January 29, 2008, 12:00 AM

How the web fits into the brand-building strategy of FAO Schwarz

The New York-based retailer, famous for its dazzling Manhattan toy store but still recovering from two bankruptcies in 2002-3, will need a much improved web presence if it is to thrive in the years ahead, CEO Edward Schmults says.

FAO Schwarz has been around for 145 years. But the toy retailer, famous for its dazzling Manhattan store, will need a much improved web presence if it is to thrive in the years ahead, says CEO Edward Schmults.

Schmults outlined his web strategy in a speech to the Shop.org Strategy and Innovation Forum last week in Orlando, FL. It includes using the web to create a community for parents who look to FAO Schwarz as a trusted source for their kids’ toys, online boutiques for key suppliers and enabling international sales.

Whatever the retailer does, Schmults says, must contribute to strengthening the FAO Schwarz brand, which is still recovering from two bankruptcies in 2002-3. Despite the negative publicity generated by the retailer’s financial woes, Schmults says research shows parents consider FAO Schwarz an expert on child development. “That gives us leeway to move into more of a lifestyle brand, and shows trust in us,” Schmults says. “But it’s hard to live up to those expectations.”

One way Schmults hopes to take advantage of that trust is to add social features to the web site, enabling parents to comment on products and share ideas and concerns. Schmults says he has considered community features for kids, including adding a virtual world feature, but is concerned about the potential for abuse by predators. He says he plans to meet with an interactive marketing firm soon to explore adding community features to the site.

He also wants to improve the web experience so that it’s more like the thrilling experiences children can have in an FAO Schwarz store. In the store, for instance, a girl can select the outfit for a Barbie doll, store associates will dress it in the back and send it out on a conveyer belt runway, as the girl’s name flashes in lights. “How do we get that on the web site?” Schmults asks.

Introducing online boutiques that feature a large selection of items from a popular brand, such as crafts products manufacturer Alex, is one of Schmults’ plans for improving the web site. He also plans to add more content this spring providing background on the products FAO Schwarz carries. “We have such an opportunity to write richly about our vendors and why we choose them,” he says. “Parents will respond to that.”

He also plans to enable international shipping this spring, taking advantage of the 25% of traffic to fao.com that comes from abroad.

Everything the retailer does, he says, must reinforce the image of FAO Schwarz as a brand that provides toys that are well designed, original, healthy and fun, Schmults says. That kind of brand image, he says, can help the retailer attain the strong growth he projects for 2009-11 through e-commerce expansion, new retail outlets and licensing opportunities.

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