The strategy worked, allowing the owners and small staff to focus on fewer toy makers, learn about their products and share that knowledge with customers. Sales grew, and the Towles now hope to open a third location.
"Other companies have tried to cast too wide a net," Claudia Towles said between a steady stream of customers at the tiny but well-stocked Thames Street shop in Fells Point on the day before Thanksgiving. "We hunkered down and thought, 'Just like our consumers, we have to be more thoughtful [in what we order]. When customers come in here, they known they will find something that has play value and is made well.' "
Independent toy shops face competitive threats on many levels. Giant retailers such as Walmart and Target offer row upon row of shelves packed with toys, in spaces that are larger than some shops. Consumers can find anything at Internet emporiums. And during the holidays, nontraditional toy retailers such as Barnes & Noble devote more selling space to toys and games.
Still, several Baltimore-area toy shops say the outlook for the all-important holiday season has brightened, after several years of a national economic slowdown.
"This year there's a marked difference," said Ed Williams, co-owner of Mumbles and Squeaks Toy Shoppe in Ellicott City. "In general, people feel better … and are seeing positive signs. Nobody's going over the top and crazy, but that's better. It's a nice, steady, you-can-count-on-it recovery."
Thanks partly to "buy local" campaigns that have cropped up in many cities, including Baltimore, interest in shopping at independent stores appears to be on the rise.
According to a recent report, more than three-quarters of independent business owners said they believed consumers are more aware of the value of locally owned businesses. And that is helping the shops' bottom lines, said the survey by the nonprofit Institute for Local Self-Reliance. The research found that local retailers in cities with active "buy local" campaigns had holiday sales growth of 8.5 percent, compared to 5.2 percent for those in areas without such campaigns.
Such campaigns include "Small Business Saturday," which American Express created in 2010 to help give exposure to those businesses during the busy Black Friday weekend. The idea has been embraced by Baltimore-area shops such as those in Hampden and Green Spring Station, which will offer special promotions and discounts on Saturday.
It has helped that the toy category is considered recession-resistant, said Adrienne Appell, a spokeswoman for the Toy Industry Association. Toy sales in the U.S. dipped slightly in 2011 to $21.2 billion, according to the latest statistics from market research firm NPD Group.
But "over the past couple of years, the industry has remained relatively stable. We attribute that to the fact that toys are relatively low-priced, and families will provide toys to their kids for the holidays," Appell said, noting that the average price of a toy is $8.
Sales at Shananigans Toy Shop in North Baltimore have headed up for the past couple of years, and this holiday season should be as good, if not better, said David Stelzer, one of the shop's owners.
"We're trying to find unique toys — traditional and nontraditional toys that you really can't find anywhere but here," he said, noting that "Magic 8 Balls and Rock 'Em Sock 'Em Robots are harder to find than you think, [when] Toys 'R' Us devotes a whole wall to the latest trend or movie. We're trying to be as competitive as possible with prices. And honestly, we offer, I would like to think, better service and a lot more familiarity with toys."
Yasmin McCarthy, a mother of two, mostly shops at independent stores for toys, making many of her holiday and birthday gift purchases at aMuse, near her Canton home.
"We come here a lot," said McCarthy, who was browsing for holiday gift ideas at the Fells Point shop while buying a stroller for her 2-year-old daughter. "They have great quality, and it's convenient."
At aMuse, as at many of the small toy shops in the Baltimore area, consumers won't find Lego, Mattel or other brand-name staples on the shelves. Instead, floor-to-ceiling displays are full of toys made by less well-known companies.
Games such as Magna-Tiles, magnetic building toys, were displayed with Spot It card-matching games, Plus Plus interlocking building sets, Carrera slot racing sets, Brio trains and tracks, telescopes, marble mazes and giant puzzles.
"What we have on the shelves needs to be special," Towles said. "There's so much stuff out there, and so much of it is not worth your money."
She and her staff can tell customers which games labeled for 6-year-olds would be equally enjoyed by 8-year-olds, which toys would best engage a child with particular special needs, which lines stay interesting through several child development phases. The staff and owners try out the products on their own children, follow toy trends and research, and last year traveled as a group to the annual toy fair in New York.
Being able to interact regularly with shoppers helps independent toy retailers develop relationships that keep consumers coming back, shop owners said.
At 20-year-old Mumbles and Squeaks, parents who shopped at the store as children now bring their own kids, Williams said. Customers end up helping to shape the store's selection.
"We have a strong, critical nucleus of customers," Williams said. "We get to know them. We get a lot of good feedback from moms. We have a great give-and-take with the customers."
Besides that feedback, Williams and co-owner Frank DiPietro also spend a week each year at an international toy show, "looking at thousands and thousands of vendors and toys," Williams said.
"Every year, there are challenges," he said. "With online shopping … we can compete with price, but we have to collect sales tax, so it's an unfair playing field. Toys "R" Us is not a competitor because they're mass-market, with Mattel and Barbie and things we don't do. What has become the competition is the bookstores. There are now full-blown toy sections copying the specialty toy market," in places such as Barnes & Noble and Books-A-Million.
The shop, which is spread out over four rooms on two floors on Ellicott City's Main Street, competes by focusing on quality, customer service and "trying to stay cutting-edge," Williams said.
"You depend on some of the very, very reputable companies like Playmobil," he said. "We carry almost the entire line. It's an awesome product, and they continually crank out some of the best [toys]."
Independent toy stores may also be in luck this year, when no single "hot" toy has yet emerged. Instead, one of the fastest-growing categories has been building sets of all types, followed by dolls, said Appell of the toy industry association.
"Obviously, a classic toy is still here, and it's still here to stay," she said.