Founded in 1997 in reaction to a stock-out of stuffed animals at her local shopping outlet, founder Maxine Clark decided it would be better if she could create her own furry friend. 18 years later, Build-A-Bear Workshop is a publicly traded company that operates 452 stores around the world, enabling customers to create and personalize their own inanimate creatures.
Build-A-Bear was designed to deliver a personalized, fun, and inspirational shopping experience for its consumers. While Build-A-Bear earns revenue through sales of individually created stuffed animals, its unique and memorable shopping experience remains its true competitive advantage. According to Clark, “we’ve always been a customer-centric organization…I believe that we don’t sell products, we sell smiles.”
Build-A-Bear’s business model necessitates operations in three sectors: company-owned retail stores throughout the US, Puerto Rico, Ireland, and the UK, international stores operated under franchise agreements, and commercial sales to business partners of various industries. Build-A-Bear achieved nearly $400 Million in revenues in 2014, of which 60% of sales were attributed to its core customers, children ages 3-12 .
The success of Build-A-Bear’s business model hinges on its ability to create an enduring trust and emotional attachment with its customers. This makes Build-A-Bear’s operating model particularly interesting, as it masterfully created an operating model that enables value to be captured through both its product and experience while simultaneously satisfying the demands of its consumers, employees, and shareholders. How does it do this?
An Energized Workforce
For the seventh straight year, Build-A-Bear ranked as one of Forbes’ 100 Best Places to Work. Of its 4,300 employees, 3,400 work part-time. This high number of part-time employees is more than a cost-saving measure. Employees’ enthusiasm and approachability facilitate the in-store environment and contribute to customers’ enjoyment. With a predominantly part-time workforce (many of which are of teenagers), Build-A-Bear helps build and maintain a sense of freshness, excitement, and job fulfilment among its people, and these qualities shine through to the consumers throughout their in-store journeys.
A Unique In-Store Shopping Experience
Upon arrival, customers are led to an interactive Build-A-Bear production line that guides them through their adventure. They bring their bears to life through an innovative and streamlined process as explained in the video below.
By making this process fun and personal, Build-A-Bear helps customers attribute positive memories to their purchase, thereby supporting its business model of providing a memorable shopping experience. Furthermore, Build-A-Bear preserves the integrity of its core in-store experience by maintaining an online platform serving its older customers. Approximately 20% of revenue comes from consumers over 12 years old who purchase bears as gifts or affinity items, most of which is done online. Meeting their needs in a digital environment both fulfills demand and helps keep the in-store experience pure. After all, it’s not only important to bring the “right” people in but also to keep the “wrong” ones out.
Strong Commercial Relationships
Build-A-Bear’s portfolio of strategic partnerships allows it to earn revenue throughout the year and outside of the holiday season. Disney, Major League Baseball, Hasbro, Sanrio, and various universities have structured agreements that feature Build-A-Bear initiatives timed with specific events, thus keeping the company relevant to its consumers throughout the year. For example, the Chicago Cubs feature Build-A-Bear on stuffed animal giveaway days and Disney launches similar promotions timed with movie releases. Revenue breakdown for FY 2014 was as follows: Q1 – $98M, Q2 – $76M, Q3 – $87M, and Q4 – $131M.
Along with a unique shopping experience and workforce well-versed in delivering customer satisfaction, these partnerships help differentiate Build-A-Bear from its competition (Toys “R” Us, amusement parks, and arcades), as Build-A-Bear’s business model requires it to compete for both family time and entertainment dollars.
The company faces risk as it attempts to expand overseas and remain relevant as retail migrates online.
Build-A-Bear maintains stable relationships with its suppliers and ships its goods from its company-owned distribution center. Because its business model and customer promise revolve around a deep trust among consumers, it will need to judiciously choose overseas suppliers and distributors as it expands. If suppliers provide products that do not meet safety standards, Build-A-Bear could face negative publicity and lawsuits, both of which would tarnish its ever-important company image.
Having strategically placed its stores in malls and locations conducive to foot-traffic, Build-A-Bear capitalizes on the uniqueness of its in-store experience. However, as consumer trends evolve, Build-A-Bear may need to further invest in its digital paw print. Initiatives such as bearville.com, home of “Bear University,” enable users to interact in a safe online forum and serve as a good start.
 Glagowski, E. Build-A-Bear Builds a Brand Around the Customer Experience. (2013, September). http://www.teletech.com/thought-leadership/articles/build-bear-builds-brand-around-customer-experience#.VlzPHqRdHIV.
 100 Best Companies to Work for 2015. Retrieved from http://fortune.com/best-companies/build-a-bear-workshop-59/.
 Build-A-Bear Workshop Unveils Newly Imagined Store. Retrieved from http://smp.businesswire.com/pages/build-a-bear-workshop-inc.
 Online Extra: This Bear Doesn’t Hibernate. (2005, June 5). Retrieved from http://www.bloomberg.com/bw/stories/2005-06-05/online-extra-this-bear-doesnt-hibernate.