ECCPartnership Build A Bear Case Study

Experience Co-Creation in Retail
Build-A-Bear Workshop Case Study
March 2006
The enclosed material is proprietary to the ECC Partnership and is for the internal use of the addressee only.
Francis J. Gouillart  The Experience Co-Creation Partnership  100 Main Street, Suite 130  Concord, MA 01742  Mobile: +1 781 888 0186
fgouillart@eccpartnership.com
Build-A-Bear Workshop Is A Highly Successful, Innovative Retailer
Source: Company Presentation for Investment Analysts, March 2006
Build-A-Bear Workshop case study – March 2006 vramaswamy@eccpartnership.com 2

© 2007 Venkat Ramaswamy, Francis Gouillart fgouillart@eccpartnership.com
All rights reserved.
Stores Sell Stuffed Animals That Kids Design and Build In-Store

Stores Create Unique, Interactive Retail Entertainment Experiences

The Chief Executive Bear
Build-A-Bear is the brainchild of

Maxine Clark, who is known as
“Chief Executive Bear.” She says
the idea for the stores came to her
when she was shopping for Beanie
Babies with a 10-year-old friend.
“I had been in the retail business for

many years,” she says. “I felt it had
gotten boring and I wanted to put
the fun back in. What better way to
appeal to children, and the heart of a
Maxine Clark child that's inside all of us?”
Chairman & Chief Executive Bear
Source: http://www.oprah.com/tows/slide/200402/20040225/tows_slide_20040225_01.jhtml

Build-A-Bear Workshop Has A Successful Track Record Of New Store
Growth
Source: Annual Shareholder’s Meeting Presentation May 2005

And Its Store Model Drives Superior Sales Per Square Foot
Source: Company Investor Update, March 2006

As Well as High Gross Margin and Expense Leverage
Source: Company Investor Update, March 2006

The Build-A-Bear Workshop Store Consists of A Series of Fun, Fully-Interactive
Bear-Making Stations Where Guests Create Their Own Stuffed Animals
Choose
Me™
Take Me Hear Me™
Home™
In-Store
Dress Me™ Bear Stuff Me™
Making
Process
Name Me™ Stitch Me™
Fluff Me™
In Build-A-Bear Workshop’s stuffed animal-making assembly line, guests select the furry animal
they want to make, choose the sound the creature will utter and then stuff, stitch, fluff, name, and
dress their new friends. The entire process takes approximately 20 minutes.
Source: Build-A-Bear fact sheet, and St. Louis Commerce Magazine

Guests First Choose They Type of Stuffed Animal They Want To Make at
the Choose Me™ Station
Choose
Me™
Take Me Hear Me™
Home™
In-Store
Dress Bear Stuff Me™
Me™
Making
Process
Name Stitch
Me™ Me™
Fluff Me™
CHOOSE ME™
At Choose Me, Guests are
introduced to all the furry
characters in the store and select
one, which soon becomes their
new furry friend.
Depending on the season, there are typically between 30-35 varieties of stuffed
animals including teddy bears, bunnies, dogs, kitties, a frog, or a pony as well as
Beary limited™ edition collectibear® friends. Build-A-Bear Workshop stuffed
animals are very affordable, ranging in price from $10- $25.
Sources: Build-A-Bear fact sheet and www.laughingplace.com

Next, They Select A Sound For Their Bear at the Hear Me™ Station
Choose
Me™
Take Me
Home™
Hear Me™
HEAR ME™
In-Store At Hear Me, Guests may select from
Dress Bear Stuff Me™ several sound choices to place
Me™
Making inside their stuffed animal to
Process
Name Stitch further personalize their new friend.
Me™
Me™ The sound chip is inserted safely
Fluff Me™
inside the new friend during
the stuffing process. Guests can
record their own 12-second Build-A-
Sound® message for $8.
Pre-recorded sounds include
giggles, growls, barks, meows and
other animal sounds, as well as
messages such as “I Love You” or
songs like “Let Me Call You
Sweetheart.” Single sounds are $3,
and a six-in-one sound is $5.
Sources: Build-A-Bear fact sheet and http://www.stlcommercemagazine.com/archives/april2000/cover.html

The Next Step In the Process Involves Bear-Stuffing at the Stuff Me™
Station Including Putting Hearts Inside
Choose
Me™
STUFF ME™ Take Me Hear Me™
Home™
and HEART STUFF
In-Store
At Stuff Me, with the help of Dress Bear Stuff Me™
master Bear Buildersm Me™
Making
associates, Guests fill the Process
Stitch
new friend with stuffing for Name
Me™ Me™
just the right amount of Fluff Me™
huggability.
A very special step that is unique to

Build-A-Bear Workshop® also happens
at this station called Heart Stuff™.
Each Guest selects a small satin heart,
adds to it his or her own love and
wishes, and carefully places it inside
their new furry friend. This process, no
matter whether it’s a man, woman, boy
or girl doing it, is a heart melting
Sources: Build-A-Bear fact sheet and www.laughingplace.com, and
experience.
schweitzerhome.net/ blog/xoom/photos/buildabear/
This Is Followed By Stitch Me™ and Fluff Me™ Steps
Choose
STITCH ME™ Me™
Take Me Hear Me™
At Stitch Me, the last seam Home™
is neatly pulled shut, nearly In-Store

completing each new best Dress Bear Stuff Me™
Me™
Making
friend. Before closing the Process
animal, the master Bear Name Stitch
Me™
Builder associate inserts a Me™
Fluff Me™
barcode, allowing it to be
reunited with its owner if
ever lost and returned to FLUFF ME™
Build-A-Bear Workshop. At Fluff Me, the Guest
Thousands of furry friends brushes the animal at the
have been reunited through bear spa to make sure his
our exclusive Find-A-Bear® or her new friend is well
ID tracking program. groomed and pawfectly
huggable!
Sources: Build-A-Bear fact sheet and www.laughingplace.com

Then Guests Give Their Stuffed Animals A Name at the Name Me™
Computer
Choose
Me™
Take Me Hear Me™
Home™
In-Store
Dress Bear Stuff Me™
Me™
Making
Process
Name Stitch
Me™ Me™
Fluff Me™
NAME ME™
Guests then stop at the Name Me
computer, where they answer
several questions about their new
furry friend, including the birth date
and of course, the name of their new
furry friend. This information is
compiled and becomes part of a
personalized birth certificate for the
Guest to take home. Guests can
select either English or Spanish.
Source: Build-A-Bear fact sheet and www.laughingplace.com

Guests Finish The Process By Dressing Their New Stuffed Friends
Choose
Me™
DRESS ME™ Take Me Hear Me™
At Dress Me, Guests may Home™
dress their new friend in the In-Store

beary latest furry fashions.
Dress
Me™
Bear Stuff Me™
Making
The bear apparel boutique Process
features clothes and Name
Me™
Stitch
Me™
accessories for all occasions. Fluff Me™
Pawsonal Shoppers, trained
in the latest bear-fashion
coordination, help Guests
select the perfect outfits and
accessories for their new
best friend. Outfits range Sneakers galore for
from $5-$15 and accessories the well dressed pal.
Sketchers for your
range from $1-$15. new pal are $8.
Build-A-Bear Workshop®
even has their own fashion
expert, Pawlette Coufur®
Fashion Advisor to the Furry
Clothing for the bears include casual wear, formal
Famous. wear and costumes including aviator, ballerina,
policemen uniforms and more.
Source: Build-A-Bear fact sheet and www.laughingplace.com
And By Taking Their New Stuffed Animal Home
Choose
Me™
Take Me Hear Me™
Home™
In-Store
Dress
Me™
Bear Stuff Me™
Making
Process
Name Stitch
Me™ Me™
Fluff Me™
TAKE ME HOME™
Finally, Guests conclude their
bear-making adventure at the
Take Me Home station, where
they are given their customized
birth certificate and a special Buy
Stuff Club® card to apply towards
future purchases. Each new furry
friend is then placed in their very
own Cub Condo® carrying
case, which is designed as a
handy travel carrier and new
home for their friend.
Sources: Build-A-Bear Workshop fact sheet; Build-A-Bear Workshop website
Store Associates Lead Customers Through The Bear-Making Process
Every Step of the Way

For Example, Employees Help Young Customers At Each of The Bear-
Making Process Stations
Source: Photo: http://www.packeteer.com/resources/prod-sol/Build-A-Bear.pdf

Employees Also Often Sing Happy “Bear-day” to Young Guests
Source: www.laughingplace.com
Store Associates – “Master Bear Builders” – Are Carefully Recruited,
Receive Training, and Are Given Career Opportunities
Recruiting occurs via the Employee Training Is Thorough

website and through in- • Associates go through a three-week training program
store applications: at “Bear University.”
• Receive extensive training in customer communication and are
taught the value of working effectively as a team.
• Allows the company to hire people without retail experience.
Employees are Valued and Given Career

Opportunities:
“ Many of our employees look at this as a career, not

just a job. Employees are glad to work in a place
where they receive 'psychic income.'
“ Retail may not pay top dollar, but there is a lot of

satisfaction here. One of my marks of success is
having our associates grow with the business and
move up the chain.”
Company Founder, Maxine Clark
Source: Company website and St. Louis Commerce Magazine

The Company Culture Is Fun and Highly Supportive of Employees
• Employees are called associates and have titles like professor of bearology,
honey manager and bearitory leader.
• At “World Bearquarters,” employees can ride on scooters, and dogs and kids
are welcome in the office
• Both the men's and women's bathrooms are equipped with diaper-changing stations
and there is a room with a TV set and toys for workers' children.
• Benefits
• The company offers flexible work schedules and telecommuting.
• The benefits package includes medical and dental insurance, a 401K savings plan,
and life insurance
• Each employee gets 15 “honey days” a year to use for vacation, illness or whatever
the person wishes.
• Build-A-Bear also contributes $100 annually toward a wellness program, such as a
health club membership.
• Performance Feedback
• All employees can receive feedback from individuals and departments they support
• Also, “Guest Feedback” lets staff know how they measure up and what “op-bear-
tunities” they have to improve.
Source: St. Louis Business Journal, May 4, 2001, and company website
Build-A-Bear Workshop’s Interactive Platform Allows Creation of an Almost
Unlimited Number of Personalized Stuffed Animals From A Small Number of SKUs
• Less than 450 SKUs in store are able

to give customers a tremendous
amount of customization choice
• SKU types include animal “skins,”
clothing, shoes, and accessories such
as sunglasses.
Source: Company Presentation for Investment Analysts, March 2006, and laughingplace.com

Example Outfits
Source: Company website

Example Accessories

Example Shoes

Example Customized Stuffed Animals
Source: www.bookmice.net/darkchilde/ stuffed/build.html

Pricing Transparency Throughout The Bear-Making Process Allows
Guests To Remain In Control Of Their Cost

Build-A-Bear Workshop Engages Its Key Customers – Children - and
Their Communities
Current Customers and Community
New York City Store
Sources: Company Presentation for Investment Analysts, March 2006; Photo from Article on the New York City Store
The Interactions That Kids Have In-Store Often Include Their Families and
Friends
By building their own stuffed

animal bears, kids can be
creative, play, and
experience joy and fun.

Build-A-Bear Workshop Has Created A New Experience Environment
Called Build-A-Party™ That Involves Whole Groups Of Customers
Example: Brownie Group Store Trip
Source: schweitzerhome.net/ blog/xoom/photos/buildabear/

New Linked Environment #1: Mobile Stores
 Build-A-Bear is experimenting
with mobile stores. The retailer
has designed an 800-sq.-ft.
mobile store within a trailer that
the company uses to extend the
Build-A-Bear brand to sports
events such as the Super Bowl,
NBA Fanfest, and NASCAR
races.
 At the push of a button, a roof-
mounted VSAT dish links up
with a satellite for connectivity.
Once the link is established, the
store systems access all the
information relevant to the day’s
business, including local tax
regulations, pricing and SKU
information.
Source: http://www.bettermanagement.com/library/library.aspx?l=13794;
http://www.icsc.org/srch/sct/sct0505/retail_today_6.php
New Linked Environment #2: Sports Stadium Stores
 Build-A-Bear Workshop opened its first in-stadium store with the

Philadelphia Phillies at Citizens Bank Park in March 2004.
 Make Your Own Phanatic™ doll.
Sources:http://www.highbeam.com/library/docfree.asp?DOCID=1G1:133563004&ctrlInfo=Round19%3AMode19b%3ADocG%3AResult&ao=;
Annual Shareholder’s Meeting Presentation May 2005
Linked Environment #3: Website Store

New Linked Environment #4: Friends 2B Made Store
Friends 2B Made is a sister company: guests create dolls with customized

personalities; each outfit comes with two charms (for doll and owner) ; and price is
right, with dolls starting at $12, accessories at $2 and complete outfits for $8.
Sources: Company Annual Shareholders Meeting Presentation (May 2005); http://travelwithkids.about.com/od/familyfunplaces/p/buildabear.htm

Build-A-Bear Workshop’s In-Store Experience Platform Has Driven
Organic Growth Through Linkages With New, Extended Environments
Friends Mobile
2B Made Store
Store Environment
Environment
Build-A-Bear
Workshop
In-Store
Experience
Platform
Website Sports
Store Stadium
Environment Store
Environment

Maxine Clark Relies On Her Customer Network and “Cub Advisory Board”
To Get and Test New Ideas
• Build-A-Bear founder Maxine Clark asked several children for advice when
she first developed her idea for the store
• She continues to proactively dialogue with her customers

• “I’m on a lot of online buddy lists,” she says.
• To return the thousands of emails she gets each week from customers, Clark
uses a BlackBerry
• To tap into customer reactions to new ideas, she has also established a
group of ~20 children, ranging in age from six to 14 years old, who serve
on a “cub” advisory board.
• Scouting out a new location, Clark will email members in an area to ask them
which malls they shop at most.
• She’ll poll her network to see if the latest trend she’s spotted in New York—say,
metallic sequined purses--might be worth rolling out as bear accoutrements.
• “I used to feel like I had to come up with all the ideas myself, but it’s so much
easier relying on my customers [for help].” The list of customer suggestions that
have made their way onto shelves is always growing—from bear accessories
like mini-scooters to mascot bears sold at sports stadiums.
Source: http://www.stlcommercemagazine.com/archives/april2000/cover.html; and article in Fast Company Oct. 2005

Build-A-Bear Workshop Also Leverages Its Supplier Partner Network To
Co-Create New Offerings For Additional Organic Growth
 Build-A-Bear's partnership with Major League Baseball goes beyond

its stadium deals. The company has participated in promotional days
with several teams, including the Cardinals, Chicago Cubs, New York
Mets, Pittsburgh Pirates and Kansas City Royals in 2005. For those
promotions, Build-A-Bear develops an exclusive, team-branded teddy
bear or team mascot available only to fans at the ballpark on a specific
day.
Source: St. Louis Business Journal, Jan. 20, 2006; and company website


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Experience Co-Creation in Retail

Build-A-Bear Workshop Case Study

Source: Company Presentation for Investment Analysts, March 2006

Build-A-Bear Workshop case study – March 2006 vramaswamy@eccpartnership.com 2

Source: Company Presentation for Investment Analysts, March 2006

Build-A-Bear Workshop case study – March 2006 vramaswamy@eccpartnership.com 3

Source: Company Presentation for Investment Analysts, March 2006

Build-A-Bear Workshop case study – March 2006 vramaswamy@eccpartnership.com 4

Build-A-Bear is the brainchild of

“I had been in the retail business for

Build-A-Bear Workshop case study – March 2006 vramaswamy@eccpartnership.com 5

Source: Annual Shareholder’s Meeting Presentation May 2005

Build-A-Bear Workshop case study – March 2006 vramaswamy@eccpartnership.com 6

Source: Company Investor Update, March 2006

Build-A-Bear Workshop case study – March 2006 vramaswamy@eccpartnership.com 7

Source: Company Investor Update, March 2006

Build-A-Bear Workshop case study – March 2006 vramaswamy@eccpartnership.com 8

Source: Build-A-Bear fact sheet, and St. Louis Commerce Magazine

Build-A-Bear Workshop case study – March 2006 vramaswamy@eccpartnership.com 9

Sources: Build-A-Bear fact sheet and www.laughingplace.com

Sources: Build-A-Bear fact sheet and http://www.stlcommercemagazine.com/archives/april2000/cover.html

just the right amount of Fluff Me™

A very special step that is unique to

is neatly pulled shut, nearly In-Store

Sources: Build-A-Bear fact sheet and www.laughingplace.com

Build-A-Bear Workshop case study – March 2006 vramaswamy@eccpartnership.com 14

dress their new friend in the In-Store

Source: Company Presentation for Investment Analysts, March 2006

Source: Photo: http://www.packeteer.com/resources/prod-sol/Build-A-Bear.pdf

Recruiting occurs via the Employee Training Is Thorough

Employees are Valued and Given Career

“ Many of our employees look at this as a career, not

“ Retail may not pay top dollar, but there is a lot of

Company Founder, Maxine Clark

Source: Company website and St. Louis Commerce Magazine

• Less than 450 SKUs in store are able

Build-A-Bear Workshop case study – March 2006 vramaswamy@eccpartnership.com 22

Source: Company website

Build-A-Bear Workshop case study – March 2006 vramaswamy@eccpartnership.com 23

Source: Company website

Build-A-Bear Workshop case study – March 2006 vramaswamy@eccpartnership.com 24

Source: Company website

Build-A-Bear Workshop case study – March 2006 vramaswamy@eccpartnership.com 25

Source: www.bookmice.net/darkchilde/ stuffed/build.html

Build-A-Bear Workshop case study – March 2006 vramaswamy@eccpartnership.com 26

Source: Company website

Build-A-Bear Workshop case study – March 2006 vramaswamy@eccpartnership.com 27

Current Customers and Community

New York City Store

By building their own stuffed

Build-A-Bear Workshop case study – March 2006 vramaswamy@eccpartnership.com 29

Source: schweitzerhome.net/ blog/xoom/photos/buildabear/

Build-A-Bear Workshop case study – March 2006 vramaswamy@eccpartnership.com 30

 Build-A-Bear Workshop opened its first in-stadium store with the

Source: Company website

Friends 2B Made is a sister company: guests create dolls with customized

Sources: Company Annual Shareholders Meeting Presentation (May 2005); http://travelwithkids.about.com/od/familyfunplaces/p/buildabear.htm

Build-A-Bear Workshop case study – March 2006 vramaswamy@eccpartnership.com 35

• She continues to proactively dialogue with her customers

Source: http://www.stlcommercemagazine.com/archives/april2000/cover.html; and article in Fast Company Oct. 2005

 Build-A-Bear's partnership with Major League Baseball goes beyond

Build-A-Bear Workshop case study – March 2006 vramaswamy@eccpartnership.com 37