Lincoln, Neb.— Karla Pederson grew up in the infant specialty market — literally. The daughter of Gene and Judy Francis, owners of Sioux Falls, S.D.-based Babytown Kids Stuff, Karla was often a "living model," both playing with and sleeping in various products in the store as an infant while her parents worked. Her husband, Aaron Pederson, also got an early start, working for Gene and Judy as a high school student.
Now in their 20s, Aaron and Karla are the next generation in the Kids Stuff family. Along with the Sioux Falls location, the Francises also operate a Kids Stuff Superstore in Omaha, Neb., and first spoke to their daughter and her husband in 2003 about the possibility of opening their own store in Lincoln, Neb., when they realized how many customers were making the trek from Lincoln to Omaha.
"It started off not-so-seriously, and then we thought, 'This could be a really great opportunity,'" Aaron said.
After spending additional time in Sioux Falls learning all they could about management strategies, financial issues, ordering and processing, Aaron and Karla opened the 12,000-square-foot store on June 6, 2004.
Location has been key. The Pedersons built a freestanding building on 27th Street, a main thoroughfare in Lincoln near many mainline furniture stores and next to Curves, a women's gym. The location, a block up from the busiest intersection in town, is also on the route into Omaha and to the University of Nebraska football stadium, so 80,000 Cornhuskers fans drive by — often slowly if there are traffic tie-ups — on game days.
The store floors between 80 and 100 cribs and is not set up in vignettes — something Aaron and Karla decided was important. Instead, Aaron describes the store as "a sea of wood," with an airy feel, and furniture grouped by color and finish rather than manufacturer.
"People know what color they're looking for," explained Aaron. A customer who's interested in white nursery furniture, for instance, can go right to that section and compare all the different options.
Another plus, said Aaron, is it lets customers buy across lines. "They might be able to afford a crib from one company and a dresser from another," he said. "We find people mix and match."
The store is set up with seven main color themes: honey, natural, pecan, amber or cognac, cherry, white and black. With Baby's Dream, the store's biggest vendor, Aaron said he sets up everything in every color, and then shows more pieces in the hotter colors in a collection.
"If it's in the warehouse, it's not going to sell," he said.
Cribs start out at $149 and go up to $900, but most are sold in the $300 to $500 price point range. Along with Baby's Dream, the store also carries Bonavita, Munire, Chanderic and Legacy.
Nursery furniture is the bread and butter of Kids Stuff's business, with about 7,000 square feet devoted to the infant side and about 2,000 square feet devoted to teen furniture. Still, said Aaron, teen has been very strong, and he's started to experiment with and expand the section, which currently floors around 15 to 20 bunks, along with a growing twin and full bed section.
Both sections show beds fully dressed with linens from companies such as Baby's Dream bedding, KidsLine, Lambs & Ivy and Whisper Soft Mills, along with a full line of accessories from KidsLine, 12 Timbers, THT Designs, Creative Images and Berkeley Designs.
Accessories that match the linens are popular in the Midwest town of Lincoln, said Aaron, and most of the furniture is set up with themed accessories and bedding. Traditional themes like farm, moon and stars, frogs, ducks and zoo animals are shown, and neutral themes are the bestsellers because many of Kids Stuff's customers elect not to find out the sex of their baby.
The Pedersons agree that accessories are one of the most important aspects of Kids Stuff's business.
"Customers will buy a $300 crib and spend $600 on bedding and accessories," Karla said.
To keep that business, the store is set up with accessories stocked nearby to where they're shown in a "grab-n-go" area, so customers can find what they want. For bedding, the Pedersons are using the same prices that customers can find on the Internet.
"If you can't beat 'em, join 'em," said Aaron, referring to the tough competition from Internet retailers, especially in the world of bedding, where e-tailers often post slim margins. "We'll match any price on the Internet. As soon as you go higher, you'll stop selling it."
Aaron said when it comes to bedding, he tries to move volume over margins and make up some of the difference by running regular margins on coordinating accessories. Despite all the competition from the Web, they've built a successful accessory business through this route and by having bedding and accessories in stock at all times — a must when dealing with today's parents, who are used to instant gratification.
As for Kids Stuff's own Web site, it has recently been completely redesigned and includes product photos of the merchandise the store carries. While they're not there yet, Aaron said the store is moving towards e-commerce and online registries.
"That's the direction we're moving," he said. "Everything is more automated."
Being in their 20s, Aaron and Karla are contemporaries with many of their customers, and they know what new parents are looking for. Aaron said he feels that being young is one of the best things they've got going for them, especially when it comes to keeping up with what's hot, which changes quickly. Karla, who does most of the accessory buying, is always looking through magazines, keeping an eye out for color trends and theme trends.
"As soon as you get complacent, the store looks like the 1980s," Aaron said.
Along with the Juvenile Products Manufacturers Assn. trade show and the All Baby and Child Expo, Aaron has also been traveling to the High Point furniture market, where he not only shops for new youth lines, but also keeps an eye out for trends from the adult side that might cross over into juvenile.
Gear is also very important at Kids Stuff, which sports an enormous stroller and carseat area with manufacturers such as Graco, Peg Perego, Zooper, Compass, Britax, Combi and Fisher-Price.
"It's another reason to come into our store," Aaron said.
Most of the merchandise at Kids Stuff is moderately priced, though Aaron said they try to offer something for everyone.
"We've tried high-end, we've tried low-end, and we've found that the moderate price point is best," he said.
"People our age who are having new babies are not financially settled," explained Karla, "and they're looking for moderate price points. We make the moderate price point look good."
Aaron and Karla plan to open a 3,000-square-foot closeout center next to the store this fall, which will feature scratch and dent and discontinued items, and free up more space in the main store.
Six employees help sell the merchandise, and the Pedersons believe in cross-training them for different departments. Rep training works very well to get the employees excited about new products, Aaron said.
The biggest competition Kids Stuff faces is from the slew of stores in Omaha, 50 miles away. There, consumers find Babies "R" Us, Pottery Barn Kids, Nebraska Furniture Mart (which has a wide range of both infant and youth furniture) and a USA Baby.
The Pedersons have advertised in local market television, on radio and with direct mail, along with their signage in the store's highly visible location. "We're trying to get the word out," said Aaron, who plans to expand his efforts with events and community involvement.
"People drive to Omaha to shop, but now they're coming back," he said.
Kids Stuff Superstore organizes its floor by color and finish, rather than by manufacturer, so that customers can easily identify which finish they prefer and go to that area. Owner Aaron Pederson has described the open floor as a "sea of wood."
While nursery furniture has been the bread-and-butter of Kids Stuff's business, a growing youth section sports bunks, twin and full offerings.
To stay competitive with their crib bedding, owners Aaron and Karla Pederson have implemented a policy where they match Internet pricing and keep accessories and linens in stock.
Coordinated accessories and bedding are a must at Kids Stuff, where owners Aaron and Karla Pederson say themed rooms are all the rage for the Midwest customer.
This princess-themed nursery has a wide variety of accessories to make a complete room setting.
Metal and gear are important parts of Kids Stuff, which sports an impressive area devoted to the category. Says owner Aaron Pederson, "It's another reason to come into our store."
