This Internet Thing Just Might Work for Build-a-Bear

A lesson in how to monetize online community was delivered this week by Maxine Clark, Chief Executive Bear (yes, I know) of the mall chain Build-a-Bear Workshop. It could be the saving grace of this struggling toy company.

BuildABearVille.com is a virtual world that launched last winter. On an earnings call Thursday, Clark noted that 4.6 million online characters have been created since launch -- many the "virtual" versions of kids' real toys, sent onto the Internets to chat, play games, build houses, and other appealing activities.

"We've seen since BuildABearville that our product launches have been even more successful and we think that part of that is that ability to promote directly to guests that are playing online and who are very interested in acquiring more products," Clark said. When the site added a room-building feature, the number of new avatars jumped 43 percent week-over-week. "Because the rooms are so expensive, [and] they're the most points to buy, the best way to get the most points is to buy animals. So we've structured those things. And we think those things over time begin to build a huge reason why you go to a store and you buy an animal just like they've done for other companies who had no business and started from zero." That would be Webkins (small plush toys with Web codes) and NeoPets (virtual world came first, plush toys added later).

BuildABearVille promotes engagement in the brand, even among kids whose parents can't afford the gas to drive them to the mall. Items coming to the store are launched first in the virtual world to build awareness. Meanwhile, with 10-year leases coming up for renewal (the company started in 1997), Build-a-Bear Workshop is reminding landlords of the role it plays bringing family traffic to retail centers.

For those of you without children, especially girl children, Build-a-Bear Workshop sells make-it-yourself stuffed animals. A child picks a lonesome shell of a critter, stuffs it, and inserts a little red heart upon which a wish has been made. The child gets to dress the bear -- every look is available, from Tinkerbell to Leather Boy -- add accessories and shoes, name it and tote it home in a cardboard "condo" with die-cut windows.

Like most sellers of nonessential items, Build-a-Bear is hurting. Traffic is down, average transactions are down, comps have been down since 2006, when they dropped 5.8 percent for the year. New store openings have been sharply curtailed, Clark said, from 50 in 2007 to 25 in 2008 and just six in the works for next year.

A short seller on SeekingAlpha.com expressed skepticism last December: "Ask any young girl (BBW's target customer) whether they'd rather have a teddy bear or a much edgier Bratz doll. Build-A-Bear is a nice novelty concept, but that's all. After a customer has had the experience once, the novelty has worn off."

As the mother and funding source of a target customer, let me just say HA. (Bratz? Not in this house. We don't play with dollz that look like hookerz. Because I said so, that's why.)

It's not any old stuffed animal by the time the child gets done. It's "your beary best friend" and it needs to go back and VISIT and acquire friends and outfits for different occasions. It needs PJs and party dresses and a soccer uniform. There are Build-a-Bears in this house that are better dressed and have more of a backstory than I do. The most expensive one ever produced by my daughter was a $80 World Wildlife Federation special-edition leopard in an angel outfit, which she bought with her Christmas money and still sleeps with years later. But she has seven others, plus three she gave as gifts.

You can allegedly get out of there for about $12 with a basic naked bear, but I've never seen it happen.

As I've been dragged in to Build-a-Bear again and again and again, I have developed a grudging respect for what this company does. Those adorable children typing their names onto "birth certificates" are opting in to an enormous marketing database that keeps reminding them of new items they just have to have. Parents wind up having as much fun as their children, discussing the merits of the flowery pants versus the sparkly pants, and staff genuinely seem to have a blast as well. As indulgences go, it's a good one.

Beyond the virtual world, Build-a-Bear Workshop has taken a substantial stake in a build-your-own model car concept called RidemakerZ that takes the "creation" theme to the male demographic. Currently in test in Myrtle Beach and other markets, it will roll out to 13 stores by the end of the year, offering big and little guys the chance to make a $10 car or a $100 one, tricked out with remote control, sounds and decals. There's little risk of cannibalizing the core bear business, because boys make up only 30 percent of Build-a-Bear Workshop guests.

As for the bear lair, two monster Disney licensed brands will launch this fall. A Hannah Montana bear is expected in September (a sparkly white bear with purple trim, plus accessory wig and microphone), but next week, just in time for back-to-school, when you'll be at the mall anyway, is the High School Musical bear, promoted by heartthrob Corbin Bleu.

We're all in this together -- you hide your daughters and I'll hide mine.