I’m always intrigued by the application of revolutionary strategy concepts to established businesses and in the past few days, I’ve noticed several provocative reports that dramatize businesses seeking innovative ways – or not – to look at their business. The New York Times on Saturday carried an article about F.A.O. Schwarz & Macy’s that you couldn’t miss if you’ve paid any attention to the always-struggling toy business and the shifting landscape of the venerable department store.
You can dispute the “revolutionary tag”, but I’ve spent some time in the toy industry where the perfect storm of cyclicality, seasonality and trendiness creates a treacherous landscape. Likewise, you’ve probably noticed that the era of department store supremacy is over and with Macy’s taking over most of the department store business across the country, it is still struggling to rediscover the promise of service, variety and price under a single roof. Now we learn that F.A.O. Schwarz is putting toy departments in all 685 Macy’s department stores, the first time in 20 years that Macy’s has carried toys. It’s another exclusive Macy’s arrangement, but it will be interesting to see if F.A.O., which was in bankruptcy as recently as 2003 – and shuttered its landmark downtown SF store – can succeed inside Macy’s, which is struggling itself with same store sales down 2.6% in Q108 vs. last year. This is evolution with a capital “R”!