10/12/2021
by Tina Manzer
In 2013, Patrick Holland and his wife Joanna purchased Mountain Top Toys, a then 21-year-old store in Signal Mountain, Tennessee.
Small and secluded, the town sits atop a ridge outside Chattanooga …where there is a very busy Learning Express store. Eight years ago, its in-store experiences and regular promotions were luring customers away from Mountain Top Toys. The Hollands’ first priority was winning them back.
Unlike Chattanooga, Signal Mountain is not a tourist destination. Its residents are the toy store’s lifeblood. To meet their needs and keep them shopping local, Patrick and Joanna introduced new product lines frequently; lines that were still under their competitors’ radar. They also installed a point-of-sales system (the prior owners hadn’t computerized) to help them better analyze sales data for more-informed purchasing decisions.
“In the first two years, we changed the store culture, put our birthday registry program online, attended holiday markets to get our name out beyond the mountain, and introduced a loyalty program that was effortless for customers to participate in,” explains Patrick. “We aggressively went into gift lines before our competitors did, and we created a local ad campaign during our second holiday season that performed WAY beyond expectations.”
They figured that Mountain Top Toys was never going to be bigger than Learning Express, nor would it be their customers’ exclusive toy destination. However, they felt that their efforts would keep the store top-of-mind.
As a result, customers came back.
In 2017, the owner of the Learning Express store approached Patrick and Joanna about buying her Chattanooga location and having Mountain Top Toys join the franchise. “There was real excitement among our customers when we announced the purchase,” says Patrick. “I think they understood, even before Joanna and I did, that each store would get the best of both worlds.
“We like to think the two stores give us a balanced portfolio,” he adds. “Due to its location, Chattanooga has the potential for great upsides but is more prone to negative market conditions. Mountain Top Toys could continue to grow for the next 10 years and not approach the sales volume of Chattanooga, but it is a consistent and reliable location that steadily increases its profits each year. That’s a great safety net for the overall business.”
In September, as Patrick took stock of his stores for the holiday season, he discussed where they stand now, what he expects in Q4, and his hopes for 2022.
edplay: How’s business?
Patrick Holland: That should be an easy question to answer, and yet … after a very challenging 2020, this year we saw a complete turnaround. It’s the highest grossing and most profitable year our stores have had in their respective histories. We’ve already surpassed our goals. For Mountain Top Toys it marks eight straight years of upward sales.
In a “normal” year, the Chattanooga store accounts for about 80 percent of our business, but during 2020, when tourism suffered, it did about 65 percent. Meanwhile, Mountain Top had a terrific 2020 because of its relationship with its community during a time when people didn’t want to venture beyond their neighborhood to shop.
We know the rest of the year and a good portion of 2022 are going to be beyond unpredictable with supply-chain issues, the challenges of hiring and retaining qualified staff, and price increases and inflation that will shake up our product mix next year. At the same time, we’ll be navigating the ongoing health concerns of our team and customers – and the lack of civility that sometimes surrounds that topic.
Your stores are fairly close to each other … does each have its own product mix? How do they compare in terms of customers served?
We may bring in new lines and test them in our larger Chattanooga store to get a quick read, but both stores essentially carry the same items. When we purchased Learning Express, we were surprised to learn that the best customers at Mountain Top were also the best customers at Learning Express. They value a consistent experience at whichever location is convenient to them that day. So, to make sure that neither store is out of good-selling product while we wait for a reorder to arrive, I spend 20 to 40 minutes each night analyzing sales and creating tickets for product transfers from both stores. The following morning, we physically do those transfers.
What are your expectations for holiday sales? How do they compare to last year?
Wow, we thought last holiday season was challenging to forecast, but this year there are just so many never-before-seen variables to add to the mix.
I trust that we’ll see very strong customer traffic, and I believe at minimum we’ll have a better holiday season than the past two years. Were it not for a supply chain made of Swiss cheese, I’d predict that this could be our best holiday season ever. But this year, nothing is guaranteed with one exception: Santa always finds a way to get his job done and done well. So, we need to do the same.
Will most sales come from brick-and-mortar shoppers or e-commerce?
From brick-and-mortar, assuming businesses will not be forced to close for mandated health concerns.
Online sales have been a big bonus over the past 18 months. Honestly, they gave storeowners confidence that they can pivot and elevate their game when push comes to shove. That’s what entrepreneurs do.
The shift to online by our local customers during the pandemic has largely moved back to in-store shopping. That’s due, in no small part, to the exploding popularity of sensory and fidget toys. The category would not have taken off the way it did without the in-store experience. The minute it became a category of collectibles, kids headed to stores to see and touch anything new. It was constant, and drove extremely high volumes over the first nine months of 2021.
With that said, online sales will still make an impact this holiday season, and retailers now have a platform they can manage to continue to adapt to the ever-changing needs of their customers.
What is your ordering strategy?
Our inventory is significantly higher going into the holiday season than it has been in prior years. We loaded up early due to the repeated warnings from manufacturers and reps that shipping and delivery were going to be a mess in Q4. That’s already proven to be case. I expect many outstanding orders are going to ship lean, and that some new items will be pushed to a 2022 release due to supply-chain issues. Hope for the best, prepare for the worst, and communicate constantly with your customers.
What will be interesting this year is the hunt for “new” late in the season. For us, it began at ASTRA Marketplace and continues via email offers, trade promotions, and new buying platforms. Each time a manufacturer reports that an item we’ve ordered won’t be available until next year, we’ve got a hole to fill. For vendors with quality product, effectively communicating that to reps and retailers will be critical – and likely rewarding.
How have you managed thus far?
We’ve managed well, surprisingly. We’ve found ways to source the hot trends that have driven our growth, and being part of the Learning Express franchise has been a major factor.
For us, the real impact of supply-chain issues has not been on the showroom floor, but in the back office. Trying to get answers takes time, as does tracking down missing orders, requesting invoices, and working to get credits on damaged goods. They’re on the rise because freight companies are understaffed.
A lack of communication between vendors, retailers and reps gives way to confusion and frustration. At the risk of sounding like Yoda, staffing shortages lead to delays, delays lead to unanswered questions, unanswered questions lead to frustration, frustration leads to burnout, burnout leads to staffing shortages.
What will be the bestsellers in Q4?
Squishmallow, for sure. Halloween has shown it is as hot as ever. Otherwise, I don’t see this holiday being “the year of the ___.” A lack of supply will likely thwart any true, late-season, breakout hits.
Anything with decent inventory levels heading into November has the potential to become a bestseller. I hope that the momentum of any new line that unexpectedly pops late then struggles to fill late orders will come back strong in 2022.
Have you hired more staff for the holidays?
We’d gladly hire another five or six employees tomorrow if we could find them. Joanna has done an amazing job finding and training new employees quickly, but they are a young staff with busy school and extracurricular schedules. It puts a strain on our veteran team members who must clock a lot of hours. Burnout is a very real concern – for staff and owners!
How was the ASTRA show in August?
I was impressed at the level and volume of innovation I saw, both from new manufacturers, and from our existing partners’ new product. I brought in some new items and lines for the holidays – props to Mavi Bands, Coosy, ID Toys and D & L, in particular – and I’ve set many more aside for 2022 consideration. Fingers crossed we have New York Toy Fair in February. But if we don’t, I feel much better about bringing in new lines early in 2022 than I did in 2021, thanks to the amazing vendors I saw in Minneapolis.
What do you look forward to working on as you serve on the ASTRA board?
Working with ASTRA and Learning Express to bring both great organizations closer together is a priority for me. I know the value of each, and I know each will find incremental value in the other.
Outside of that, I’m willing to assist in whatever way I’m needed; to positively impact ASTRA and the industry given my background and experience. That sounds like an answer a politician would give, but the past 18 months has shown us that what we hope or plan to do versus what we’re asked or needed to do are often very different given macro-level conditions.
More than anything else, three years from now when my time on the board is over, I hope the world, the industry and my own business have all normalized to the point where when I’m asked, “How’s business?” I can respond simply, “Can’t complain, how are things with you?”
