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This article by Kathleen McGinn Spring was prepared for the February 11, 2004 edition of U.S. 1 Newspaper. All rights reserved.

At Jazams, Toys R Her

Colorful sleds lean on the front of Jazams’ Palmer Square store, calling to youngsters on a cold, sunny winter’s day. Those lucky enough to find a parking spot nearby have to climb mountains of snow to reach the door. It’s perfect sledding weather, and that should be good news for the toy store, which sells everything from no-frills plastic saucers in primary colors to high-tech, triple-runner sleds with steering wheels. But, it’s not, says owner Joanne Farrugia. Cold, snow, and ice keep customers away.

The weather is not good for retail, but it is way down on the list of challenges Jazams — and specialty stores like it all across the country — are facing. “I’m surviving, but not thriving,” says Farrugia, who started the mini-chain of toy stores nearly eight years ago.

But she is determined to prevail. “It will work because it has to,” she says. “Failure is not an option.”

Farrugia, a 37-year old who could pass for a co-ed, has a broad, deep understanding of what independent toy stores are facing. She has been involved with the American Specialty Toy Retailers for years, and is now president of the organization. She keeps in close touch with members across the country at meetings, by E-mail, and through a listserv. She is aware that the issues confronting toy stores are also dogging independents trying to make a profit by selling shoes, silverware, or Sunday brunch. Times are tough throughout specialty retail, but this has been an especially brutal season for toy stores. So much so that even some of the biggest players found out that selling playthings can be no fun at all.

Ticking off the casualties, Farrugia says, “In mid-November Toys R Us closed its Kids R Us clothing stores and its free-standing Imaginariums.” The latter are toy stores with an educational bent. “Then,” she continues, “sometime between the 5th and the 10th of December, FAO Schwarz closed its Zany Brainy and The Right Start stores.” Shortly thereafter, FAO Schwarz found that jettisoning those brands was not enough. It filed for Chapter 11 bankruptcy at the height of the Christmas season, and closed its stores. KB Toys, long a fixture in shopping malls, declared bankruptcy just a few weeks later.

In the wake of the casualties, Farrugia, representing her organization, has appeared on television to comment. One of the biggest factors, she says, is fierce competition from big box discounters, Wal-Mart and Target chief among them. Both went into the toy business in a big way during the holiday season, and put their massive advertising clout behind below-cost pricing.

The discounters had the power to KO or cripple key competitors and they have not done Jazams any good either. Farrugia, who closed the Montgomery store where she started her chain in late-January, traces the end of good times for Jazams to the opening of the Target mall. Now in “hunker down” mode, she is down from four stores to two. In addition to the Palmer Square store, there is a Jazams in Pennington, in the Pennington Market shopping center.

Farrugia started her toy stores with a carefully-plotted dream, prospered immediately, expanded too quickly, and is looking forward to moving her two-store chain past all obstacles.

Her past is rooted in retail. Her grandmother, now 99 and living in Toronto, grew up in Malta with her eight brothers and sisters. “She went to the butcher, the cheese shop, the fish store, the bake shop. That was her day,” says Farrugia. She grew up in Hopewell hearing these stories, and also spending a lot of time in Rose and Chubbys luncheonette. Her aunt is Carol (Chubby) Montello. “I was in and out of the restaurant all the time,” she recalls. “My aunt raised me.”

Farrugia tried college, first at Mercer County Community College and then at Rutgers. “I majored in English, women’s studies, anthropology, philosophy,” she says. She thought she would like to teach, but resisted getting a degree. “School,” she says, “was not my thing.”

After dropping out of Rutgers, she went to Manhattan to study massage therapy at the Swedish Institute of New York. She set up a practice in the city, but she had already decided that it would be just a way station. She wanted a career that combined her interests in children and in education, and decided that a toy store would be perfect. She used her massage business to build up her savings account.

Using the savings, along with a home equity loan, and credit cards, she made the leap into retail in 1995. Her life partner of 17 years, Tom Grimm, one of the Thomases in Thomas Sweet, the ice cream and chocolate stores, was behind her. “He was willing to take the plunge,” she says. While not involved in Jazams’ operations, he was ready to offer encouragement and advice.

Farrugia her first store in the Montgomery Shopping Center, and named it Crackerjacks — and was promptly sued for infringement.

In search of a new name, she held a contest, and was set to decide among three finalists when her attorney advised otherwise. All of the winners had trademark problems. You just have to make up a name, the attorney told her. You can’t use any word in the dictionary. So, she scrambled the letters in the names of her nieces, nephews, and step-sons, and came up with Jazams.

She stocked the new store with carefully chosen toys that, in nearly all cases, are not available elsewhere. She added lots of books, and was ready for parents and grandparents in search of high-quality wooden toys, marionettes, science projects, imported puzzles and games, costumes, art supplies, and craft kits.

“It was profitable from day one,” Farrugia says. “It was like rolling off a log.” When she talks about the early days, though, it sounds more like walking across a log-filled river. “I worked 24/7 for a year,” she says. “I was open from 10 to 9 every day.”

Hard work added to personal service, knowledgeable salespeople, free gift wrapping, and a wide selection of carefully selected toys was more than enough to win the store a loyal following.

Asked to name any mistakes she made early on, Farrugia hesitates not one second: “Expanding too fast,” she says. “I had one store, I blinked, and I had four.” But, the admission made, she amends it somewhat. “Times were good,” she says. “And that’s what you do in good times, you expand.”

She opened a store in Hillsborough and another in Pennington. The third store had just opened, when Toys the Store moved out of Palmer Square. “I got a call from David Newton,” she says. “He wanted me to move in.” Newton manages Palmer Square, and that is very much where Farrugia wanted to be. “Having a store downtown was my dream,” she says. She had been holding off because she did not want to compete with Toys the Store. With that business gone, her path was clear. But the timing was bad. She didn’t see how she could open a fourth store so soon after the third.

Grimm advised her to go for it. “He told me I could always close another store if I had to,” she says. Soon the Hillsborough store was shuttered.

That decision was easy. The decision to close the Montgomery store at the end of January was much more difficult. “It was my first store,” says Farrugia, expressing the sentiment mothers feel toward their first born child. “I had many sleepless nights.”

In the end, she realized that the Montgomery store had to go.

“To survive, we had to make changes,” she says. “We were cannibalizing ourselves with three stores so close together.” She is totally unwilling to see Jazams die, because of cannibalism or anything else. “I’m making a concerted effort to make this work,” she says. “It has to, and it will. It’s a labor of love.”

Too much expansion too quickly may have one reason that Jazams’ early profitability has disappeared, but there are others. Toys are among the most price sensitive items in retail. When Wal-Mart, Target, and other big discounters decided to make toys loss leaders, they pulled customers away from other toy sellers, big and small. But that is not the only factor facing independents like Jazams.

“Shopping habits have changed,” says Farrugia. “We’re in such a fast, furious world. People want to get everything in one superstore. The Internet is a huge competitor,” says Farrugia. While she can do little about the presence of the big box discounters, she is not letting the Internet get the best of Jazams. “I’m not much of a computer person,” she says, “but just today I signed up with a host.” Jazams’ first Internet presence is just a single web page, but it is offering some products for sale. If it works out well, there will be more.

Meanwhile, back on terra firma, Farrugia is relieved that the Montgomery store decision has been made, and is enthusiastic about moving ahead with her two remaining stores. “I have no regrets about Montgomery,” she says. “It led me to Princeton.”

Even on a frigid, icy January afternoon, the door of the Palmer Square store opens and closes constantly. It is fully stocked just a month after Christmas — the blockbuster toy holiday, the season during which 40 percent of all toys are purchased. Passing the display of sleds, including one fetching yellow and red plastic number that looks like cross between a snowmobile and duck, customers find all manner of possibilities for indoor play.

There are Cinderella stitch-and-sew kits, Winged Warrior race car sets, Bilderlotto puzzles from Germany, card games, including Frog Juice, which carries a recommendation from the Association of Gifted Children, board games, including 10 Days in Africa, Ambiente small wooden play sets, including “How Neat,” a laundry room set, and large wooden play sets, including an ark, a castle, a church, and a pirate ship.

There are dozens of small, expensive toys set at kids’ eye level. Farrugia says that, in addition to parents and grandparents, the store draws a fair number of children with a few dollars burning a hole in their pockets. The young consumers can choose from bags of marbles, helicopter whistles, flying saucer balloons, Silly Putty, and much more.

But school is not yet out for the day, and the store is filled with grandmothers, including one assembling an order for shipment to England. There were also a few moms, many of them European or Asian, out on solo toy buying missions. As if sensing the store’s need for a little more action, a toddler bursts into Jazams, trailing her mother behind her. The mom, betraying signs of fatigue as the sun was well along toward its dip below the horizon, introduces the bright-eyed tot as Lily Rooney.

Dressed in a striped pink hat, a hooded knit jacket in an Inca design, a long patterned red dress, and tan suede boots, Lily looks like a doll. But she moves like a dervish, talking happily to herself as she dashes from the Brio train set to the wooden kitchen, both toward the back of the store. Then she abruptly reverses course, grabs the multi-color, kid-size shopping cart that is always onhand, and begins tossing plastic vegetables into it with gay abandon before deciding that the tiny doll stroller parked near the door looks like more fun.

As Lily continues on her shopping spree, Farrugia talks about consolidating operations and moving back into profitability. At the peak of her growth she had 45 employees, and is now down to 30. “I didn’t go into it to be a business manager,” she says, “somehow it grew out of control.” Along the way, she turned to Paychex for her payroll, and hired a bookkeeper. She also hired a manager for Jazams’ warehouse, which is in Rocky Hill.

“This is what I love most,” she says as she watches Lily’s mom attempt to lead the suddenly-tiger-like tyke out of the store. “I love to be on the floor.” Also, she adds, stroking a bright red, floppy monkey, “I love buying.”

She doesn’t do all the buying, though. The largest part of the Jazams’ stores is given over to books — everything from touch-and-feel books for infants to novels for teen-agers. She has a book buyer, Kate Blair, whose job it is to meticulously comb through publishers’ lists for top-quality titles. Blair reads a great many of the books before putting them on the shelves, and what she doesn’t read, someone else on the staff does.

Wait. If competition in toy retailing is brutal, isn’t competition in book retailing even worse? How on earth can she compete with deep-discount Internet sites like Amazon?

This, surprisingly, is not a big problem. “Parents don’t have the time to read all the books, but we do,” is how she sums it up. Jazams’ staff is able to tell parents and grandparents if there is a date rape in a book, if the mom — or the dog — dies, and whether there is violence.

Playing off its success with recommending books, Jazams has started a book club. Customers, typically grandparents, let the staff know the age and interests of the child, and Jazams chooses, gift wraps, and sends one book each month.

If Jazams does not have a book a customer wants, the staff doesn’t hesitate to provide directions to Micawber Books on Nassau Street. “The fact that Micawber is still around gives me hope,” says Farrugia. Always a supporter of independent stores, she has become more so as survival for the entire group has become more tenuous.

She buys everything she can in the independents, even paying more when necessary. “Relationships are so important,” she says. Being greeted by name and receiving well-informed buying advice is well worth adding a dollar or two to a sales receipt. But paying more is not always necessary, she hastens to add, saying “our prices definitely are competitive.”

While Jazams’ consolidation was in large part a move to boost profitability, Farrugia, who has stopped drawing a paycheck, says it is also about lifestyle. “I want to cut back to six days a week,” she says. She is hard pressed to even add up the hours she now works. Maybe 70 hours a week, she says, but that doesn’t necessarily include off-site paperwork, which can add another 10 or so hours.

“Tom has to work every day,” she says of her partner. “He’s driven.” But, after eight years in retail, she thinks a day off each week would be a lovely change.

“Last year was such a great year for Jazams, in every way but one,” she says. “We were named business of the year by the Princeton Chamber, and our Harry Potter night was a big success — we involved other merchants and drew 1,500 people.” A newsletter was launched, and the store laid plans to print its first-ever standalone catalog. The store’s staff had jelled to a point where every full-time was knowledgeable, responsible, and involved to the extent that each member was considered to be a manager.

The lone problem was profitably. The lingering recession showed up and customers purchased less. Competition, both on land and in cyberspace, intensified. Asked to speculate on the future of independent retail in general, and of her stores in particular, Farrugia hesitates. On the face of it, the trend lines do not look good. But, expressing equal measures of stubbornness and optimism, Farrugia is far from ready to give it.

It’s going to be rough sledding for Jazams, but Farrugia is holding on tight, and shooting straight for profitability. “It will work,” she says again. “It has to.”

— Kathleen McGinn Spring

Jazams, 15 Hulfish Street, Princeton. 609-924-8697.

Jazams, 25 Route 31 South, Pennington. 609-730-9690.

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