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

• On its official website, the following are the brands classified as favorites: Fao Schwarz itself, Sharper Image, Discovery Kids, Barbie, Gund, Marvin's Magic, Bunnies by the Bay, and Melissa and Doug.
• Its portfolio consists of around 20 different internally developed, licensed, and acquired brands, which are sold in more than 70,000 retail stores around the world, including the United States.
• The Sharper Image brand brings high-tech entertainment and knowledge that comprises drones, robots, and RC toys.
• Discovery Kids' brand is made up of globes, plasma orbs, starlight lanterns, and motorized crane sets, among others to produce reliable and innovative means to explore the world.
• It also carries the Barbie brands with all its fashion accessories.
• Gund serves as the oldest manufacturer of Teddy Bears and soft toys. It is one of the favorites among brands provided at Fao Schwarz.
• Marvin's Magic consists of magic toys for all ages, including Magic Made Easy, Mind Blowing Magic, and the award-winning Marvins iMagic.
• Bunny by the Bay are charming bunny and skipit stuffed toys ranging from 12 to 20 inches in size.
• Melissa and Doug are centered on classic wooden toys, pretend plays, and games. Additionally, there are grocery baskets, shopping carts, hand puppets, costume sets, and pretend-to-spend wallet, among others.

Competitors

• Fao Schwarz is a toy specialty company, and it competes with Toys R Us, KB Toys, and Etoys. However, these brands are all losing shares to retail giants such as Amazon, Walmart, and Target.
• Toys R Us acquired Etoys in the year 2009, while KB Toys was acquired by Bain and later by Strategic Marks in 2016.
• Thus, Fao Schwarz's competitors consist of the leading e-commerce giants and retailers, namely Amazon, Walmart, and Target. According to Forbes, despite toy specialty stores facing a decline, some of these establishments, such as KB, could make a return if they are clever and make the right decisions.

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:

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: