Small Minnesota retailers hope to lure budget-conscious shoppers with 'adventures'

Brad Ruoho brandishes an impressive arsenal as he leads his army of Minnesota-based Legacy Toys stores to battle against the big-box and online-shopping giants during this competitive holiday siege.

A life-sized unicorn at Southdale. A T-rex at Mall of America. Jugglers and professional yo-yoers on staff. Even a mini pet store — for a collection of "breathing" robotic puppies and kittens — and a talking tree that can read stories to kids are on their way to Ridgedale Center.

While the holiday shopping season is always important for stores, this year, retailers big and small will need to do everything they can to entice customers and their inflation-limited wallets.

"That's always what we've tried to be is an experiential toy store," Ruoho said. "We try to figure out what different things we can do."

U.S. holiday retail sales are expected to increase 3.5% to 4.6%, totaling $1.54 to $1.56 trillion from November to January, according to a national Deloitte study. As the holidays typically generate 30% to 40% of Legacy Toys' annual sales, Ruoho said he needs to fight for every bit of market share he can snatch in the next few months. But it won't be easy.

The different in-store attractions — like the reading tree, once it finally arrives from overseas to the Ridgedale Center store that opened Sept. 24 — are just one of Ruoho's new draws.

Legacy Toys has also lowered the prices of numerous toys to below $25 to appeal to cash-strapped shoppers. In early October, Ruoho even joined hands with the enemy — Amazon — to offer in-store pick-up for toys Amazon shoppers bought. Legacy is the first toy company in the country to have this partnership with the online retailer, Ruoho said.

Ruoho is smart to prepare so thoroughly and early, as the holiday shopping season is already in full swing for many of the country's biggest retailers. So far this month, Minneapolis-based Target held its Target Circle Week of deals and revealed its list of Top Toys, which includes selections as low as $7.99, the cheapest the retailer has ever featured. Best Buy launched a slate of deals, including discounts every day during the month of October for paying Best Buy members and a range of flash sales.

Online juggernaut Amazon staged its second Prime Day sales event Oct. 10 and 11 following a similar sale it ran in the summer with Walmart also hosting sales.

"The biggest thing that retailers have to do this holiday is create demand," said Marshal Cohen, chief retail industry adviser for consumer behavior firm Circana. "I have to convince you that now's the time to buy, here's the product to buy, and I'm the place for you to buy it."

Retailers with brick-and-mortar stores need to lean into unique store experiences shoppers can't find elsewhere, Cohen said.

"Having Santa Claus in the store is nice," Cohen said. "Having Barbie in the store is even nicer. What does that mean? It means Barbie Claus has to show up. You've got to have a Barbie adventure. You've got to have a Lego adventure. You've got to have a Little Mermaid or Disney adventure."

Retailers like Target have expanded their shop-in-shops for brands like Disney. Even shopping centers like the Mall of America are showcasing more brand experiences such as the Malibu Barbie Cafe, which will open later this month.

Kristen Caffrey, 38, of St. Louis Park, likes taking her 4-year-old and 1-year-old daughters into stores so she can see what appeals to them.

"It's hard to know what your kids like, so coming into a store and seeing what they gravitate toward ... it's something we can't do online," she said.

While Caffrey said she might be more financially fortunate than others, her family has had to be more aware of what they spend and plans to keep to a tighter budget this year for the holidays.

Because of the current high price of other necessities like food, Emily Goudreault, 33, of Minnetrista, said she is being more intentional, focusing on gifts that will last, even if the total number of gifts for her young daughters is smaller than in the past.

She is also considering giving experiences as gifts, like zoo memberships or visiting an indoor waterpark during the winter.

"We are all about making special memories with the gifts," Goudreault said. "It's not about the quantity."

Many retailers are zoning in on price points as they look at their holiday lineup.

Patina, which has eight gift stores throughout the Twin Cities, has seen its average sale decrease this year after pandemic highs, but the number of transactions has grown.

To respond to shoppers looking for lower price points, Patina owner Christine Ward said she has worked with suppliers since the beginning of the year to lower prices of items and find alternatives to products that some might have viewed as more expensive. Patina has also marked down some international products that are now cheaper to ship, she said.

"We have to keep the prices really sharp or sharper than normal," Ward said. "We're kind of going back to 2019 but with the 2023 realities."

Baby toys and supplies provider Pacifier is opening a new store in Woodbury Oct. 19 in the shopping center where BuyBuyBaby closed earlier this year. Just in time for the holidays, the store will fill a void in the east metro that's underserved by baby stores, owner Alissa Montbriand said.

"We have been wanting to have a store on that side for quite a while," she said.

With the help of North Loop warehouse space that Montbriand purchased last summer, Pacifier has been able to ship holiday merchandise early and will likely start putting out holiday displays at the beginning of November. Pacifier plans to have a range of events at its stores including storytimes with Santa and baby-proof ornament making. Montbriand predicts toy sales will continue to surge this holiday season as they have the last few years.

"People will cut spending on themselves before they cut spending on their kids," she said.

Matt Marsh, managing partner of the Minneapolis office of Deloitte, agrees.

"There's definitely uncertainty out there with the shopper," he said. "[But] one of the things that we've always seen with every holiday season is: Families tend to find a way to make the holiday season meaningful."