FAO Schwarz in Store for Chicago Macy’s

Although FAO Schwarz closed most of its stores a few years ago, the upscale toy merchant is easing back into retail. FAO is partnering with Macy’s to open a store-within-a-store in the retailer’s downtown Chicago location.

FAO’s 5,200-sq.-ft shop, scheduled to open Nov. 1, will be located in the children’s department; Macy’s is also giving FAO Schwarz two windows on the main floor. The Macy’s location will give shoppers “a taste of FAO,” says the toy marketer’s CEO Ed Schmults.

After the holiday season, FAO’s Macy’s store-within-a store will shrink to 3,500 sq. ft. from January through October. FAO operates two of its own considerably larger stores: its 60,000 sq.-ft. store in New York, and a Las Vegas location that measures 50,000 sq.-ft.

There is an opportunity roll the concept to other Macy’s stores, according to Schmults, who did not rule out Macy’s flagship Herald Square location. “If they came to me and wanted me to run their toy department, they’d have my attention,” he notes.

To generate traffic for the new shop, both Macy’s and FAO Schwarz are mailing postcards, not catalogs, to their respective customer files. FAO also plans to trumpet its arrival jointly with Macy’s by covering Chicago buses, kiosks, and billboards with ads launching Nov. 1.

Battered by price competition, FAO filed for Chapter 11 bankruptcy protection in 2003 before it was bought by its current owner, private equity player D.E. & Shaw Co. The deal is a win-win, Schmults says, as FAO Schwarz needed to expand without taking on hefty real estate costs, and Macy’s needed to attract shoppers into the State Street store.

As in its New York store, FAO’s Macy’s shop will include large plush stuffed animals, a Lee Middleton baby doll “nursery,” and plenty of hands-on toy demonstrations. And during the Christmas season, the line to see Macys’ Santa Claus will conveniently wind through FAO Schwarz’s shop.

One thing that will not be in the Chicago location is the 22-ft. floor piano popularized by Tom Hanks and Robert Loggia in the movie Big. The piano is a wonderful presence, Schmults says, “but square footage is tight, and it doesn’t directly correlate to sales.”