FAO Schwarz makes an iconic comeback in the Big Apple


Discussion
Photo: FAO Schwarz
Nov 19, 2018

FAO Schwarz, the toy retailer that closed its famous Fifth Avenue flagship three years ago, has just as suddenly returned to the Big Apple.

The retailer opened the doors of its new store in Rockefeller Center store on Nov. 16, according to Boston.com. The 20,000-square-foot store features some of the touristy attractions the original flagship was famous for including a clock tower-style entrance and a giant playable piano floor mat familiar to Baby Boomers and Millennials from the iconic scene in the 1988 film “Big” starring Tom Hanks.

The then owner of the original FAO Schwarz flagship, Toys “R” Us, blamed the closure on escalating rents in Manhattan. Toys “R” Us also closed its own Times Square store that same year. ThreeSixty Group acquired FAO Schwarz in Oct. 2016.

In addition to FAO Schwarz’s return to New York City, the retailer has been planning an international expansion, according to CNBC. FAO Schwarz plans to open permanent stores in Canada and China and has developed a pop-up strategy for Spain, Australia and London. Unlike the massive main store in New York City — currently the retailer’s only U.S. brick-and-mortar location — its stores in other countries will be small formats, many within existing department stores and taking up as little as 1,000 square feet.

FAO Schwarz makes an iconic comeback in the Big Apple

Photo: FAO Schwarz

The opening of a store at Rockefeller Center comes at the start of a holiday season with a lot up in the air for the toy world. The final closure of one-time category killer Toys “R” Us has prompted moves by retailers nationwide to fill the vacuum.

Walmart and Target as well as specialty retailers, such as Party City, have announced enhanced toy selections for the holiday season. And even retailers less directly associated with kids or toy shoppers, such as Kohl’s and J.C. Penney, are targeting the category for the Christmas season.

DISCUSSION QUESTIONS: Do you approve of the strategy behind FAO Schwarz reopening its flagship store in Manhattan? What will be the keys to FAO Schwarz acheiving success in the U.S.?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"Return to Wonder, indeed. Rockefeller Center is going to be a busy place."
"The key is to not limit themselves just to in-store inventory. The should use the store as a portal to access global toys."
"The critical question here is, “is the toy category already lost to digital retailers?”"

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17 Comments on "FAO Schwarz makes an iconic comeback in the Big Apple
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Mark Ryski
BrainTrust

The FAO Schwarz brand still has plenty of life, and opening a flagship in Manhattan will get lots of attention and interest from shoppers. While I believe this is an interesting move, the reality is that it’s a drop in the bucket of the massive toy category that has seen renewed interest and focus by Walmart, Target and Amazon, and so while it’s nice to see FAO back, it’s not going to have much impact on the market.

Steve Montgomery
BrainTrust

I had drafted my comments but then read yours and realized you had already said it all.

Bob Amster
BrainTrust

I think of FAO Schwartz as a one-of-a-kind wonder; an attraction that you must see but you’re not sure if you’ll buy anything in it. The question as to whether this should be a unique international chain of a few stores sprinkled around Western Europe remains to be answered. (The stores have not yet opened.)

Phil Masiello
Guest

FAO Schwarz was always known for having unique, sometimes handmade, toys. I remember my sister got a dollhouse from there that was a one of a kind back in the ’60s. But it lost that edge and when Toys “R” Us took it over, it was nothing but a bigger Toys “R” Us. Lego land, Pokemon, etc. No toys that could not be found anywhere else. So why would someone want to pay more for the same items you could buy at the local mall?

What will be unique about this store? It seems to be a store of other brands like Sharper Image, Build-A-Bear and other, easily accessible toys and brands.

Other than the name, I see nothing unique about it and I do not see the long-lasting potential of the brand.

Shep Hyken
BrainTrust

Welcome back, FAO Schwarz! The opening is working. It’s getting the retailer buzz and attention. What’s next will be a new version of an iconic brand – one that knows how to navigate the new retail landscape with a combination of onsite experiences in their flagship and pop-up locations alongside an online presence that will digitally scale out the wonder that FAO Schwarz is known for. They can’t try and be better than other retailers selling toys. They must be different.

Adrian Weidmann
BrainTrust

FAO Schwarz was an iconic NYC destination- for locals and tourists. The store became exceptionally magical around the holiday season. It’s somewhat ironic that FAO Schwarz was acquired by Toys “R” Us in 2015 and they closed the NYC location. Three years later Toys “R” Us is gone and FAO Schwarz is back in the hands of descendants of Frederick August Otto Schwarz. I believe FAO Schwarz can be THE immersive, experiential, and physical portal to global online toy shopping. They can use their physical magic to provide unprecedented click-and-deliver experiences. The key is to not limit themselves just to in-store inventory. The should use the store as a portal to access global toys.

Brandon Rael
BrainTrust
My entire family, including the child in me, is happy to see this iconic NYC toy store tourist attraction mount a comeback in NYC. FAO Schwarz at its best, or at least in my nostalgic mind from my visits in the 1980s, was, and could once again be a wonderland of toys, magic, surprises and experiences. We were there this past Saturday, the lines were around the corner by Rockefeller Center, yet my seven- and five-year-old children couldn’t be more excited. I didn’t mind at all. Once we were finally inside the store, there was some of the magic I remembered. The smiles and wonder on my kid’s faces said it all, and we left after over an hour and with a small magic trick gift that they really wanted after watching a live demo. Yes, the objective retail strategist in me also realizes that FAO Schwarz is making a comeback in an extremely congested industry. Kohl’s, Target, Amazon, and even Kroger may compete with price. However FAO Schwarz, if they do things right, will… Read more »
Chris Buecker
BrainTrust

FAO Schwarz with its former location and in-store experience has been iconic and an unforgettable adventure for kids. If the new owner keeps this USP, then I would give it a chance.

Dave Bruno
BrainTrust

I of course love the strategy of re-opening the New York store just ahead of the holidays. That’s a no-brainer. I also think bringing back some of the iconic elements of the original store’s experience needs to be the foundation of their strategy to differentiate. They must differentiate on experiences. They simply can’t win on price. Unique assortments combined with unique experiences is the only way to earn share in the toy market here in the states. I worry that 1,000-foot departments outside the U.S. will not have the ability to create compelling experiences, but if they are very, very smart about their assortments, perhaps they can find a niche in Europe and Asia.

Mohamed Amer, PhD
BrainTrust
Mohamed Amer, PhD
Independent Board Member, Investor and Startup Advisor
3 years 6 months ago

The FAO Schwarz flagship store in Manhattan is perfectly located to garner media and consumer attention at the right time of year. The brand’s history combined with the bold store opening statement will provide a halo effect to its international presence. Manhattan is a tourist and shopping magnet. The success of this strategy does not require becoming a dominant player in the toys category, but rather rediscovering the brand’s exclusivity and boldness. This is a well thought out move by the Three Sixty Group on its investment. Now it’s a matter of smart execution without dilution of the brand or over-extending on future investments.

Rich Kizer
BrainTrust

If you were to teach a course on the power of brand equity, you would be wise to choose FAO as the example. Kids and adults that grew up with FAO still love them and will run in again, renewing past memories and introducing their children to this iconic experience. Those who have never been to FAO, if given a chance, will put it at the top of their list. And what a time to reopen. This could be a movie for the holidays!

Ryan Mathews
BrainTrust

It all depends if you are asking whether we approve the opening of a destination store for tourists or a retail store. If it’s the former, “welcome home.” If it’s the latter, the devil will be in section, pricing and execution. If the store was opened just to make a statement as part of a larger rollout strategy, we’ll have to watch the rollout. The critical question here is, “is the toy category already lost to digital retailers?” As to the keys to success they haven’t changed — have the right products, in-stock at the right price in the right quantities. The toy category is tough, especially in an era where a little social media attention can switch the “in” toy into the “out” category, so I would say FAO Schwarz needs to approach the market in innovative ways, leveraging — and paying attention to — all available social media channels.

Ricardo Belmar
BrainTrust
Ricardo Belmar
Retail Transformation Thought Leader, Advisor, & Strategist
3 years 5 months ago

Great to see this iconic brand make a comeback! I don’t expect this will move the needle in any significant way in the toys segment, but given that we’re all talking about it they have certainly made an impact on industry perception. I’m sure FAO Schwartz will find its way to open more stores in a controlled manner, but I would not look for them to become a large mass merchant toy seller — expect them to stay the course with unique offerings and stores that favor a true experiential approach versus just stacking shelves with product.

Georganne Bender
BrainTrust

FAO Schwarz isn’t just a toy store, it’s that great, elusive store experience we all talk about but rarely find. Calling it a toy store is akin to calling American Girl Place just a store to buy a doll.

I’m happy that FAO is back — we’ve lost so many wonderful retailers. It’s the toy store of my childhood and the one stop we always made when visiting NYC. I’m glad to see that the toy soldiers, the clock, and the piano from Big are back, too — I can play a mean Chopsticks on that thing and I can’t wait to try it again. Return to Wonder, indeed. Rockefeller Center is going to be a busy place.

Camille P. Schuster, PhD.
BrainTrust

FAO Schwartz and Toys “R” Us do not appeal to the same consumers, but being the only toy store in Manhattan will give them an edge. They need to remain iconic, have different selections of toys, and be trendy to succeed. As long as the wealthy consumers worldwide have disposable income and FAO has iconic toys, the brand will do well.

Craig Sundstrom
Guest

What is it with toys that we seem to have a whole category filled with efforts to bring-back-the dead?

Anyway, back on topic. I think it might work, but only in the sense that any new business “might” work. And “new” is exactly what I think this is, because I don’t feel the original brand has any equity left — which is too bad. I think it was a classic example of an iconic brand destroyed thru over expansion and general incompetence.

Jeff Miller
Guest

Like the Glossier store that was featured last week, this new FAO Schwarz store is only as good as what it is intended to be. If this is a single location or even a small set of stores globally that each need to turn a profit then I don’t see success in their future.

Turning a profit selling toys in NYC just does not seem like a great option. However, if these stores are marketing expenses that drive brand awareness, experience, sales of the brand online and in other retailers then it is a great move.

ThreeSixty Group has some of the best supply chains in all of China which is saying a lot. They can use these relationships for insanely low costs and also speed to market and then use a revamped and built up brand equity of FAO Schwarz to fill the void left in the toy space.

wpDiscuz
Braintrust
"Return to Wonder, indeed. Rockefeller Center is going to be a busy place."
"The key is to not limit themselves just to in-store inventory. The should use the store as a portal to access global toys."
"The critical question here is, “is the toy category already lost to digital retailers?”"

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