The Product

On paper, it all looks simple. Maxine Clark opened the first company store in 1996. Since then, the company has opened more than 370 stores and has custom-made tens of millions of teddy bears and other stuffed animals. Annual revenues reached $474 million for 2007 and are growing at a steady and predictable 15 percent annually. After going public in November of 2004, the company's stock price soared 56 percent in just two years. Annual sales per square foot are $600, roughly double the average for U.S. mall stores. In fact, Build-A-Bear Workshops typically earns back almost all of its investment in a new store within the first year, a feat unheard of in retailing. On top of all this, the company's Internet sales are exploding.

But what all these numbers don't illustrate is how the company is achieving such success. That success comes not from the tangible object that children clutch as they leave a store. It comes from what Build-A-Bear is really selling: the experience of participating in the creation of personalized entertainment.

When children enter a Build-A-Bear store, they step into a cartoon land, a genuine fantasy world organized around a child-friendly assembly line comprised of clearly labeled work stations. The process begins at the "Choose Me" station where customers select an unstuffed animal from a bin. At the "Stuff Me" station, the animal literally comes to life as the child operates a foot pedal that blows in the amount of "fluff" that she or he (25 percent of Build-A-Bear customers are boys) chooses. Other stations include "Hear Me" (where customers decide whether or not to include a "voice box"), "Stitch Me" (where the child stitches the animal shut), "Fluff Me" (where the child can give the animal a blow-dry spa treatment),

"Dress Me" (filled with accessories galore), and "Name Me" (where a birth certificate is created with the child-selected name).

Unlike most retail stores, waiting in line behind other customers is not an unpleasant activity. In fact, because the process is much of the fun, waiting actually enhances the experience. By the time children leave the store, they have a product unlike any they've ever bought or received. They have a product that they have created. More than just a stuffed animal that they can have and hold, It's imbued with the memory created on their visit to the store. And because of the high price-to-delight ratio (bears start as low as $10 and average $25), parents love Build-A-Bear as much as the kids.

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