March 01, 2016
Peekaboo Beans: Because Clothing for Children Should Be Playful
by Lin Grensing-Pophal
Headquarters: Richmond, B.C., Canada
Executives: Traci Costa, Founder and CEO
Products: Clothing and accessories for children ages birth to 10
Retail price range: $20 to $100
Number of sales representatives or play stylists: 850
Annual number of parties: 3,500
Average sales at party: $750
Mission: “To provide ingredients for a playful life.”
One look at the Peekaboo Beans website helps visitors understand that play is serious business. Peekaboo Beans relies on quality children’s clothing, childlike charm and a direct selling model. Their mission: “To provide ingredients for a playful life.” It’s a mission that’s supported by the key messages used to bolster their brand: “Buttons bug us,” “Chemicals scare us,” “Budgets love us,” and “Moms rave about us.”
These elements are essential facets of the business, founded by Traci Costa in 2006. First launched as a traditional retail model with her line placed in various stores and boutiques in Canada, Costa switched to a direct selling model after she noticed many retail shops closing during Canada’s financial downturn.
“It was one of my best decisions,” Costa says. While she had initially positioned the company in a retail business model, she quickly found that her clothing was getting lost in the racks and racks of “cute, but not functional” apparel that tended to predominate. The message behind her line was being lost and sales were suffering. Since she made the switch to direct sales she hasn’t looked back.
Today, she and her executive team work with approximately 850 independent representatives or “Play Stylists” to spread the brand’s value and help the stylists achieve their career or hobby goals. “We have paid over $2 million in commissions since 2011,” Costa says.
In 2016 the company will be making another big move: going public. In April the company will transition from a private to a publicly traded company through a reverse takeover and will be trading on the Toronto Venture Exchange.
Costa, who shares ownership of the company with friends, family and outside investors, says, “Going public provides us with greater opportunity to raise capital so we can deploy and achieve all our goals to grow as a company in a strategic way.”
Initially the company is expecting to raise $2.5 million by offering 2 million shares. That capital will be invested back in the business of Peekaboo Beans—primarily toward technology, infrastructure and growth to support the company’s stylists. Going public also will provide stylists with a financial stake in the business. Peekaboo already has provided them with an opportunity to invest in a round of pre-listing financing, and once the company is public, stylists can purchase stock at any time.
The Birth of Peekaboo Beans
Costa believes the Play Stylists, customers and the children who wear Peekaboo Beans products are helping to preserve play in the world. “Our busy lifestyles are shifting away from free play, which really is the work of children. We believe our direct selling model has the type of compensation plan that will help parents stay home with their children.”
What prompted this business idea? After the birth of her first child, Costa noticed the fussy elements of children’s clothing such as small buttons, snaps and other construction details that dug into her child’s body and hindered play. She soon learned that she wasn’t alone. As she came in contact with other mothers to share experiences, she learned that they had witnessed the same results. She also realized that manufacturing processes relied heavily on harsh chemicals to create clothing that she describes as “fast fashion.”
Costa says “fast fashion” is the hallmark of traditional retail models. “There is something new each week, with a product that’s designed for little growth and won’t last as the child grows.” Sadly, she says, “fast fashion is something that is going to end up in the landfill and won’t be passed down.” Like many mothers, Costa quickly found that most children’s apparel simply wasn’t “monkey-bar proof.” She wanted to offer an option that would provide kids (and their parents) with clothes that would grow along with them, while promoting unstructured free play.
She set out to make a quality product, designed by parents, that would be passed down and would endure multiple washings, with a “grow-with-me” element. For example, she says, a Peekaboo Beans product can be worn as a dress with leggings, then a tunic as the child grows—and the garment will still be in great shape to wear as a T-shirt. Also Peekaboo Beans clothing contains no carcinogenic dyes, heavy metals or dangerous finishes, and the company follows the Oeko-Tex Standard 100, an independent testing and certification system.
And how did Peekaboo Beans get its name? Costa said the clothing product was “born out of her home,” but so was the name. “When my daughter was 2½ she combined the peekaboo game while eating edamame (soybeans in a pod). The beans would pop out as she ate, so we had our name.” Costa notes that the name evokes fun, health, playfulness and home—all part of the Peekaboo Beans brand.
A Natural Fit for “Stylists”
Costa isn’t the only mother to be frustrated by the traditional clothing available for kids in retail outlets; she’s just one who took matters into her own hands to make a difference. In the process, she’s found plenty of support from other mothers who have been passionate to become part of the Peekaboo Beans movement. Their passion often begins with the experience of purchasing the clothes for their own kids.
Parties, known as “soirees,” provide an opportunity to get the clothes in front of parents, and kids; they take the format of either a “moms’ night out” or a play date with the kids. Beyond these soirees, stylists are well-supported by Peekaboo Beans and encouraged to stay connected with customers in small ways that can make a big difference, such as adding personal touches to their communications and orders. And stylists also are supported through customized e-commerce websites, ready assistance for any customer issues, an annual conference and vacation incentives such as an upcoming trip to Mexico for qualifying stylists.
Costa says stylists find the brand easy to share with others because the company values also reasonate.
Product Development and Manufacturing
While there are plenty of kids’ clothing lines on the market, Costa says she believes the secret to Peekaboo Beans’ success is simple. It’s the focus on the end user, not the moms and dads buying the clothing (although they’re an important audience as well). It’s really about the kids themselves and what it takes to make them comfortable and keep them safe, warm and well protected.
“We pay keen attention to the fit and analyze body measurements of boys and girls,” Costa explains. “We want the material to be soft and something children will want to wear.” In fact, she says, “We’ve heard stories about children being disappointed if their favorite Peekaboo Beans pieces are in the laundry and not available for them to wear.”
When Costa launched her business, she worked with Canadian manufacturers for the first four years of operations, but as the business grew she needed manufacturers elsewhere, finally selecting operations in China. Costa recognizes the stigma here and addresses it directly on the website: “China? Yes and we’re proud of it.” Costa said she works diligently through onsite visits and audits to ensure ethical manufacturing processes. Staff members also are on site to guarantee ethical manufacturing and quality control.
The company manufactures four seasonal lines, with clothing the primary product, but it may add to its product offerings.
Costa and her executive team were presented with a major challenge several years after founding the business in 2006. Their traditional retail model, which included selling products in more than 100 stores, was coming apart at the seams as they watched many retail shops fold in the wake of the 2008 and 2009 financial crisis.
However, Costa says they realized they had the ingredients for a direct selling model: a quality product and a brand worthy of passionate people to sell it.
Their next challenge, Costa says, was “creating growth and opportunity to get people to join us. We needed the infrastructure and a compensation plan to empower two primary groups, those with a career plan for direct sales and the hobbyists.”
Like many direct sales organizations, Peekaboo Beans takes a keen interest in paying its success forward by supporting causes that are closely aligned with its mission and target audience.
With her network of Peekaboo Beans representatives, Costa has helped raise thousands of dollars to support Playground Builders, a registered Canadian charity that builds havens for more than 250,000 children in war-torn areas. It’s no surprise that Costa would select a charity to benefit children. To date, her “Play it Forward” program has provided Playground Builders with $45,000 to create seven playgrounds, one in the war-torn nation of Afghanistan.
Although Peekaboo Beans has play stylists in the United States, the majority of stylists are located in Canada. Within the next two years, Costa says her executive team is working on a roadmap for extension into the United States. “We plan to create the most robust shopping experience we possibly can while continuing to spread the message about the importance of play,” she says.
Costa adds that she is looking forward to transitioning from a private to public business in April. “Taking this step is really all about creating growth and the opportunity for more people to join us.”
Peekaboo Beans is a company commited to stability and opportunity for its stylists, parents and children alike. With a consumer audience increasingly interested in high-quality, comfortable and environmentally friendly clothing for children, the company reinforces its mission with the promise of a public offering to help infuse more capital into the organization with an eye to longevity. For Peekaboo Beans, “playful” = profitable.