FAO Schwarz is making a comeback

FAO Schwarz is coming back.The toy store is opening new locations, including a new flagship in New Yo...

Posted: Oct 9, 2018 10:55 PM
Updated: Oct 9, 2018 10:55 PM

FAO Schwarz is coming back.

The toy store is opening new locations, including a new flagship in New York in November.

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New York (State)

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Northeastern United States

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Business, economy and trade

Consumer products

Toys and games

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Toys "R" Us

Retail and wholesale trade

Specialty store

FAO Schwarz was famous for its Fifth Avenue store, where Tom Hanks and Robert Loggia performed "Heart and Soul" and "Chopsticks" on the floor piano in "Big." It closed the Fifth Avenue location in 2015.

Consumer products company ThreeSixty Group, which also owns Sharper Image, acquired FAO from Toys "R" Us in 2016.

Under its new owner, FAO plans to open airport stores, including at New York's LaGuardia Airport, and in Canada. It has also started selling inside Kohl's.

But its new 20,000-square-foot store at 30 Rockefeller Center in midtown Manhattan will be the company's top priority. The Wall Street Journal first reported the plans in August.

The store will be staffed with product demonstrators, magicians, and costumed actors as well as sales clerks, the Journal reported.

"Everything we are doing revolves around 30 Rock...That's the anchor," David Conn, CEO of ThreeSixty Brands, told CNBC on Tuesday.

Bob Phibbs, chief executive of New York-based consultancy the Retail Doctor, believes FAO's plan is flawed.

"Instead of developing a strategy that reaches younger shoppers, FAO Schwarz has chosen to tap into '80s nostalgia by featuring in-store spectacles. It's outdated and doesn't show a fundamental understanding of their customers," he said.

FAO will face tough competition from big retailers that have expanded their toy selections in recent months to fill the void left by Toys "R" Us' bankruptcy.

Target (TGT), which reported double-digit toy sales growth last quarter compared to a year ago, has been buying up extra toys.

"Given the strong affinity between families with young children and our brand, both toys and [baby] are key categories for us," Target CEO Brian Cornell told analysts in August. Toys "R" Us closures created "unique opportunities" to drive traffic and capture market share for Target, he said.

Walmart (WMT) has announced plans to increase its new toy selection in all stores by 30% and expand its website assortment by 40%.

It is bringing hundreds of exclusive brands to aisles and holding in-store toy demos. Walmart is also partnering with Ryan, a first-grade YouTube star, on "Ryan's World" — a line of toys he created.

Amazon (AMZN) is making a heavy push on toys, too.

"Amazon is gearing up to take disproportionate share this holiday season," Jefferies analyst Stephanie Wissink said in a report.

And FAO also isn't the only dead toy store brand attempting to revive itself.

Toys "R" Us said in a court filing last week that it is considering "a new, operating Toys 'R' Us and Babies 'R' Us branding company."

The plan would "create new, domestic, retail operating businesses under the Toys "R" Us and Babies "R" Us names, as well as expand its international presence and further develop its private brands business."

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