MASTERMIND’S MASTERMIND
President of niche toy store credits carefully curated merchandise, knowledgeable staff for chain’s late-in-the-game success,
It’s only taken 31 years for Mastermind Toys to become a runaway success.
Founded by brothers Jon and Andy Levy as a computer and software store in 1984, the country’s largest specialty toy and children’s book retailer has recently been acting like a tech startup. In the past four years, the company has tripled sales, quadrupled stores and increased its workforce by 40 per cent.
Neither competition from Amazon Canada, which sells more than 300,000 toys, nor the declining fortunes of Toys “R” Us, seem to threaten the suddenly aggressive pace of privately owned Mastermind, which grew to 11 stores from 1984 to 2010, but just opened its 40th location, in Calgary.
“We’ve mapped out, conservatively, 75 stores across the country; realistically, above 100,” said president and COO Humphrey Kadaner of a trajectory that in a few years would give them more toy stores than any toy retailer in Canada.
He credits a foundation of carefully curated merchandise and knowledgeable staff.
“We aren’t trying to be all things to all people,” Kadaner said. “Our core customer is an educated, informed mom; and usually there’s a certain level of financial wherewithal and preparedness to buy quality goods. That’s the place we’re in and why we believe we can keep opening stores; because it’s differentiated.”
But it took the injection of capital resulting from Mastermind’s partnership with Birch Hill Equity Partners, its majority shareholder since 2010, to realize the company’s potential.
Still, Jon and the management team felt some trepidation when Kadaner, who was hired after the Birch Hill investment, began planning stores outside the GTA. He’d assumed most of the operational responsibilities after Andy retired in 2011.
“The concern was ‘How could you manage something that you can’t touch?’ ” recalled Kadaner, a former HMV Canada president and senior executive with PepsiCo and Sony.
“I said: ‘That’s sort of easy. You guys did the hardest part; you built the brand, the foundation. You just hire people that share the same values as you; you hire good retailers; and you teach them. If they’re smart, they’ll learn your business.’
“Some of the concern was very valid that we didn’t have enough resourcing to then take on this level of growth,” said Kadaner. “They were looking at and hearing numbers and things without us having brought on the tools for the foundation.”
“Now we can sit down in our management meetings and talk about opening10, 11 stores this year and nobody even blinks an eye. Now they see how it works and we’ve built the machine to support it.”
CEO Jon, 53, who shares a toy-filled office with Kadaner as he did with his nine-years older brother, says he’s busier than ever, still overseeing visual merchandising, marketing and travelling the world to source new toys, but has more peace of mind.
“I finally have the team I always felt without,” he explained. “I finally have the safety, the security, of knowing there is someone so capable in the construction (for example) that I don’t have to know the fixtures are delivered on time, or the cash desk is in the right place.”
The Levys started off selling educational computer software in a nook near the current Yonge St.-Lawrence Ave. flagship, but quickly expanded the product assortment and moved to a bigger location, said Jon in an interview at the company’s Markham Rd.-Hwy. 401headquarters.
“What really defined our curiosity and our journey was that we enjoyed selling things to families with children,” he said. “Computers or computer software was what we were selling at the moment, but we loved this market. So what would we sell additionally — science kits, robotmaking kits, puzzles, games, craft sets?”
There were some short-lived franchising partnerships, but the brothers remained at the helm. They found Birch Hill’s long-term view and ability to attract high calibre talent compelling. For Kadaner, who grew up helping out in his parents’ party rental business but made his career at corporate giants, it wasn’t a hard sell. “The business had all the key pillars and foundation of a great brand and just happened to be smaller and GTA-based,” he said. “This is the opportunity to help contribute to build something really unique in Canada.”