The toy store brand FAO Schwarz is back, nationally. In lots of places, including middle-market airports. At airports, the retailer is a licensed boutique for travelers, selling candy and last-minute stuffed animals and assorted toy classics, such as an FAO Schwarz rubber ducky.
One of their newest shops is at Norfolk International Airport’s Concourse B. It is a small FAO Schwarz candy and gift stand run by Hudson Group, a NYSE-traded retailer and affiliate of the Dufry duty-free company of Basel, Switzerland. The mini-FAO basically sells some of the same sort of things that one would sell in an airport shop (gifts for kids, candy). However, it all has an FAO spin, playing off the legendary toy retailer of New York, even with a floor keyboard. This allows it to demand a bit of a margin on things that are mostly low cost.
FAO Schwarz is the nation’s oldest remaining toyseller, founded in 1862. As the FAO Schwarz Toy Bazaar, they were a part of every young American’s trip to New York for over 150 years. The original FAO Was located at Fifth Avenue and 31st Street, eventually moving to 745 Fifth Avenue. The Fifth Avenue location up through the early 1980s had an old school feel; multiple stories, dollhouses, train sets and stuffed animals. Their catalog was a sort of collection of great dreams for kids. If the annual Sears toy catalog was all about mass produced items, the FAO catalog had unique items.
A sidenote: Yours truly had one entirely special Christmas or birthday present from FAO Schwarz in the 1970s. It was a land sailer, literally a seated tri-wheeler cart with a sail. The idea was that it would enable the kid to sail across the driveway. The problem, of course, was that you needed alot of wind to make it work, and so it did not get used. No matter, it was still way cool, and the sort of ambitious toy that made the retail brand special.
In 1963, and after a long ownership by the Schwarz family, the family sold to Parents Magazine. The company had a succession of owners after that. The retailer was reinvented in the 1986, moving to a location on the General Motors Plaza off of Fifth Avenue. The store, more glitzy than the old, gained a new life through its restyling as a sort of toy promotion destination; in came the ever-memorable Barbie shoe water tower (it was a column of water filled with Barbie shoes) and other branded toy displays.
Toys R Us bought the retailer in 2009, and sunk it in only a few years. A retailer that had made it through multiple recessions, the bankruptcy of New York, and the advent of the category killer could not survive the incompetence of greedy private capital.
The New York store closed in 2015 with the bankruptcy of Toys R Us. In 2016, the Irvine, Calif.-based ThreeSixty Group bought and rescued the FAO brand with the assistance of AEA Investors LP. The price was not disclosed. The company, originally known as MerchSource, was founded in Southern California in 1999. Today, ThreeSixty sources and wholesales consumer products across diverse categories under a portfolio of owned and licensed brands.
ThreeSixty restarted the brand carefully, by beginning to sell private label products at department stores, as well as going online, before reopening a New York store at Rockefeller Plaza. They also reached out to the family. In their 2016 notice of the sale, they got a key quote from Eric Schwarz:
“As great-great grandson of the founder of FAO Schwarz I and other family members are proud of the legacy of wonder and play that FAO Schwarz represents. We are excited to support ThreeSixty, the latest steward of the brand, and hope they will build upon and strengthen the FAO Schwarz legacy for this and future generations,” said Eric Schwarz, Chair of the FAO Schwarz Family Foundation and Co-Founder and CEO of College for Social Innovation.
Since that opening, it has created these airport stores in conjunction with Hudson Group. The one at Norfolk International Airport opened this spring. The airports aren’t the only locations. It is wisely partnering with department stores, which often have extra retail space. It announced a new location in Dublin, at Arnotts Department Store. This is a smart idea, as department stores are struggling to fill retail space as sales volume decreases. The problem, however, is that toy departments are more seasonal in nature, and buyers at the few department stores remaining have lost the skill of curating an interesting assortment of toys.
The company also recently licensed the brand for Beijing, a smart move. It is with Kidsland International Holdings Limited, the largest toy retailer and distributor in China. American brands such as FAO have cachet abroad.
The FAO relaunch is a useful take on how to keep a brand alive, even when the underlying company has gone through difficult times. Some thoughts:
- It’s a challenge. When a retail brand disappears, particularly one with a family name connected to it, it is a difficult proposition to keep new. So many retail brands that are well known have disappeared, even when they are well known. Just think of Gimbel’s. So to keep a retail brand around, you need to be creative.
- Don’t Henri Bendel it. The Henri Bendel department store was nearby to the original FAO; it was a small boutique department store. However, it turned into a licensing play, and failed. The reality? A family retail brand cannot survive just being a licensing play. It has to have a store attached that actually sells useful things, not just promotional items.
- You need that flagship store. It is essential to the FAO brand that they have a store in New York City. A store in NY is their identity, and the brand cannot easily thrive elsewhere as the city is such a part of the identity.
- It is smart to license a brand creatively. This sort of promotion does nothing to detract from the original identity. Because it is well done, it only makes you wish for the real thing, aka a visit to the bigger store.
- Keep ties with the family. The company has kept ties with the original Schwarz family and quoted one the family in their relaunch press release. Whenever a new person acquires a brand with a family name connected to it, having a person in the family as part of the promotion can help to make the brand “real” again. With the Schwarz family, they are enormously well known and respected, and have been over the years.
- Connect the foundation to the brand: The family run FAO Schwarz foundation provides fellowships to recent college graduates and helps keep the name alive. The foundation was established in 1990 by descendants of the original Frederick Schwarz. So many dead retailers have foundations connected to them.