FAO Schwarz is Playing for Keeps
FAO Schwarz CEO Edward Schmults spoke at the Direct Marketing Association’s Catalog on the Road Day in Cambridge, MA on Tuesday. Anyone who showed up expecting fun and games was likely disappointed.
Like most U.S. businesses, the toy retailer is facing tough times. They’ve reduced catalog page counts and cut back on their prospect mailings dramatically. Overall circulation has been scaled way back, and FAO is opting instead for an increased e-mail marketing program.
The company also reassessed all expenditures down to the paperclip level, renegotiating things that at one time would have been unimaginable. Schmults said FAO even got its lawyers to agree to a lower hourly rate.
“That’s a sign of the apocalypse, I’m sure,” he said.
FAO, which has filed for bankruptcy twice in the last decade, has a big perception hurdle to jump with consumers, who view the store as pricey. And that was true in the 1990s, said Schmults, when FAO typically sold products at full retail price that shoppers could find discounted in Toys R’ Us or Wal-Mart .
He noted that one item FAO stocked then was a $50,000 toy sports car. Visitors to the NYC flagship store loved having their photo taken with their store. Of course, they’d take that picture home and show it to friends, who would then associate FAO with outrageously priced items the typical parent couldn’t afford.
Today, while the company still does offer high end items
