Torching A Brand: FAO Schwarz Case Study

Several months ago, a LinkedIn.com member posited the question to a group of professional marketers: "In one sentence, what's the definition of marketing?". 600+ respondents proffered their opinions; more than 500 failed to stay within the one-sentence guideline. Our answer was "Marketing is about connecting the tag line to the bottom line.."

You ask, "What does that have to do with the title to this posting?"...
If there was ever a case study in how to torch an iconic brand, it might very well be found in the corporate marketing files of the those that have steered FAO Schwarz brand over the past five years.

With silver spoon in mouth, I was an FAO customer throughout my less-than-impoverished youth. After all, FAO was the uber-luxe destination for 2-12 yr olds for two generations. Growing from a single venue in New York, to multiple stores throughout the country, FAO did what many other retailers did during the go-go days...they tried to introduce their brand to the masses.

Then came the new normal economy, and the concept of $1000 life-sized teddy bears and $2000 dinosaur-sized toy pianos became less than normal, and FAO Schwarz was sent into the critical care unit.

First, management tried exporting the brand to other countries, then, after being acquired by private equity firm DE Shaw--a group that caters to the ultra high-net-worth investor and institutional portfolio managers, it closed down stores that were bleeding, including the Las Vegas venue,  until there was only the NYC flagship. Then they closed that store and reopened it 4 months later after extensive 'renovations'.

In May 2009,after the Toy Czars at "ToysRUS" acquired the brand in bankruptcy,  the marketing gurus at ToysRUS are now introducing FAO 'pop-up stores' within the four walls of a retail chain that is targeted to the masses.

I'm sorry--marketing geniuses need to understand that in order to survive, certain brands must maintain limited elasticity. This means they should not be and cannot be 'expanded.'. By doing so, you completely dilute the heritage and exclusive nature of the brand itself.

Sure, many retail "experts" dream about having more stores than McDonald's, but the fact is, its not the size, its the motion that maintains the profit/revenue momentum.

I'm a fan of pop-up stores, but why didn't anyone pursue a deal with the people at Neiman Marcus, or Bloomingdale's, and open FAO pop-up stores in those, up-scale venues?--as opposed to denigrating the brand with an effort to insert this icon within the equivalent of a Sear's store. (No disrespect to ToysRUS, but let's face it, your appeal is to the masses, and you consider WalMart a competitive threat)

The methodology of KISS (Keep It Simple Stupid) applies to every business model. Growing revenue is a great goal, but this writer suggests that too much of anything is no good, and too many don't realize that growth isn't the end all and be all; maintaining profitability and hence, brand value is what its all about.