Consumer Products

Build-A-Bear bolsters its international presence

Extending its reach into the international market, St. Louis, Missouri-based retailer Build-A-Bear Workshop is cracking a tough nut this fall. Along with bolstering its presence in the U.K. market, the teddy bear company will expand into its 14th nation, opening franchise stores in the burgeoning India marketplace.
May 1, 2006

Extending its reach into the international market, St. Louis, Missouri-based retailer Build-A-Bear Workshop is cracking a tough nut this fall. Along with bolstering its presence in the U.K. market, the teddy bear company will expand into its 14th nation, opening franchise stores in the burgeoning India marketplace.

BAB has teamed up with the Murjani Group to set up its interactive stores in India, where kids can create their own stuffed animals. This isn’t Murjani’s first North American partner. Notably, the company brought Calvin Klein outlets to India and launched Gloria Vanderbilt and Tommy Hilfiger brands there in the ’70s and ’80s.

India’s certainly a hot market right now. The country’s economy has been growing at a steady rate since the ’90s, but it’s the growing 200-million plus, English-speaking middle class population that has U.S. retailers and manufacturers looking Eastward. Fisher-Price, for one, is planning to open more than 20 stores in India this year. And international retail giants such as Wal-Mart are eager to make their mark in the country as well, but the government’s rules of foreign direct investment have been preventing them from making the move. Under these restrictions, international retailers have to team up with domestic companies to establish a presence in the region.

For Maxine Clark, Build-A-Bear founder and chief executive bear, the country’s young population (more than 50% of its 1.33-billion residents is under 21 years old) was one of the most compelling reasons to enter the market. She says her company had held off on setting up shop in India until it found the right partner. She adds Murjani Group CEO Mohan Murjani’s 35 years of retail experience makes him a good match for BAB.

The announcement of the move to India came just a few weeks after BAB signed an agreement to acquire U.K. plush retailer The Bear Factor in early April. Build-A-Bear paid US$41.4 million in cash for the 40 Bear Factory stores in the U.K. and Ireland. Under the deal, BAB also obtained The Bear Factory’s U.K. franchisee Amsbra. The stores’ conversion into BAB Workshops (managed by Amsbra) should be complete by this holiday season.

In 2005, BAB’s revenues shot up roughly 20% for the second year in a row, reaching nearly US$360 million. Clark says the steady growth can be partially attributed to the international expansion program, with international franchising fees rising more than 20% in 2005. 35 new Build-A-Bear stores were opened across the world in 2005 and that number is expected exceed 50 in 2006.

Meanwhile, The Murjani Group is currently scouting potential BAB sites in India, and more than one store is scheduled to open in 2006. Clark says more retail outlets are planned in the future as appropriate locations are found. Aside from the India venture, BAB also plans to open two stores in Thailand this year, starting in July.

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