Macy’s, FAO set exclusive play date

Those who bet that the limited-time FAO Schwarz holiday shop at Macy’s on State Street in Chicago served as the testing ground can cash in soon.

Come fall, Macy’s will house about 200 FAO Schwarz departments that range between 200 and 300 square feet, as well as 75 full-sized shops that span 1,000 and 3,500 square feet. Macy’s customers will also be able to indulge in the toy merchandise via Macy’s Web site.

Each shop will carry an array of FAO Schwarz private label collections, as well as select groups of brands that contribute to the toy store’s success. In addition, Macy’s ensured that the boutiques will appear in stores that already carry children’s clothing, potentially generating more traffic to both departments. “This is an outstanding partnership that will bring toys back to Macy’s in an exciting and unique way,” said Macy’s Inc. president and ceo Terry J. Lundgren.

Partnering with big names is nothing new for Macy’s, which already has exclusive deals with the likes of Martha Stewart and Tommy Hilfiger. The new partnership helps to fill the opening in the retailer’s children’s department and highlights that it is much more than just apparel and home goods. As retailers struggle to draw traffic into stores, offering an exclusive creates a slight panacea in the turbulent economy.

To boot, dabbling in toys opens a Pandora’s box in the sense that Wal-Mart and Toys “R” Us will be facing additional competition that can nibble at its market share. Macy’s already stated that it is planning to expand the store-within-a store concept to 685 by 2010.

Sure, kids put technology-fused toys at the top of their wish lists, but the classic toys known to FAO Schwarz are apt to awaken the traditional and refresh the merchandise offering. After all, FAO does have 146 years of experience under its belt. Macy’s is no novice either, celebrating its 150th birthday this year.

Although FAO Schwarz is in agreement with Macy’s to sell its toys exclusively, the toy retailer will continue to own and operate stand-alone stores like its New York City Fifth Avenue flagship store, its location inside Caesar’s Palace in Las Vegas and its online site www.FAO.com .