Company sells toys as learning tools

DEVENS -- Seated behind a large desk in a brick building that had once been the Army's command center here, Sharon DiMinico said, "I now call this the Beanie Babies building," named for the toy world's hot product of the late 1990s.

DiMinico, 61, is founder and chief executive of Learning Express, which, according to the Chicago-based American Specialty Toy Retailing Association, is the nation's only franchiser of toy stores.

Franchisees, or small-business owners who have bought in to the Learning Express network, operate 120 stores in 27 states, said DiMinico, who opened the first store in Acton in 1987. Other Massachusetts stores are in Andover, Westborough, Needham, Bellingham, Hanover, Newton, Beverly, Grafton, and Sudbury.

Revenues last year were $78 million and this year they are expected to be 6 percent higher because of a healthier economy and what is expected to be a more bullish holiday sales season, said DiMinico, whose husband, Lou, 61, is vice president of real estate and leasing. They live in Groton.

The high point in revenues, $110 million, was reached in 2000, thanks to the Beanie Babies craze, she said.

Retail toy sales nationwide "will be slightly up this year after five years of stagnation," predicted Gerrick Johnson, a toy industry analyst for the investment firm Harris Nesbitt in New York. Sales last year at retail were about $21 billion, Johnson said.

"Until fairly recently, toy makers had been content to just dust off some old products like Care Bears," he said. "Now, there seems to be more research and development and creativity. As a result, toys today are more exciting."

The 1990s were heady times, prompting DiMinico, her husband, and several others to set up a separate dot-com toy venture, which failed like so many others early this decade. Some Learning Express stores also were closed.

But now, it's back to the basic, and growing, business of reaching out "to educated parents" of the company's target group: infants to 8 -year-olds, DiMinico said, adding, "That's what we call our sweet spot."

What differentiates Learning Express from Toys 'R' Us Inc. and big-box retailers like Wal-Mart are personalized service "and a mix of products that others don't have," DiMinico said.

Each of the franchised outlets has from 3,000 to 5,000 items, ranging from a 50-cent party favor to a $200 piece of furniture, she said, emphasizing that most of the toys and games are geared to helping a child increase his or her learning experiences.

"We shop a lot of different markets -- gift and fashion shows, booksellers -- and now have more than 300 vendors from around the world," she said.

DiMinico, who founded Acton-based Upstairs/Downstairs Tile and Bath, said she got the idea for a children's business when she went shopping for a crib and other goods for her daughter Lauren, now 23. "After the cash register rang up a bill of $2,500, it dawned on me that shopping for kids is an important emotional experience."

Deciding that toys would be her next entrepreneurial ticket, DiMinico, with Lauren and son Michael, now 22, in tow, visited toy stores throughout New England. "I compiled lists of the toys I wanted and the merchandising techniques I wanted to use.

"Then after opening the Acton store," she continued, "I opened another one in Needham six months later. It was then that I read an article on franchising. I liked the idea of creating a business and having others involved as store owners."

In 1990, downtown Andover became the location of the first franchised store, with Chip Will, a former Intel salesman, as the owner. Will, 48, has also been the owner of a Salem, N.H., store for 14 years.

Becoming a Learning Express store owner requires an initial investment of about $200,000 in a store, an upfront license fee of $30,000, and 5 percent monthly royalties on sales to the parent company, DiMinico said.

The backgrounds of store owners vary greatly. Some have had considerable business experience, others have not.

For example, Matthew Sahagian, 34, became a franchisee right out of college. With brothers Gregory, 40, and Paul, 39, as partners, he became involved in the Needham store's operation in 1993, the Beverly store in 1994, and Acton in 2005.

"All of our stores are doing very well, and we distinguish ourselves by the service that we give. Our people really know their stuff," Matthew Sahagian said.

And that's especially important during the holiday season, DiMinico said last week in the 10,000-square-foot Devens building that was acquired eight years ago from MassDevelopment for $500,000. She supervises a home office staff of 19.

Asked which products are likely to be pacesetters once the holiday season gets rolling, DiMinico cited Webkinz plush pets, each $9.99; a folding trampoline, $129.99; a Groovy Girls' cheerleading set, each $14.99; and a ridable plasma car, $69.99.

A child, with a parent's help, can go online to have some fun with a Webkinz stuffed animal, said Will, owner of stores in Andover and Salem, N.H. "When you type in the pet's tag number, you're referred to various online activities involving the pet."

Products that have electronic applications are now in great demand, said Kurt Barnard of Nutley, N.J., who publishes a newsletter, Barnard's Retail Trend Report.

"Electronic toys and games for kids 3 years of age and older are increasingly pushing traditional toys and games out of the way," he said.

At some point, keeping track of sales will be daughter Lauren's responsibility, DiMinico said. Lauren is now a Boston-based healthcare consultant for General Electric Co.

"I've involved her in this business and, at the right time, it will be turned over to her, hopefully," DiMinico said.