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$4 Million Baby

Baby Emporium grows up fast

The first time Tom Kim went shopping for a baby gift in Hawaii, he recognized his next business opportunity. “I decided at that moment I would open a baby store,” he says.

Five months later, in February 2004, Kim opened Baby Emporium in Kakaako. That wasn’t because Kim enjoyed the baby-gift shopping experience, but he wanted to improve what he saw as limited selection and “sassy” service. Never mind that Kim, now 37, had worked mainly in the automotive industry, or that he and his wife didn’t have any children yet.

photo: Karin Kovalsky

Much has changed since Kim opened the 3,000-square-foot store on Cooke Street. From March to December of its first year, Baby Emporium’s gross sales were $1.4 million and are projected to exceed $4 million in 2007, Kim says. The store now stocks about 10 times the number of products it did when it opened and is backed by an additional 11,000 square feet of inventory in a nearby warehouse. Kim knows the baby-products industry as intricately as he knows cars. And yes, the Kims have a daughter, Phoebe, now 1 year old.

Because many women are having babies later in life, families tend to have more discretionary income to spend on their children. Baby Emporium, which specializes in premium baby products, has a strong appeal to this group. Among the vast inventory is an upscale stroller in the $1,000 range.

A one-piece bodysuit proclaiming “Language is overrated” costs $16.98.

Peggy Friedman, an associate professor of marketing at Chaminade University in Honolulu, compares the popularity of “affordable luxury” baby products to what she calls the Starbucks effect. More affluent parents seem to want high-end baby products in the same way they do gourmet foods, and they feel these are things on which they can afford to splurge.

University of Hawaii marketing professor Dana Alden notes that many of today’s parents are from Generation X (people born roughly from 1965 to 1976), which is the first generation to get the “full blast” of the emphasis on interactivity with kids. Products for children tend to be carefully researched and often high-tech. “The days of the wooden rattle are gone,” says Alden, who is the William R. Johnson distinguished professor at the Shidler School of Business.

Hawaii and the nation have seen an increase in baby-product retailers because the industry is profitable, high volume and attracts a lot of interest among retailers and buyers, Alden says.

Yet in spite of more competition, Kim may have an edge: Last year, Baby Emporium posted the highest sales volume for Combi strollers in all of North America, including Canada, Mexico and Puerto Rico. “I was in the right place at the right time,” Kim says. From the start, Kim focused on building his inventory rather than what he sees as more peripheral aspects of the business, such as creating a fancy showroom. His strategy has paid off. The store’s warehouse is more than three times the size of the store, enabling Baby Emporium to stock about 500 cribs at any time. “If you have the inventory, basically you win the customer,” he says.

One key to selling baby products is that often, people can’t wait for products to be shipped in. “If the baby is due in two months, you can’t tell the mother the crib will be ready in three,” he says. The store’s large volume enables Kim to have merchandise shipped in by the container load, which helps to keep prices down.

Customers Ryan and Jeanette Moore drove in from Ewa Beach two days in a row to shop at Baby Emporium. Jeanette, an attorney, says the store’s selection makes it worth the drive. The Moores bought several items, including a baby bathtub, for their newborn, Isaac. “We’re stocking up our house,” she says. Ryan, an Army helicopter pilot stationed at Schofield Barracks, was due to return to Iraq in a few days.

Cars to Cribs

Kim grew up in Guam, where his father worked in the construction industry. After graduating from high school, the younger Kim planned to attend college in New York but decided against it. “School wasn’t for me, and working for someone else wasn’t for me,” he says. “I was a terrible employee and a terrible student, so working for myself was the only option open to me.”

From the age of 18, Kim got to know cars from many angles by running a variety of businesses, including a gas station, a go-cart racing operation and selling high-performance parts and luxury cars. People were surprised when he decided to get into baby-products retail, but everyone was supportive, he says. Everyone but his father, who he says didn’t understand the need for specialized products emphasizing baby safety.

“I didn’t have a crib or a car seat growing up,” Kim says. “He looked at everything and said, ‘How are you going to make it?’” But his father soon saw the potential in baby products. “He now thinks he played a major role. He says, ‘I’m glad you did this business,’” Kim says, laughing.

Kim credits his father for teaching him the basics of business for his success on his own. He used personal savings from his automotive enterprises to finance Baby Emporium and to enable him to reinvest what would have been his paychecks back into the business for the first two years. Those things, and working “seven days a week, 16 hours a day,” have enabled him to continue to build inventory without taking on debt.

“I have zero investors and zero bank notes,” he says. “I just did it all on my own.” Further, all of his inventory has been paid for or will be paid for within the vendors’ billing cycle. “It’s not like I have to wait [to pay for it] until I sell it.”

Growing Up

Kim says a plan for a shop for older children, likely to be called Kids Emporium, has been in the works for several years, but nothing is definite. Baby Emporium’s current space can be expanded vertically but not horizontally. He is also working on leasing the space next door, which used to house a home theater. But rather than rushing into things, Kim is playing it cautious. “If I could have a guarantee that things would continue to go the way they are going, I would take on some serious square footage.”

Above all, he aims to keep doing what got Baby Emporium to be the top Combi stroller retailer in North America last year. “We’re blessed to be No. 1,” he says. “I want to continue to be No. 1.”

Kim is guardedly optimistic about the future. “We’ve been lucky because the economy has been good and people were making large profits because housing has appreciated. Hopefully even if the economy slows down, people will still pay for premium baby products.”

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