Toys ‘R’ Us Adding FAO Schwarz Boutiques

Discussion
Oct 28, 2009
George Anderson

By
George Anderson

There
were plenty of questions when Toys “R” Us acquired FAO Schwarz last
May about how it would operate an iconic toy merchant that was the
virtual opposite of itself. One anser is now known: Toys “R” Us will
open FAO Scwarz boutiques in each of its 585 stores in the U.S. beginning
on Nov. 1.

“FAO
Schwarz is known to kids and kids-at-heart for offering distinctive,
unique toys and creating memories that last a lifetime,” said Jerry
Storch, chairman and CEO of Toys “R” Us, Inc., in a press release. “This
holiday season we are proud to celebrate the legacy of the FAO Schwarz
brand, making it more accessible to customers from coast-to-coast while
creating new traditions for generations of children to come.”

Each
boutique will be located in a prominent position near the front of
each Toys “R” Us store and will feature life-sized displays of the
FAO Schwarz toy soldier.

The
sections will sell tightly edited and affordable FAO Schwarz items
ranging in price from $2.99 to $64.99. Consumers looking for the full
FAO Schwarz effect, can go online to its website, www.FAO.com,
or order through its holiday catalog. The catalog will ship to consumers
across the country on Nov. 10. and include toys priced up to $1,499.99.

Discussion
Questions: What do you think of the multi-channel approach Toys “R” Us
is taking with FAO Schwarz? How much will the in-store boutiques affect
sales in Toys “R” Us this holiday season? Will they, for example, get
consumers to visit Toys “R” Us stores that might not normally do so?

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11 Comments on "Toys ‘R’ Us Adding FAO Schwarz Boutiques"


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Joan Treistman
Guest
11 years 6 months ago

It’s hard to imagine the FAO legacy represented with items up to $65. It’s the opportunity to experience the luxury and aspire to the $1500 product, settling for the $65 (or less) toy, that generates much of the FAO Schwarz in-store revenue.

So if Toys “R” Us sections off a part of the store to showcase items that are essentially in the same price range as the other products in the same Toys “R” Us store, it will be difficult to convey the special FAO message. There will be no luxury customer experience.

The article suggests the life-size toy soldiers and unique items in the boutique section will be sufficient to reinforce the FAO Schwarz equity. I’m not convinced.

Doron Levy
Guest
Doron Levy
11 years 6 months ago

FAO could be considered a toy brand in itself and this differentiates TRU from its competition by offering this unique and upscale line. Boutiques have worked in TRU. Babies “R” Us started off as a boutique and RZone has been a consistent player in the segment. If anyone can execute on the boutique concept, TRU can. FAO brings a new level of exclusivity to the mix.

Ben Ball
Guest
11 years 6 months ago

My bet is that the FAO Schwarz franchise is headed the way of the Lands’ End franchise after being incorporated into the Sears stores.

Kevin Graff
Guest
11 years 6 months ago

Off the top, I like this approach for TRU. In an ever more competitive toy category, this may help distinguish them from the pack. The other panelists who raised concerns about the FAO brand may be right in the long run, but I can’t see this as being anything but a winner for TRU.

Chuck Palmer
Guest
11 years 6 months ago

Toys “R” Us is surely leveraging their opportunities and taking a variety of smart strategic steps to solidify their position in toys. CEO Jerry Storch said this in a recent Bloomberg interview: “This is a great time to reinforce our authority position in the toy marketplace, a great time to increase our brand penetration and a great time to drive incremental sales.”

Not only have they acquired FAO Schwarz, but also a slew of online toy retailers (Remember eToys and how it was going to undo traditional retail?). They are also taking advantage of the relationship they have with repeat customers at Babies “R” Us and cheap mall space by doing 340 new Pop-Up locations, adding 1 million square feet of selling space.

While the FAO shops in Toys “R” Us may be questionable on the price point level (that rendering being published isn’t helping much), you have to admire their speed to market and the opportunity to communicate new relevance for the FAO brand.

I mean, where else can one create their own Muppet?

Doug Fleener
Guest
11 years 6 months ago

I think it makes a lot of sense and is a great way to differentiate TRU from the Walmart and Target toy sections. The true FAO brand died along with Sharper Image and others from the heydays of overpriced products.

So for TRU, the FAO brand can represent a more upscale line that will resonate with some shoppers but stand out to all. Smart move.

Bernice Hurst
Guest
11 years 6 months ago

Brilliant move even if the FAO items in-store are at a low price level. The boutique concept will create interest and footfall, plus, quite possibly, increased sales at both TRU and FAO’s catalogue. Lots of new customers who might never have purchased from either line could be introduced whether for a single purchase or longer term, repeat, visits. I’m heading to Anchorage next week and will be sure to pop in while I’m there. It will be particularly interesting to see what the response is in such a market.

Jeff Hall
Guest
11 years 6 months ago

I have reservations as to the success of this strategy.

FAO is for many an iconic brand, representing a unique and immersive shopping experience. There was something very special about going to one of the large flagship stores while holiday shopping, or finding the perfect gift for a child’s birthday.

My doubts are placed in the belief that in order to execute a successful boutique, TRU will need to devote ample floor space, an interesting diversity in product mix, and expertly execute the merchandising in such fashion as to recreate some of the FAO legacy. If the rendering at all indicates what the boutiques will be like, TRU could end up unintentionally diluting and damaging FAO’s brand equity.

Craig Sundstrom
Guest
11 years 6 months ago

“….affordable FAO Schwarz items ranging in price from $2.99 to $64.99”

$2.99 ?!?! Wasn’t the whole point of FAO – or any aspirational brand – that it WASN’T affordable? Or at least barely so…something you looked forward to and valued when you received it?

I could go on endlessly about how I think this idea is ill-conceived, but I’ll give the censor a break today and just say I don’t think it will work. RIP FAO.

Jerry Gelsomino
Guest
11 years 6 months ago

I don’t mean to offend, but it is like changing the name of Marshall Field’s to Macy’s. It is not the same store anymore. Why would you buy a premium brand if you are going to sell it to the masses?

Shilpa Rao
Guest
11 years 6 months ago

I guess TRU is all geared up to make some huge profits this holiday season. First with pop up holiday express stores and now with FAO Schwarz, they are trying things which they had never tried before–getting where the customers are with holiday express and making a compelling offering to lure them into the store with FAO Schwarz. It will be interesting to watch how TRU fairs this holiday season.

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