A new generation of collectors helping Department 56 stage second act

The Department 56 die-hards who still line up to have their miniature holiday villages signed by their artists are dominated by a graying set.

The baby boomers, some who show up decked out in old-timey costumes, have amassed expansive village collections over the decades and are the backbone of the Eden Prairie-based gift and collectibles business.

But these days, newer faces are also in the crowd.

"What's nice about it is at the signings now there are so many more young people showing up," said Scott Enter, who has made pencil drawings for 25 years that are the basis for many of Department 56's villages.

These newer fans often know someone who collected — a grandmother, an uncle, a friend. And now they are building their own collections as they start their own families, he said.

That is proof to him and company officials that Department 56 is not a "has been." Rather, they say the brand is in the midst of a second act and that the keepsakes that were once a mainstay on many holiday mantles still can resonate with the next generation.

"We lived through the heyday of collectibles," said Molly Kinney, who came in two years ago to lead the downsized company as its president. "And we survived. That didn't happen to everybody. But the cream rises to the top, and we're still relevant."

Younger buyers, though, often have smaller living spaces, so they are not as inclined to buy as many items as the older fans do.

"They are not necessarily building the entire snow village collection in their apartment in Manhattan," she said. "They are buying one, and we support that: Buy one."

Department 56 is the company behind not just those once ubiquitous holiday villages but also Snowbabies figurines and holiday ornaments. It started in 1976 as a subsidiary of Bachman's floral business and was later spun off and became a high-flying Twin Cities icon. At its pinnacle in the 1990s, it was listed on the New York Stock Exchange, with its stock trading at $40 a share.

It was such the rage that thousands of collectors, many who flew in from around the country, used to fill the Minneapolis Convention Center every year. And it had huge flagship stores in tourist destinations such as the Mall of America, Disneyland and Las Vegas.

So why and when did that all come tumbling down?

In actuality, the slide began before that. Collecting became less of a hobby as consumers' tastes changed. The recession and the housing slowdown didn't help either. An ill-fated acquisition in 2005 of much larger crystalware and china company Lenox also burdened it with debt. Those forces led to an implosion in 2008 when its parent company filed for Chapter 11 bankruptcy.

Department 56 lived on, though. It was sold twice the following year, finally landing in the hands of Enesco, a privately held gift company in Illinois.

The firm jettisoned many of its unprofitable lines to focus on its bread-and-butter products. While the Eden Prairie headquarters once employed more than 250 people, today it has about 30. The firm now shares a lot of services with Enesco — finance, customer service, sales, warehousing and sourcing in Asia — that Department 56 once did on its own, Kinney said.

While it doesn't publicly disclose its revenue, company officials said Department 56's sales have grown 7 to 11 percent a year in the past four years, at a time when the rest of the gift industry has been flat.

About two-thirds of its business is still funneled through the hundreds of mom-and-pop gift and Christmas shops around the country. But most of the recent growth has been from the remaining third with national retailers such as Sears, Macy's, Dillards and Hallmark stores. Amazon has also become one of its biggest customers.

Department 56 also is planning to launch a revamped website this summer. But the updated website will not fulfill online orders. Like the current site, it will redirect those orders to its base of mom-and-pop shops in order to help ensure those businesses stay healthy.

Many of those shops are built around Department 56's villages, Kinney said, and would go out of business without it. The company also gives those shops first dibs on its newest releases and makes Amazon wait until the second year before it can carry them.

City Lights Collectibles, a store in San Diego, brings in Department 56 artists a couple times a year for signings. While many of the other collectible lines it has carried over the years, such as Annalee dolls, have fizzled out, its Department 56 business continues to be one of its biggest.

"Collectibles are traditionally pretty cyclical," said Spencer Young, who runs the store with his father. "But 56 is one of the few that have lasted. … It went through a rough cycle, but it's come back very strong for us."

The new, younger fans with more disposable income are helping his business, he said.

But the key is that collectors are still buying, he said.

"It's the only brand I know that still has collectors clubs in every city," Young added.

There are more than 100 Department 56 collectors clubs, plus a national umbrella group run by hobbyists called the National Council of Department 56 Clubs, which runs an annual convention and puts out a newsletter six times a year.

"There's a real resurgence right now of people who are just now discovering Department 56," said Richard Puckett, the council's vice president, who has a collection of more than 600 items. "Collecting as a whole has evolved as the newer, younger generation is inheriting grandma's and moms and dads' collections."

Back in its glory days, Puckett recalled the frenzy around the items that Department 56 would retire each year. The company would take out full page ads in USA Today to publicize those items, and stores would be swarmed that day because the value of the items often skyrocketed after items were discontinued.

"But I still get excited at retirement time," he said.

Kavita Kumar • 612-673-4113