Toy Story

With an eye on the video screen and an ear to the ground, Toys n’ Joys’ Alex Le stays one step ahead of the rest of the gaming and toy world

It feels like the day before Christmas. The queue at the cash register is 10 deep, while dozens of customers wander through the jam-packed toy aisles, carefully examining possible purchases. Everyone seems wide-eyed and happy.

It’s actually just another late Saturday morning in May at Toys n’ Joys’ new, sparkling, 5,500-square-foot Waialae Avenue store. The toy shop has a surprisingly eclectic clientele: kids, their parents, big kids, really big kids and an occasional senior citizen, all hovering around prospective merchandise.

Toys Will Be Toys: Toys n’ Joys specializes in video games, anime and collectable toys. Here Alex Le re-enacts the battle between good and evil, a fight between Kikaida 01 (right) and Hakaida.

One of the store’s core customers — 18 to 30, male, single — wanders in to chat with Toys n’ Joys’ youthful owner and operations manager, Alex Le. They speak briefly about the latest video game releases and what’s expected in the next shipment. Just before he leaves, the customer asks Le if he’s hiring. “I’m not sure,” says 29-year-old Le. “I’ll have to check. But we probably won’t need anyone till Christmas.”

The customer leaves, but he’ll be back soon.

That customer, and many others like him, have been “working” for the store for years. These video-game junkies, anime fanboys and collectible-toy maniacs are an important resource to Le and his staff, informing them about the latest must-haves or trends. Telling them what they just can’t live without.

It’s Not Just Kids’ Stuff

Le needs the input, because the toy world is a surprisingly high-flying and high-risk business, with toys and games being bought and sold more like commodities and futures than like little playthings. Everyone wants to have the hottest new thing, be part of the next wave, which comes year after year after year. Guessing right means lines out the door; getting it wrong means close-out sales from here till next Christmas.

“Nintendo, Tamagochi, Tickle-Me Elmo, Furbee and Pokeman. These are all things that we had an inside track on. I just mentioned five in the last 15 years, but there have been hundreds of toys in between,” says Le. “We knew that these were going to be hot, and we got great feedback from our customers. But it’s not an exact science. The year after Tickle-Me Elmo, they released Sing-and-Snore Ernie. We went aggressive and that bombed. We thought the “Star Wars” toys would be huge, but it turned out that customers wanted only a few of the toys from the entire line. And who would have guessed that Pokeman would get as big as it did?”

Monster Sales: Godzilla toys are consistent performers at Toys n’ Joys. With $10 billion in sales annually, Japan’s toy market is the second largest in the world.

It would seem that there are plenty of toys and video games for everyone. According to a 2003 study by securities firm Piper Jaffray, the toy market in the U.S. is massive: worth more than $21 billion annually, constituting 37 percent of worldwide retail toy sales. According to a 2005 PriceWaterhouse Cooper’s study, in 2004, the U.S. video game market was valued at $8.2 billion in revenues annually and is projected to grow by 12.9 percent compounded annually to reach $15.1 billion in 2009.

Specializing in video games, collectible toys and anime, nearly all of which are manufactured in Japan or China, Le has carved out an ever-so-slim niche in a market that is dominated by big-box retailers. While this very narrow focus may require him to be a bit of a riverboat gambler when it comes to selecting his seasonal toy buys, the concentration on Asian toys and games gives Le two distinct advantages over his big-box rivals: a core of devoted customers and market knowledge and connections that can’t be matched.

“In Hawaii, ‘Kikaida’ is basically religion,” says Brian Flynn, publisher of Super Seven, a San Francisco-based magazine, which specializes in Japanese collectible toys. “People were born and raised on it as well as ‘Rainbow Man’ ‘Kamen Rider V-3’ and ‘Ultraman.’ All those shows were heavily supported in Hawaii in the ’70s and the toys were imported heavily. On the Mainland, these things never moved out of the cult level, but, in Hawaii, it was huge and it remains that way for a lot of people.”

Toys n’ Joys has another edge. Le says that he and his father, Raymond, who founded the business 23 years ago, have direct links to toy manufacturers in Japan and China, so they receive their merchandise when the rest of Asia gets theirs, giving them a two-year head start over their American competitors.

“When Japan gets new stuff, we get it the same week,” says Alex. “When a certain Power Ranger comes out, we get it. We get the new Power Rangers a full year before the Mainland gets them.”

Toys n’ Joys is structured around a very unique business plan, applying big-box principles to its specialty toy and game lines. While the scope of Le’s selections may pale in comparison to the Wal-Marts of the world, he heavily stocks the categories that he does carry. Toys n’ Joys has 6,000 items in its product line. Its video game wall, which runs nearly the length of the store, is stocked with more than 2,000 different CDs and cartridges at any one time. According to Le, it is the largest selection of video games in the country, if not the world.

Video games are released weekly, much like DVDs, and, to move this massive product line, Toys n’ Joys is constantly marking down its merchandise. Over the course of a year or two, a game that originally retailed for $60 can be had for a mere $10. This deep discounting not only moves inventory off the shelves, it has extended the store’s customer base to include younger customers or ones with less discretionary income but more patience.

Although Le wouldn’t disclose gross sales figures, he does say that his store sells approximately 2,500 video games a week, with an average cost of $50 for each game. That’s an average of $125,000 in weekly sales of video games alone, or $6.5 million a year.

“Video games and anime are our bread and butter,” says Le. “If it were up to me, I would carry even more inventory. I would need maybe three or four times the space.”

The House That Nintendo Built

The moment Raymond Le saw the Nintendo video game console, he knew that it would be a winner. Luckily, no one else in the room had the same feeling. Raymond had gone to the Consumer Electronic Show in Las Vegas in 1982, partly in search of a hot, new product and partly because he had a thing for gadgets. He owned a small, discount retailer called Wholesale Outlet, located in Kaimuki’s old Queen Theatre complex, where he sold just about anything: clothes, toys, bags, luggage, kitchenware and other household goods.

Toys R Them: Toys n’ Joys’ new Waialae location has several times more display space than the old store. It’s still not enough room.

“Nobody cared about video games then,” says the camera-shy Raymond, who refused to be photographed by Hawaii Business. “I just walked in their booth myself and I knew the minute I saw it. Before, there only was Pac Man. Now you had Mario and dinosaurs jumping around. The graphics and the colors were so different.”

In 1982, video games were on their way out. Atari and Caleco, two video-game pioneers, had run their course. But Le quickly put in an order for several thousand Nintendo units to be delivered in the early summer.

The move was risky, especially for someone who had very little experience in the electronic toy world, which was still in its infancy. But Raymond was used to entering new worlds. Born and raised in Saigon, he served in the U.S. Special Forces from 1968 till the end of the Vietnam War in 1975. He and his very pregnant wife, Loan, were airlifted out of Saigon the day before the besieged city fell. When the couple boarded the roaring helicopter, Raymond had $50 in quarters in his pants pockets, handed to him through the U.S. Embassy’s chain-link fence by friends and relatives.

The Les’ transport plane, bound for a relocation center in Arkansas, stopped at Oahu’s Hickam Air Force Station for refueling. Loan went into labor during the flight, and the couple was whisked away to Tripler Hospital once the transport landed. Their baby was born safely shortly thereafter, but the doctors told the couple that their son had a bad case of jaundice and would need to stay at the hospital for at least three additional days. Raymond ended up living at the hospital for nearly a week, sustained by the waiting room’s food and drink vending machines and his $50 in change.

Raymond decided to stay in Hawaii and found a series of part-time jobs before landing a position with the state government as a laborer. After working as a janitor, gardener, carpenter and plumber for six years, he hurt his back and went to Canon Business School, where he received a degree in accounting after two years of study. Raymond then got a position in accounts payable for the Hawaii National Guard. It was a job he would hold for a little more than 10 years.

“It was a secure job. It had all the benefits, and it paid well,” says Raymond. “But after a while I started to sell things at the swap meet on the weekends, just all kinds of things. After a few years, I decided to go into business myself. My co-workers thought I was crazy, but I couldn’t sit in the office from nine to five.”

Raymond opened up shop in a small, 500-square-foot storefront in Kaimuki. He patterned his business model after Job Lot, a East Coast retailer, which bought closeout merchandise and then quickly turned around and sold it at deep discounts. Raymond’s store slowly grew, but, a couple of years later, after seeing the Nintendo machine in Las Vegas, his business plan changed.

The new video games were an immediate and overwhelming hit and, because Raymond’s contract with Nintendo made him the exclusive distributor for three full years, the business bloomed. The games drew customers, who lined up outside the door. But the games got Raymond’s foot in the door in the game and toy world, helping him establish crucial connections in Asia and the Mainland.

“At about the same time that Nintendo came out, Transformers emerged and G.I. Joe made a comeback. It was a sort of perfect toy storm,” says Alex. “From then on it quickly became clear to my dad what direction he needed to take the business. We became a specialty toy store, and for three years our specialty was mainly Nintendo.”

Big Boys’ Toys and Other Things

In 1989, Raymond opened a small store in the Westridge Shopping Center in West Oahu. Two years later, the Les moved their Kaimuki store just a block down Waialae Avenue and filled the 1,300 square feet from floor to ceiling with their specialty toys. It would become a local institution.

The Line Up: With customers queing up at the cash register, it’s a typical Saturday morning at Toys n’ Joys.

Two years ago, Raymond retired, handing everything to his young son, Alex, who has taken the business to the next level. Earlier this year, the Waialae Toys n’ Joys moved into a new location just a couple doors down that is more than four times as big. Not only does the new location offer more space for the store’s massive inventory, but also for its customers, who now wander more freely and bring their parents or significant others.

In addition, Alex opened another store in Guam and also directs a thriving Internet business, which has a strong following in Australia and the U.K. and now accounts for 25 percent of Toys n’ Joys’ sales. Alex’s older brother, Anderson, who was born at Tripler Hospital and is the film coordinator at the Hawaii International Film Festival, has helped establish an Asian film library, which includes action, art and martial arts films as well the increasingly popular Korean dramas. Like everything else, the films are eventually discounted, and they have begun to draw a much older customer to the store.

Finally, Raymond has briefly come out of retirement to introduce a big boys’ toy department, a section at the back of the store, which sells knives, swords, replica firearms and higher-end collectible toys. Once the new store and the new section are established, he plans on retiring again.

“It [the toy business] is a rough business and it takes a certain type of mentality to thrive in it,” says Anderson. “My father and brother just love it. They live it. Yeah, I think they have a little bit of a gambling streak in them.”

Says Raymond: “We always hit 20 or 21. It’s not always black jack, but that is our average.”

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