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
- 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.
- 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.
- 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.
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.