own stuffed animal? But every kid said "Where is it?" and "When can I do it?" My teddy bear, "Teddy", was my first best friend and helped shape who I am today, so I knew just how meaningful teddy bear friendship could be."

Build a Bear Workshop is clearly a star business. The founder - Maxine Clark - took one of the largest segments of the toy industry (stuffed animals) and divided the market in an entirely new way (ready-made stuffed animals and make-your-own stuffed animals.) She may have done this unconsciously but the process is unmistakable. Another vital thing that she did was not rely on feedback that may have been given to her by her peers (other adults.) Rather, her market research appears to have been directed at her target market of children.

Today, many other toy-makers are jumping onto the build-your-own-toy bandwagon. On a recent visit to a toy store in Orlando, I saw toys like make your own dinosaur and make your own Star-Wars light-sword. Regardless of whether these toys succeed or fail, they strengthen the position of Build a Bear Workshop since it now comes across as the original category leader (the real thing.) In other words, competition is good for the category leader (since you need to have followers in order to be a leader) as long as the competition arrives a little while after the category leader is established. Build-a-Bear has transcended being a fad by lasting for 10 years and creating an emotional connect with it's target market. Today's toddlers will be tomorrow's parents and will take their own children to a Build-a-Bear 20 years from now. So this is not just a star business but also an enduring star.