Our lowest prices ever! Hurry, limited time offer! Half off at our doorbusters sale!

If you're a tiny toy store pitted against the Toys "R" Uses and Wal-Marts of the world, how can you compete? The challenge may seem daunting, yet approximately 1,500 to 2,500 independent toy stores, according to the American Specialty Toy Retailers Association, manage to survive. Some get bigger with each passing holiday season.

Phil Wrzesinski, 41, is an entrepreneur in the trenches of the toy wars. He owns Toy House and Baby Too in Jackson, Michigan. Because his town is centrally located among several of the bigger cities in state, including Detroit, Ann Arbor, Lansing, Battle Creek and Kalamazoo, the toy entrepreneur has no serious shortage of customers. But he also doesn't have a shortage of competition. His county of 163,000 residents is home to a Toys "R" Us and several discount big box stores that sell truckloads of toys.

So you'd think every year about this time, Wrzesinski would be contemplating holding a going out of business sale. And yet his store, a family business that began in 1949 and that he took over in 1993, is pulling in more than $2 million a year.

He describes his business as a toy store versus a specialty toy store or boutique, which carries more niche items and foregoes toys that can be found in large retail outlets. "Every article I ever read about our industry says you shouldn't compete against the biggest chain stores, but we have a philosophy that we are a toy store, and so if we can get good toys, we should," Wrzesinski explains. "Our customers expect all kind of toys, the kind you can't find anywhere else, and the kind you can."

Diana Nelson, whose business, Kazoo & Company, owns Kazoo Toys, in Denver, Colorado, makes no apologies for putting her store in the specialty category. "We don't sell toys that you're going to find in a Toys "R" Us. For instance, we don't sell Fisher-Price," she says.

In previous years, that might have been a drawback. However, in the summer, Fisher-Price recalled more than 1 million toys, including Dora the Explorer and Sesame Street playthings, and other toy manufacturers were soon following suit. "We haven't had one recall," says Nelson, "and I'm very proud of that."

By carrying 60,000 educational toys for newborns to 12-year-olds, Nelson's store, one of the largest independent toy stores in the country, is able to bring in more than $1 million in annual revenue. Although Nelson won't disclose exact figures, she has a staff of 20 full-time employees, which doubles during the holiday season.

But more than the money, it's the passion for toys and improving the minds of youngsters that drive entrepreneurs like Nelson and Wrzesinski to do what they do. Nelson says owning her store is "a blast," and adds, "I can't tell you how cool my sons think Mom is, that she has a toy store."

Wrzesinski, meanwhile, loves helping parents decide what toys to buy their youngsters as gifts. "We do a lot of talking about the true cost of toys," he says, referring to the dialogue he and his staff have with their customers. "That is, what's the cost versus the hours of play you get out of the toy. If you're going to get your daughter a doll, the best dolls are the ones that do the least. She has to create a voice, give it action--all of that comes from her. The doll's personality isn't coming from somebody at Mattel, but her."

It's this type of passion and knowledge that impresses Tracy Dudkiewicz, owner of TAP Marketing in East Troy, Wisconsin. She was recently with one of her toy manufacturing clients--Kapla, which makes wooden blocks--at Geppetto's Toy Box in Oak Park, Illinois. She was blown away by how the staff understood the product and was able to demonstrate it to customers. "At a good independent store, the employees know every product in the store, how it works, how much it costs, what company makes it and who should play with it," says Dudkiewicz. "They know their customers and their community, so they can stock items that their customer base will buy."

She contrasts that with a discount chain store she was recently at. "I couldn't find the board game I was looking for, and another customer couldn't find any of the four toys on her grandkid's list. They were out of stock, and the store had no idea if and when they would be getting more of the items in."

For independent toy stores, offering that "something special" or a sense of magic is key. In fact, every owner should schedule time to see Mr. Magorium's Wonder Emporium, Hollywood's recent Christmas card to toy store owners everywhere.

"My kids and I had a lot of fun identifying the toys we saw in the movie," says Wrzesinski. "That movie was all about the magic of the toy store, and that's the feeling that we try to accomplish in our store. You know, a lot of my friends will say, 'You own a toy store--that must be fun.' And I always agree with them--it must be fun."