FAO Schwarz's Toytown Tryouts

The world famous toy seller wants to bring back the magic by tapping into the creativity of everyday people

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To get there, one took the subway from Queens. Another drove from upstate. A third flew in from Mexico. But at 10 a.m. on Mar. 9, all three took a plastic seat on the second floor of the Fifth Avenue FAO Schwarz. It was their chance to pitch an idea to the toy store's new chief executive, Ed Schmults, and its president and chief merchandising officer, David Niggli.

In one chair sat the inventor of Snarly Sally, a doll and the star of two published books, who doesn't like to have her hair combed. Sitting next to her was the creator of a strategy board game called STICK2IT that has been played by as few as two people and as many as 94 at a time (and it floats).

Across from them sat a computer programmer who had used his knowledge of math to create a pyramid appearing to contain stars shining into never-ending space. By day's end, 22 inventors had demonstrated more than 50 unique ideas. "Even if they don't succeed with my presentation, this has been so dynamic and exciting," said Alan Hewson, inventor of the Infinariam pyramid.


  Jonathan Klip, the first to present, had traveled from Mexico City for his five-minute presentation. A manufacturer of wooden hangers for adults, Klip had struck on his idea while looking for a way to expand his business. After unloading a series of colored boxes onto a table in front of the two executives, he opened them up to pull out a series of wooden hangers in just the right sizes for kids' clothing, painted in bright colors, stamped with butterflies and frogs.

As Schmults tested the clips and pulled at the mini hangers, he peppered Klip with questions about the type of wood (pine), whether it had been responsibly forested (yes), if it would warp (no), and the paint (non-toxic). The executives liked the idea that the hangers could be monogrammed.

Soon Klip was packed up and out the door, and Madison (Conn.) native Diana Schoenbrun was gently pulling out of bags a pair of the stuffed animals she designs and makes by hand out of recycled material, beads -- and a vivid imagination. Her sharp-clawed, dinosaurish armadillo wore a cape. Her penguin's feet were decorated with red beading, his rounded head topped with black fringe.

Soon after, a couple who work at the Bureau of Engraving in Washington, D.C., Cheryl and Greg Clark, were displaying their homemade card game and backpacks all about spiders.


  For inventors like Barbara Briggs Ward, the mother of Snarly Sally, who first made up the adventurous character in a desperate bid to lure her now 31-year-old daughter into brushing her hair, it's a shot at getting a 25-year labor of love onto the shelves of the world's most important toy store.

For the managers of FAO, it's a chance to spot a few unique toys that can remind shoppers of what makes the store special.

"I don't see a lot of creativity, a lot of new designs from many toy companies," says Schmults who became CEO in late September. "As a company whose lifeblood is introducing unique products, I think this is a fabulous way to get that quirky, special item."


  Like all toy retailers, FAO hasn't had much fun over the past few years. Big toy makers like Mattel (MAT) and Hasbro (HAS) are focusing more and more attention on their biggest customers: Wal-Mart (WMT), Target (TGT), and Toys 'R' Us. Some, including FAO, tried to cope by merging. But by 2003, FAO, by then aligned with Zany Brainy and The Right Start, had declared bankruptcy.

Today, FAO is in private hands again and operating on a much more modest scale. It has only two stores, in New York and Las Vegas. Schmults, a former executive of outdoor clothier Patagonia and online retailer Red Envelope, says he has been surprised at how little risk-taking there is in the toy business. To regain the special sparkle that FAO once had, he's focusing on products with an interesting story behind them, made of recycled or environmentally friendly materials, and that last for years.

So FAO is casting a wide net. Buyers go to toy fairs in the U.S. and Germany, gift shows, even kids' apparel shows. Last year, the store started the auditions to tap another vein. Several of the products made it into the holiday catalog, including a sled made in Vermont and a digital interactive picture frame for infants.


  A board game called Lawsuit! sold out a couple of times. Creator Tina Eskreis Nelson had first made the game as a Father's Day present for her husband. Both are lawyers, and Nelson saw it as a way to teach their children, then 2, 4, and 5 years old, about what they did all day. She started with three pieces of cardboard, Velcro, and blank business cards, eventually designing a game where players proceed through law school, run a practice, and try amusing, family-friendly lawsuits.

Draw an "Appeal" card and you may find the Court of Appeals has ordered a new trial -- and this time your client got an additional $2,500. Pick one from the "Lawsuit" pile and you may find your client's trade secrets on how to make a book out of candy have been divulged.

Her kids loved it, their friends loved it, and soon Nelson had hired a graphic designer and illustrator to design a real board, and had a batch manufactured in China.

Now that it's in wide release, Nelson has taken her children's pictures off the money, but otherwise the game is largely the same. She heard about the FAO auditions from the mother of one of her children's friends, also an inventor. The only hitch was figuring out how to obtain a bar code, a process that took most of the summer. "It's great to watch people play the game," says Nelson, who is in the process of designing a new version aimed at law students.


  Nelson's story makes it look easy, but the game category is a tough one to break into. It's dominated by classics like Monopoly and Clue, and without a TV advertising budget, it's hard to get the point of the game across. But FAO merchandising chief Niggli says a strong box design helped Lawsuit! -- and the fact that so many New Yorkers are attorneys themselves.

Will this year's crop of hopefuls spring another Lawsuit!? Even a hit like that has only a limited impact. Nelson has sold a couple of hundred games total. That's a lot for her, but FAO would need a lot of such small surprises to make a significant impact on the bottom line.

Still, there's a brand-building value to these products, what Niggli calls "the magic dust that makes FAO special." With technology, it's also now possible to do smaller scale innovation at a profitable price. "The rise of the Internet has added to the increased importance of design," he says. "I can be a designer in a small town in New Hampshire and access a logistics consultant in Ohio, a manufacturer in Taiwan, and marketing and advertising in New York. I can put together a whole supply chain on the Internet"


  The business model is not built on selling lots of a few big hits, but on selling a few of a series of memorable ones. "A great toy," says Niggli, "is a toy that gets played with, a toy your child goes back to again and again."

For him, way back when, that toy was Captain Action, an action figure that could change into Batman, Superman, or any other super hero. "Twenty years from now those are the ones we will still be talking about."

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