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Naming and branding: FAO Schwarz
desperately seeking Santa.

A strong brand loses its way in the jungles of the toy business.

NEW YORK, Dec. 20, 2003. This could be the last Christmas for FAO Schwarz unless the desperate retailer locates a really big St. Bernard stuffed with money--and remembers where it put its corporate soul. Opened in 1870 by Frederick August Otto Schwarz, a German immigrant, the store was filled with music boxes from Switzerland, mechanical toys from Paris and teddy bears from Germany. Mr. Schwarz also had exclusive arrangements with many U.S. toy manufacturers. So the positioning of the store was to offer toys and a toy-buying experience that people couldn't find anywhere else.

Mr. Schwarz would turn over in his grave if he could see the corporate branding nightmare on Fifth Avenue. Around the corner from a few exclusive items like a 1,748 piece Star Wars Lego set ($220) and a $1,475 precision model steam engine, you'll find Hot Wheels and Crayola, Fisher Price and Micro Machines, along with videos of Scooby Doo, Barney and the Lion King. In the candy section, Reese's Pieces, Tootsie Rolls and Snickers bars have taken the place of all the wonderful, exclusive goodies of yesteryear.

Many customers are in tears. They have been coming to FAO Schwarz for as long as they can remember. That's the brand they're looking for. And they have no idea why it's turning into a Target or a Toys R Us. The Schwarz family sold the company in the 1960's to Parents Magazine, and it has changed hands half a dozen times since then. As recently as the 1980's, the store held onto its brand image by refusing to sell Cabbage Patch dolls because they could be bought anywhere.

In 1987, Altman & Manley, an earlier incarnation of A Hundred Monkeys, produced the FAO Schwarz catalog, which offered a branding experience worthy of the "ultimate toy store" -- a junior-sized Ferrari Testarossa for $14,500, an African safari adventure ($50,000), and the Birthday Party of a Lifetime (only $18,000). Presents like this don't even exist in the wildest fantasies of Wal-Mart executives.

With a succession of investors playing in the company candy store, FAO Schwarz succeeded in growing the business and almost running a strong brand into the ground. Would a branding consultant have kept them on the right path? Who knows? But with all this misguided marketing, the brand still evokes wonderful memories for millions of people who were touched by the experience and remember what it stands for.