Does the remarkable success of the Mastermind chain ever tempt its owners to wonder if they unconsciously named it after themselves?

The question makes Andy and Jonathan Levy laugh out loud. Respectively their company's president and vice-president/buyer, the Toronto-born-and-raised brothers launched Mastermind in 1984 and now own and operate 10 stores in the Greater Toronto Area.

Focusing exclusively on high-quality educational toys, books and computer programs, and doggedly marching to the beat of their own drummer, the Levys have grown their chain into the largest independently owned specialty toy retailer in Canada.

No Canadian wannabe has even tried to muscle in on Mastermind's niche. And its American equivalents - including Zany Brainy and Learningsmith - not only never ventured into Canada, but all went belly up in a few short years.

Ken Kerr, Business Edge
Mastermind specialty toy co-founders Jonathan, on a Big Wheel trike, and Andy Levy have concentrated on children- oriented computer software since opening their doors in 1984.

Yet, says Jonathan, "When we started Mastermind, we honestly didn't have any kind of master plan for the future.

It was strictly a baby-step-by-baby-step evolution."

Maybe it's their modest beginnings that make the brothers so self-effacing. Back in the early '80s - which Andy calls "the cave days" of home computing - both had been working for a cousin in a computer software company.

"People were beginning to buy computers for their homes, but they weren't quite sure what to do with them," Jonathan recalls. "One day, Andy had a brainstorm. It just clicked that there was a void we could fill - teaching people about software and selling it to them.

"And then, because Andy was just starting his own family and coming to appreciate the importance of making playtime educational," he continues, "it struck us that the real core of our business should be software for children."

Believing initially that this would be their sole stock in trade, the brothers said goodbye to their cousin and took the retail plunge.

"I sold my car," says Jonathan, "and Andy and his wife put in a few bucks from their savings."

In spring 1984, the Levys leased a 300-sq.-ft. space behind a sandwich shop in North Toronto.

To dedicate as much of their minuscule startup funds as possible to inventory, they designed the store, laid tile and built store fixtures themselves. Then they stocked their shelves with as much of the child-focused software that was just coming onstream as they could find.

"We started out with titles like Reader Rabbit, Math Blaster and Robot Odyssey," Jonathan says.

Thanks to their own computer experience, the added value the brothers planned to offer was demonstrating the programs on in-store Commodore 64s, so kids and parents could get familiar with what they were purchasing.

The Levys then opened Mastermind's door and waited for customers. It took six days before the first one wandered in. That recollection prompts another laugh from Andy, who says: "Back then, we had one customer in six days; last month, we served 60,000."

Although their first week in business was worrisome, it wasn't long before customers were flocking to Mastermind, partly because "the salespeople in the computer stores in those days were very tech-oriented and weren't much interested in software," Jonathan says. "So they sent their customers to us, usually with their new computers still packed in the trunks of their cars."

With software sales going swimmingly, the brothers decided to expand their inventory to include educational toys as well as books. While searching for an additional location, they hired knowledgeable consultants to hunt for suitable additions to their stock.

The second Mastermind store opened in October 1985 in a much larger space in what's now the Pickering Town Centre.

By 1988, another example of the Levys' ahead-of-the-curve perspicacity was up and running. It was Mastermindtoys.com, which today accounts for between five and 10 per cent of gross revenue and ships tens of thousands of items all across North America. True to its owners' philosophy, the site is replete with pertinent educational essays on such topics as classic wooden toys.

As the years rolled on, the brothers added eight more stores throughout the GTA, maintaining a hands-on policy every step of the way. Although Jonathan is the chief buyer, both brothers travel frequently, checking out tradeshows as far away as Hong Kong and Germany and visiting suppliers to see potential new stock and hear pitches in person.

That hands-on strategy is paying off handsomely, says Anton Rabie, president and CEO of Toronto-based Spin Master Toys, which is one of Mastermind's major suppliers. "They always act with integrity and, for local entrepreneurs, they really dig deep to find great products. They also understand their customer extremely well."

In fact, customer relations extend to not just figuring out what will keep people coming back, says Andy, but also listening to their advice. "That's why we added a free gift-wrapping service (with colourful, branded paper), both in-store and at our website. We had customers saying: 'I've got to get to a birthday party in 15 minutes and I really need to get this (gift) wrapped.'" Another vendor who is a big fan of the Levys' way of doing business is Larry Sedran, managing director of Lego Canada, for which Mastermind is his company's sixth-largest Canadian outlet.

The brothers "are an absolute pleasure to work with," he says. "They are real professionals and real gentlemen and they should get nothing but accolades for the great job they've done in building a great business."

Although the Levys declined to disclose their financials, Sedran says that Mastermind's specialized niche, plus the prowess of its owners, seem to be standing the chain in good stead during the current downturn in the toy industry.

"Because there's so much fragmentation with all the choices consumers now have, the marketplace is much more competitive than it used to be."

According to a recent report from Statistics Canada, revenue among leading domestic toy retailers declined to $82.3 million from $95.2 million between the third quarters of 2004 and 2005.

Sedran, who says he's a regular Mastermind customer, also praises the way the Levys train their workforce, which now numbers more than 300 people and, he says, "is very friendly and very good at helping customers make their choices."

Indeed, says Jonathan, he and his brother have always "tried very hard to make Mastermind a really fun, interesting and rewarding place to work."

He adds that many of their employees are mothers looking for jobs after raising their children and youngsters who work part-time while finishing high school or university.

While the average managerial stint is five to seven years, some employees have stayed on the payroll for up to a dozen years.

As the 1990s progressed, the Levys came to believe it was only a matter of time before their U.S. counterparts arrived in Canada. So they did major upgrades of their stores, although, Jonathan says, "we were very careful to keep our friendly, neighbourhood spirit and we stayed true to our specialty niche."

But the anticipated invasion of their turf never happened. Instead, he says, "the Zany Brainys and Noodle Kadoodles and the others collapsed between about 2000 and 2002."

Why? Jonathan believes it's because they pursued a course that's the antithesis of Mastermind's modus operandi, but very American: "Go big or go home. They tried to compete with the Wal-Marts and the Targets. So they over-expanded and they strayed from their original concept - which is something we will never do."

What is in Mastermind's future? It is expansion, says Andy, initially throughout Canada and then possibly to the United States, and increased Internet presence.

Explaining the brothers' different-drummer philosophy, Jonathan says: "It's been a mainstay in the development of our business that we don't let the traditions of our industry hem us in. Plus, we keep on having a lot of fun along the way."

(Terry Poulton can be reached at poulton@businessedge.ca)