Toy Town Makes a Play for Retail

An antique lover, Fred Brown knows that a few rough edges can lead to a real bargain. It’s the same principle that keeps drawing the Glassell Park resident back to Toy Town, a bustling but dog-eared cluster of toy and gift businesses amid downtown Los Angeles’ Skid Row.

“Malls bore me,” Brown explained on a recent holiday shopping expedition, recalling the watches, toys and electronics he has purchased in Toy Town in years past. “And you can’t beat the prices here.”

That’s welcome news for Toy Town entrepreneurs, who would like to attract a lot more shoppers like him.

Known for its barbed wire as well as its bargains, the freewheeling wholesale center is trying to polish its image as a retail destination to offset swings in its export trade.

This year, just in time for the holidays, property owners are pooling their resources to finance security, sanitation and marketing programs in an effort to attract a new crop of shoppers to the area.

“Toy Town has to keep evolving,” says Charles Woo, chief executive of Megatoys, one of the largest wholesalers in Toy Town. “Retail is going to be an important part of that.”

Although the name conjures up images of elfin magic, Toy Town is a long way from Santa’s workshop.

It took root amid the missions and flophouses near Los Angeles and 4th streets in the late 1970s, when a handful of immigrant toy wholesalers moved in where other businesses feared to tread.

Today the area teems with more than 300 resellers of toys and other inexpensive Asian-made gift items, accounting for more than $1 billion in annual sales, by some estimates. Toy industry leaders here say it’s the largest toy wholesaling district in the nation.

Toy Town’s mostly ethnic Chinese merchants are middlemen who import goods from the Far East for resale to local independent toy stores, variety stores, distributors and swap-meet vendors. Many also export to Mexico and other parts of Latin America, trade that was pinched following the mid-1990s peso crisis and more recently by weakness in Brazil.

“Business is a little worse this year than last,” says exporter Kenneth Huie, owner of Evergreen Trading. “The peso is still weak.”

To take up the slack, some Toy Town entrepreneurs have turned to selling to consumers seeking good deals on toys and other merchandise. The retail trade always has existed, but it took on more urgency following the peso’s nose dive, says Woo, who opened up his own retail outlet three years ago next to his Megatoys warehouse on 2nd Street.

“For me, it accounts for maybe 2% of my business,” he said. “ . . . Still, foot traffic is good for the area.”

The challenge is how to attract more consumers to a gritty area shared by the homeless who frequent the nearby missions on East 5th Street.

Toy Town property owners have opted for a strategy being tried by other urban commercial centers nationwide--a business improvement district, or BID. Seventeen such zones have been formed in Los Angeles over the last few years, with 27 more in the planning stages.

Essentially, merchants or property owners in a business district agree to tax themselves extra to pay for mall-type services that City Hall cannot provide. Typically that means full-time cleaning crews and safety patrols as well as some promotions to get the word out to the public.

The Toy Town BID, with an annual budget of $165,000, encompasses the area bounded by 3rd, Los Angeles, 5th and San Pedro streets. It will work closely with the Downtown Industrial District BID, an adjacent warehouse district bounded roughly by 4th, Alameda, 8th and San Pedro streets with an annual budget just over $1 million.

Some Toy Town land holders already are grumbling about paying extra for what they see as basic city services such as sanitation and security. But others point to the property owner-financed cleanup of the neighboring Garment District as proof that BIDs can help to lure customers, lift sales and boost property values.

“I was in Santee Alley when you could get space for 25 cents a [square] foot,” said Ben Neman, who owns property in both the Fashion District and Toy Town. “Today, I’ve got tenants there paying $15 [a square foot]. . . . That’s not going to happen overnight in Toy Town. But keeping it clean and safe is going to help.”

Although the Toy Town BID won’t be fully funded until early next year, organizers were able to secure a $40,000 short-term loan from the city to spruce up the area in time for holiday shopping.

Red-shirted crews have begun sweeping the cluttered sidewalks and gutters. New red-and-purple banners are fluttering overhead.

Even so, business owners don’t pretend that the Toy Town experience will appeal to every shopper. Parking is horrendous. Sidewalk vendors with their fragrant, sizzling pans of sausages and sweet peppers provide the only refreshment. The closest public restrooms are the portable johns down on Skid Row.

And shoppers need a sharp eye to discern the brand-name goods from the knockoffs. Haggling is mandatory, English optional, warranties and returns practically nonexistent.

But for those seeking a $6 Barbie doll, a dozen pairs of athletic socks for $8 and Disney merchandise for a fraction of what you’d pay in the Disney Store, Toy Town promises a shopping experience unlike anything available in a suburban mall.

“Look, the Brentwood set is never going to shop there,” said Ron Bagel, president of Donaty Group, an industrial real estate brokerage that is active in Toy Town. “But is it farfetched to think they could pull in more middle-class people like the Garment District did? In time, I think they can.”

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

New Game Plan

Property owners in Toy Land and the Downtown Industrial District are trying to clean up the area.