HK-listed Toy Retailer Brings FAO Schwarz to China

Chairman and CEO of Kidsland Lee Ching Yiu at the opening of FAO Schwarz in Beijing

One of the world’s oldest toy companies, FAO Schwarz, has opened its first store in China, bringing the Manhattan icon to a country better known for being a toy exporter.

Kidsland International Holdings Limited, which has a market capitalisation of HK$268 million, opened FAO Schwarz’s flagship store in Beijing on May 25th, according to an announcement by the company this week.

The Hong Kong-listed toy retailer adds FAO Schwarz to its roster of international brands in a bid to boost profits after recording a net loss of HKD$100 million last year.

“The introduction of FAO into China reflects our confidence in the potential of the Chinese economy and market development,” said Lee Ching Yiu, chairman and chief executive officer of Kidsland.

The Hong Kong retailer’s alliance with the American toy giant, which hit the Hollywood big-time in 1988 when it appeared in Tom Hanks’ Big, continues a trend of partnerships between Kidsland and international toy brands that includes Denmark’s Lego.

Doors Open on FAO Schwarz’s Flagship store in Asia

Marching soldiers welcome customers at FAO Schwarz’s flagship toy emporium in Beijing

The 30,000 square foot Beijing store, FAO Schwarz’s first in Asia, is located at China World Mall in the shopping and lifestyle district of Chaoyang, where it will keep company with other luxury brands including Louis Vuitton, Prada and Burberry.

“We believe there is strong demand for quality toys among families and young people, so this is an important advantage for Kidsland to provide quality experiential retailing there,” said Lee.

The Beijing flagship store, which features a replica of the giant floor piano seen in the film Big, will be followed by several medium-sized stores in the mainland over the next two years, according to the company.

Toy Soldiers on the March in Guomao

FAO Schwarz, known for its interactive venues, offers customers of at the Beijing outlet the full toy adventure guided by a dedicated “user experience” team accounting for 20 percent of the store’s total staff.

Actors dressed as soldiers from Grimm’s fairy tales march in and out of the store welcoming customers, and in a playful twist on Apple’s Genius Bar, FAO Schwarz inaugural Asia outlet includes professional play advisors who assist their youthful clientele with the proper implementation of the latest in plush and plastic.

A special welcoming ceremony awaits VIP customers, and the Hong Kong toy retailer hopes that a hall-of-fame style display of famous and limited edition toys from around the world will make the Beijing store a mecca for toy enthusiasts.

Kidsland Driving Forwards Despite Last Year’s Stumble

The move continues Kidsland’s strategy of partnering with international toy brands entering the China market”, adding to alliances already formed with Crayola and Tomy, among others, according to the toy retailer’s announcement.

Customers experiencing the dance-on floor piano made famous in the Tom Hanks film ‘Big’

Last year the company opened seven Lego stores in the mainland and one in Hong Kong, helping to grow the company’s revenue by 5 percent from HK$1.9 billion to HK$2 billion, despite recording an overall net loss of over HK$100 million.

Lee said the challenging year was due to a weakening economic environment in China, price competition, and rising operating costs.

The Hong Kong toy retailer’s FAO Schwarz outpost is the latest addition to its portfolio of 257 independent stores and 519 consignment counters in 44 cities that including Lego stores, the baby toy store Kidsland, and infant products outlet Babyland.

Although consumer retail spending has slowed, a recent JLL report projects that children’s retail will remain popular as consumers prioritise lifestyle spending.

“Under the current economic climate, demand for experience-related offerings is expected to see increased stability as consumers prioritise spending on retail offerings that directly impact their quality of life,” said Zoe Yang, head of retail leasing for tenant representation at JLL in Beijing.

Prime retail space in the capital saw rental growth of 0.4 percent in the first three months of this year, with the overall core vacancy rate dropping to a historic low of 2.8 percent, according to research by JLL.