FAO Schwarz's Ed Schmults talks shop
By Brent Felgner -- Gifts and Dec, 2/1/2006 6:00:00 AM
Finding the groove
For better or worse, FAO Schwarz' reputation is that it's an expensive place to shop. But that’s not so, insists CEO Ed Schmults, pointing to an $8 keychain as an offset to the store's $50,000 Ferrari ride-on.
"I don't want to be known as an expensive place to shop. I want to be known as an extraordinary place to shop," he offered. "Managing those customer expectations from expensive to extraordinary is something I want to do very quickly, but carefully."
What's the problem? Schmults notes that from a branding perspective, expensive tends to be exclusive, unique and luxury oriented—all good things, by themselves. But in the competitive toy industry, expensive carries a highly negative connotation, though it might not for a store like Bergdorf Goodman across the street.
"I can't have this be a museum," he explained. "I hear parents say to their kids, 'Don't touch anything.' It's a toy store! Touch everything! I want kids to touch stuff. Everything, that is, except a $95,000 antique toy—but everything else is OK. Adults and children need to be involved with the store," Schmults said.
"Breaking down the 'expensive' and moving into 'exclusive-extraordinary' is something we need to do in terms of the mix of product. How we position ourselves and get the message across through the catalog and Web site will get people feeling comfortable with FAO Schwarz."
It's the imponderables
What does Ed Schmults worry about? Plenty, although he doesn't seem to be losing much sleep over his concerns. Instead, his worries so far appear to be routed to resolve.
The new FAO Schwarz CEO doesn't lack confidence in his plans to turn the retailer toward the future. It's the seemingly infinite number of imponderables that nag at him.
"I'm worried about the toy business in general. It's such a fiercely competitive, highly changeable, fluid environment—from the manufacturers we're dealing with to the attention spans of 7-year-old children, which change with incredible swiftness. There are few discernible patterns and, as a global brand, we just magnify that situation.”
"The industry always yearns for one hot toy, but I don't like the [idea] of a hot toy. If there's one hot toy, you sell one toy."
"The market is segmenting into ever fine groupings. I worry about the dynamics of this business. I need many strong suppliers. I need product trends coming and going in a regular fashion. I'm not talking 'predictable,' but the industry now seems so scattered and so dominated by three or four big brands and three or four big retailers that I think a lot of the personality that built this business in the first place is fading … I view that as an opportunity."
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