The New World of Toys: An Experience Economy

December 3, 2018

 

With the Holidays just around the corner, one of the world’s oldest and most iconic toy brands, FAO Schwarz, is reopening doors in New York City and, for the first time in decades, will not have major competitor Toys R Us nipping at their nose. FAO Schwarz is undertaking a massive global expansion for the holiday season just months after Toys R Us filed for bankruptcy and liquidated hundreds of stores across the U.S.

 

In 2015, FAO Schwarz fell victim to rising rents and heightened competition from online retailers, closing their famous location on Fifth Avenue. The brand will triumphantly return to New York on November 16 by opening a flagship store at 30 Rockefeller Plaza and opening permanent stores in Canada and China, as well as pop-up shops in Spain, Australia, and London for the 2018 holiday season. Each will be modeled after the new 30 Rockefeller store, maintaining a consistent narrative throughout the stores.

 

FAO Schwarz reenters the market in strong financial position. While many may think online retailers are what killed Toys R Us, it was in truth billions of dollars in debt that led to the company’s demise. Crippling debt

kept the company from making the necessary investments in stores where shopping became an unpleasant experience for customers.

 

Shoppers are once again drawn to the enticing yet comfortable experience that FAO Schwarz delivers. More than toys alone, they offer a journey through childhood and a place where everyone can stop and play. With the opening of a slew of new stores, the company returns to its core values, once again bringing your innocent dreams alive. A trip to FAO Schwarz is a waltz down the “Big” piano keys and a grand magic show.

 

For consumers, a visit to FAO Schwarz is a memorable experience, possessing the anticipation and excitement of a special occasion. This is the “why” of their story and what makes the 150 year old brand recognizable thought the world. This timeless story evokes the emotion that makes FAO Schwarz come to life for their audience.

 

Toy line Mattel, a major player in Toys R Us product offerings over the years, is renewing their story in another way. The bankruptcy of Toys R Us dented Mattel’s gross sales by 10 percent in the second quarter this year. The company is launching a revitalization of their brand by announcing a new division, Mattel Films. The creator of Barbie, American Girl, and Hot Wheels has suffered slowing sales in the last few years with the rising popularity of video games and electronics.

 

Mattel is seeking new ways to boost sales and reach their consumers. Hasbro, Mattel’s rival, has excelled in converting their toys into successful television shows, online videos, and movies. Hasbro’s "Transformers" films have grossed more than $4.37 billion at the international box office alone for the company. Currently, the brand focuses on the product, not the emotion behind it, but this new division can help the brand refocus their story.

 

This is an enormous opportunity and has the potential to bring children from the screen back to Mattel’s toys.

Walmart is also offering a new in-store experience to customers. The brand revealed that they will offer customers a wider selection at “America’s Best Toy Shop” this holiday season. The toy store will be in- store and online and include thousands of new and exclusive toy items from influencers, all at their iconic low prices points.

 

Walmart is just one of many retail giants trying to master the “new norm” of experiential shopping. Brand representatives say there will be ongoing demonstrations of new toys and that 30 percent of their toys in stores will be new. Walmart will also be making a big online push with 40 percent more toys online.

 

This change in the Walmart shopping experience is a direct result of changing consumer habits. E-commerce sales are ever-growing, but consumers have shown they are willing to trek to a store for an experience.

Today, customers want to be catered to and accepted. Customers are more likely to shop and even pay a higher price if they are able to identify with the brand because emotions are more compelling than logic. This is why it is important to curate and invest in your brand’s story.

 

Good brand stories are memorable because they resonate with our emotions and are about more than the product alone. FAO Schwarz, Mattel, and Walmart are all adapting to the new norm of retail in different ways and modifying their brand stories to do the same.

 

FAO Schwarz wants you to “Return to Wonder.” Calling on your emotions, not on reason. Consumers buy the more expensive toys at FAO Schwarz because they are buying into the very excitement that Frederick August Otto Schwarz created in 1862 within his toy store. This place of wonder has survived because it has not veered from its brand identity and calls on adults and children alike to enjoy themselves.

 

E-commerce is ever growing and will continue to expand, but this does not mean retail giants will die. On the contrary, they will nimbly adapt and with hope, flourish.

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