A Year Later, Sales Blossom And Company Operations Branch Out For Children's Orchard Inc.

ANN ARBOR, MI (Wednesday, May 04, 2005) - Ann Arbor-based Children's Orchard Inc. is expanding its headquarters to make room for a warehousing distribution system that will increase efficiency for its franchisees.

The expansion will add about 1,500 square feet to the existing 4,500 square feet the company is leasing in the Atrium Office Center on Victors Way in Ann Arbor.

"In the past, many of our logo items (such as bags, signs, and letterhead) were distributed through a third party, but we've decided to bring that in house," said Taylor Bond, president and CEO of Children's Orchard, which sells gently used children's clothing and accessories. The company also will launch an online store for its franchisees, so they can both order the items and track them once they're shipped.

"We think it's a more efficient way to work with our vendors. If you can centralize some of that buying so that vendors don't have to deal with 100 different points, you tend to be able to create stronger relationships and get better products at better pricing," he said.

The investment in the expansion is "substantial," said Bond, and should be complete by June.

Children's Orchard has gone through several changes since Bond and a group of investors purchased the company from its previous owner, Walter Hamilton, for an undisclosed price in January 2004.

It recently launched a new marketing campaign and is rebranding its concept, a move that's already seeing results. During its first marketing effort, the company experienced a 90 percent increase in sales nationwide.

re:group inc. of Ann Arbor is the advertising agency.

It also has more than doubled its office staff, from six employees in 2004 to 15 today. Bond plans to hire more this year, bringing the total number up to about 20. "That will get us to a point where we're fully staffed and doing all the things that we need to be doing in order to be successful," he said. "The Internet is a great thing, but there's got to be points of contact (for franchisees)."

The Internet still plays a vital role in Children's Orchard business, however. "When I got here, we were distributing a lot of things the old fashioned way. All information was going out via regular mail or fax," said Bond. "Now all our marketing gets delivered via the Internet (and) we communicate with our franchisees on a daily basis via the Internet.

The company also rolled out a national gift card program and an in-store credit program. For example, Bond said, "if you sell us something, we'll offer you $15 in store credit or $10 in cash."

Children's Orchard reported a 2004 annual revenue of $22 million, up 10-15 percent over 2003.

Resale is a growing industry that attracts consumers from all economic levels, according to the National Association of Resale & Thrift Shops, a St. Clair Shores-based trade association. "In my opinion, the stigma of resale shops is long gone," said Adele Meyer, executive director of the organization. "I think it's been more accepted for a long time."

According to America's Research Group, a consumer research firm based in South Carolina, about 12-15 percent of Americans shop at resale stores during a given year. That compares to 11.4 percent of Americans who shop at outlet malls, 19.6 percent who shop at apparel stores and 21.3 percent who shop at major department stores.

Children's Orchard was founded in 1980. It has less than 100 franchisees throughout the United States, with 10 new stores currently in the works. It hopes to open an additional 15-20 before the end of the year, Bond said.

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