FAO Schwarz

Part
01
of two
Part
01

FAO Schwarz: Overview

Fao Schwarz was acquired by Threesixty Group from Toys R Us in 2016. After successful partnerships with department stores, Threesixty Group recreated the brand, opened an iconic New York flagship store, and expanded to key markets globally such as China.

Company's History, Major Events and Milestones

  • Established in 1862, Fao Schwarz is the oldest toy establishment in the United States. The company's annual revenue amounts to $169 million, and it employs about 845 employees.
  • Toys R Us owned the label up until 2009 and ultimately sold it to Threesixty Group in the year 2016.
  • After Threesixty Group's acquisition, they organized and offered a "high giftable cross-category product line" to department stores that consisted of half toys (Fao Schwartz) and half Christmas items and home decor.
  • Their partnership with department stores proved successful due to their tactic of always administering window displays and energizing the space using product presentations and experiential activities such as drawing competitions, magicians, and appearances from Santa Claus. This action prompted high levels of traffic and led to extraordinary sell-through rates during the first year.
  • Following the department stores in year one, they came back with some proposing an exclusive contract with them. To become a branded retailer themselves, the company initiated the iconic Fao Schwarz flagship shop in New York.
  • Toy retailers were experiencing challenges managing a New York flagship store. Even Toys R Us was losing despite drawing an immense volume shoppers to its Times Square establishment. Fao Schwarz survived these hardships by opening up during the ideal months, November and December, of toy sales. It also partnered with influencers and celebrities such as Jimmy Fallon and Gigi Hadid, thus recreating a trademark known for its innovation and quality.
  • Fao Schwarz resumed its expansion to significant Asian markets such as China by collaborating with Kidsland International Holdings Limited, which operates as a powerful distributor of toys carrying about 27 various international labels like Lego in China.
  • The company also partnered with the Hudson Group, one of the largest travel retailers within North America, to establish Fao Schwarz storehouses in airport shops and joined Wild and Wolf, a prominent manufacturer and designer of wooden toys, games, and puzzles.

Key Brands and Products

Competitors

Target Market

  • The estimated average age of consumers at Toys R Us, which is almost the same as the other prominent toy retailers (e.g., Walmart, Target), is around 43.1 years.
  • A case study regarding Toys R Us shows that the toy retailer's target market is not merely children of every age, but most importantly the parents of these children who are purchasing the items.
  • Toy spending among children peaks at 5 years old, and there is an elevation between 5 to 9-year-olds. Similar behavior is observed among their parents as spending peaks at 33 years old, followed by a plateau between 33 to 37-year-olds. Furthermore, there is a steep decline in spending after those ages.

Research Strategy:

We obtained data from Fao Schwarz's official website, along with reliable media sites such as Business Wire and Forbes. Meanwhile, company details were taken from business directories such as Crunchbase and ZoomInfo. A report from Toy World Magazine featured Fao Schwarz and appeared to be useful for further reading.

To determine the target consumers of Fao Schwarz, we first explored its official website, as well as reputable news sites such as Forbes and from Toy World Magazine. This research strategy did not produce useful results. We then attempted to search for the age bracket of Fao Schwarz's toys, but most are for children of all ages, and it was not conclusive.

Next, we searched for the demographic data of Fao Schwarz on Alexa and Similar Web. The results from Similar Web indicated that data was not sufficient to detail the demographics of visitors to Fao Schwarz.

Afterward, we broadened the criteria by reviewing the demographics of Fao Schwarz's competitors. Toys R Us, the company that previously owned Fao Schwarz, had data available regarding its target market. One article showed that the average age of customers of Toys R Us is the same as that of other major toy retailers such as Walmart and Target. We then searched for the peak spending age of the toy retailer industry as a whole, which we included in our brief.

Part
02
of two
Part
02

FAO Schwarz: Marketing or Retail Partnerships

The partnership of Macy’s and FAO Schwarz aims to bring back toys to the department stores. Also, FAO Schwarz will open shops inside 685 stores of Macy’s over the next two years. FAO Schwarz has also partnered with The Bon- Ton Store, Britannica Home Fashions, Galerie USA, Uncas International, Canada's Hudson Bay, IT'Sugar, and Mattel.

MARKETING OR RETAIL PARTNERSHIPS OF FAO SCHWARZ

1. FAO Schwarz and Britannica Home Fashions (2019)

  • Britannica Home Fashions together with FAO Schwarz will develop a collection of home fashions including various styles of bedding, bath, soft holiday décor items, and more.

2. FAO Schwarz and Galerie USA (2019)

  • Galerie USA is working with FAO Schwarz to create confections, chocolates, gift-sets, and bespoke candy offerings meant for festive seasons such as Valentine's Day, Easter, and Christmas.

3. FAO Schwarz and Uncas International (2019)

  • Uncas International will launch a line of new FAO Schwarz accessories including jewelry, hair products, and key chains.

4. FAO Schwarz and Canada's Hudson Bay (2018)

  • In partnership with Canada's Hudson's Bay, all 89 stores across the country will open pop-up FAO Schwarz shops, ranging in size from 300 to 1,200 square feet. Items will also be available at www.thebay.com.

5. FAO Schwarz and IT'Sugar (2018)

  • Specialty candy retailer IT’SUGAR has partnered with FAO Schwarz to open a candy shop — FAO Schweetz inside FAO’s new flagship store in New York City.
  • The FAO Schweetz product line will launch with 2lbs of gummy bears, chocolate bricks, chocolate donuts, gummy block houses, make-your-own gummy worm kits, giant gummy unicorns, and mega chocolate bars.

6. FAO Schwarz and The Bon-Ton Store (2017)

  • The Bon-Ton Stores is launching FAO Schwarz toy departments in 186 of its department stores and on its website. The famous toy brand will be featured at selected locations across Bon-Ton’s network of department stores (including Bon-Ton, Boston Store, Bergner’s, Carson’s, Elder-Beerman, Herberger’s, and Younkers) and on its website.

7. FAO Schwarz and Macy's (2008)

  • FAO Schwarz will sell toys in Macy's stores
  • Macy’s and FAO Schwarz are teaming up to bring toys back to the department store. FAO Schwarz will open shops inside 685 stores of Macy’s over the next two years.

8. FAO Schwarz and Mattel (2007)

  • Mattel and leading specialty toy retailer FAO Schwarz will open “styled by me™ Barbie® doll,” a 1,500-square-foot, one-of-a-kind retail experience at the retailer’s legendary Fifth Avenue flagship store, where girls can customize their own Barbie® doll.

YOUR RESEARCH TEAM APPLIED THE FOLLOWING STRATEGY:

We performed an exhaustive search on press releases, business publications sites, and trusted media sources to find data about the retail or marketing partnerships of FAO Schwarz in the past 15-20 years. We were able to locate eight retail or marketing partnerships of FAO Schwarz. However, most of the partnerships of FAO Schwarz took place in recent years between 2017 to 2019. Only two of the partnerships took place in 2007 and 2008. Other information concerning FAO Schwarz in the public domain was extraneous.

Further, FAO Schwarz company website has no available press releases or news room. We opted to checked their Crunchbase profile to see if FAO Schwarz has partnered with any retail or marketing companies. However, the results did not return anything promising.
Sources
Sources

From Part 01
Quotes
  • "His dream became a reality, and today, as the world's most iconic toy store, it has provided wonder and excitement to families for more than 150 years."
  • "A visit to FAO Schwarz is an experience unlike any other. You are at the center of the story. An adventure larger-than-life that sparks the imagination in all of us awaits every time you step through our doors. Over the years, we continue to create new, lasting memories for generations of children and nostalgic moments for adults alike. "
Quotes
  • "-ThreeSixty Group, Inc. (“ThreeSixty” or the “Company”), a leading provider of branded consumer products to the nation’s largest retailers, announced today that it has acquired FAO Schwarz, one of the oldest toy retailers in the world and an iconic brand synonymous with quality and innovation. FAO Schwarz had been owned by Toys ‘R’ Us, Inc., the world’s leading dedicated toy and baby products retailer, since 2009. The terms of the transaction were not disclosed."
Quotes
  • "Subsequent to its successful relaunch in 2017, the iconic toy retailer, FAO Schwarz continues its international growth strategy, propelling the brand into new global markets, channels and categories. The announcement follows an exceptional holiday season, where FAO Schwarz introduced an extensive collection of classic toys and specialty items at shop-in-shops in over 5,000 retailers nationwide. "
  • " It also follows the reveal of the planned opening of a new 20,000 square-foot flagship location in the heart of New York's historic Rockefeller Plaza in time for the holiday 2018 season."
  • "FAO Schwarz will launch into the mainland China market in 2018 via a brand collaboration with China's largest toy distributor, Kidsland. The long-term, multi-channel partnership will see FAO Schwarz enter the market and establish its position as the high-end toy retailer in mainland China with a flagship location in Beijing and Shanghai. "
  • "In addition, FAO Schwarz has entered into an exclusive agreement with Hudson Group, one of the largest travel retailers in North America, to open a chain of FAO Schwarz branded airport shops in the U.S. and Canada. The stores will feature signature FAO Schwarz branded toys and games as well as products from other leading brands. The first store will debut later this year, including stand-alone candy stores under the famous FAO Schweetz brand."
  • "Additionally, FAO Schwarz has signed a license agreement with Wild and Wolf, an industry leading designer and manufacturer of wood toys, puzzles and games, expanding on the brand's elevated breadth of products. Wild and Wolf will launch their first collection for holiday 2018 at department and specialty stores."
Quotes
  • "Perhaps a decade or so ago, there were three iconic specialty toy retailers—KB Toys, Toys "R" Us and FAO Schwarz. There were, of course, other players such as Etoys (purchased by TRU in 2009). "
  • "So there you have it. Consumers are now largely consigned to buy their toys at Walmart, Target and Amazon. But wait! There may yet be some hearts still beating in those “dead” brands."
Quotes
  • "ThreeSixty Brands owns and operates the FAO Schwarz and Sharper Image brands and is a New York based subsidiary of ThreeSixty Group, which designs, sources, and distributes consumer products across diverse categories under a portfolio of owned and licensed brands. Their portfolio includes more than 20 brands (internally developed, acquired, and licensed) including the iconic FAO Schwarz, Sharper Image, Wembley, and Discovery brands."