If You Thought Baby-and-Kid Stores Aren't Big or Plentiful Enough, Here Comes Wonder!
Former Walmart (WMT) vice president Bill Colaianni looks at an America crowded with 850 Toys "R" Us and Babies "R" Us stores and sees... room for more and bigger baby-and-kid stores. His first 135,000-square-foot Wonder! store is planned to open near Chicago before the end of the year.
With Toys "R" Us/Babies "R" Us seeing shrinking sales at established U.S. stores, it's hard to see more opportunity in this niche. Toys "R" Us took in $150 million less last year than it did in 2008 and eked out less than a 3 percent profit on more than $13 billion in sales, even with the advantage of massive economies of scale.
TRU/BRU stores are only 40,000 square feet or so, so that's likely a lot less rent to pay than Wonder! stores will owe. Though maybe not off the bat -- for the first store, Colaianni bragged about getting a good rent deal on the shell of a former Great Indoors store, the housewares-superstore chain created by Sears (SHLD).
With Wonder!, Colaianni hopes to take the kid-superstore idea up to the "eatertainment" level, including a large play area and restaurant inside the store and everything imaginable you could want to buy for newborns through 8-year-olds. So it's not just shopping but an indoor park, a meal out, the works. One retail wag described it as a cross between Cabela's (CAB) and Costco (COST), though no word on whether there'll be free food samples in Wonder!'s aisles.
Apparently Colaianni hasn't talked to the folks at premiere eatertainment company Rainforest Cafe, which saw the momentum for their expansion die more than a decade ago. Rainforest Cafes are now confined entirely to mega-trafficked locations such as Disneyland, and haven't grown since Landry's Seafood Restaurants (LNY) bought the 24-unit chain in 2000. But the birthrate has ticked up a hair, so Colaianni sees a growing market, notwithstanding the evidence from existing kid-focused and eatertainment-driven chains.
So far, Colaianni has raised the funding needed to create his store with help from partner and venture capitalist Shane Christensen, and with backing from Cabbage Patch Kids investor Rick Mazursky. Wonder! has raised $4 million so far and says it needs to raise $10 million more to put up four more stores by 2013. Even with the tough venture-capital climate these days, raising the money could be easier to do than getting cash-strapped parents to spend enough to make this mammoth baby-and-kid store pencil out.
Photo via Flickr user Michael (mx5tx)