1) FAO Schwarz will make its comeback in Rockefeller Center as toy retailers scrape up Toys R Us’ debris.

What happened

  • FAO Schwarz closed its Manhattan flagship back in 2015. This November, it’s returning with a 20,000 square foot location in Rockefeller Center, as well as a smaller storefront in LaGuardia airport and one in China that’s set to open in 2019. Instead of only sales associates, the Rockefeller store is holding retail staff auditions for what it’s calling “product demonstrators”—magicians and character actors who will bring the store to life.

Why it matters

  • FAO Schwarz’s revamp has been in the works since ThreeSixty Group Inc. acquired the company from Toys R Us in October 2016, well before it filed for bankruptcy last September. But the legacy toy retailer’s new location is about much more than simply filling in the void that Toys R Us left—it’s about making FAO Schwarz an emblem of future toy retail. Though the infamous giant piano will play a major role at the new store, the “sense of theater” described by ThreeSixty Brands aims to instill something new that ideally will suspend visitors’ disbelief, reinstating some magic into brick-and-mortar toy shopping.
  • This thinking needs to remain at the forefront of FAO Schwarz’s retail strategy in order for the company to survive long term. It’s easy to forget that Toys R Us’ Times Square flagship used to boast a ferris wheel—clearly merging retail and entertainment at a single store doesn’t necessarily shield a company from financial meltdown. FAO Schwarz’s return is also inextricably linked to how it balances—and highlights—its legacy as the oldest toy store in the U.S. with a quickly changing market. It will have to face the other retailers vying for Toys R Us’ leftovers: Walmart, which will sell 30% more toys in stores this holiday season (40% more online); Party City, which will launch 50 Toy City stores next to its Halloween pop-ups this fall as it begins to circulate toys in its permanent inventory; and Amazon, which is handing out holiday toy catalogs at Whole Foods and sending them to Prime members’ homes.

2) Hims wants to take on Hers, but risks overvaluation like other digitally-native predecessors.

What happened

  • Hims, a direct-to-consumer startup for men’s health and wellness that sells items for hair loss, erectile dysfunction and skincare, first launched in November 2017. Though it just closed a $50 million round in June, the company is now attempting to raise an additional $100 million in order to address the women’s market. The fundraise would value the company at $800 million.

Why it matters

  • Since Hims went live, CEO Andrew Dudum has said he wants to create a $10 billion brand. The company claims to have made $1 million in revenue in its first week, amounting to $20 to $40 million in annualized revenue. There’s nothing wrong with adding women’s products to the docket, but such fast fundraising—especially as health-oriented, digitally-native startups continue to crowd the market—raises questions about how sustainable a path Hims is creating for itself.
  • The company cites Roman as its biggest men’s products competitor, but it’s also up against businesses like Dollar Shave Club, which continues to expand to new verticals. On the women’s side, Dudum wants to compete with Glossier (one of the most valuable companies in Forerunner’s portfolio, which also invested in Hims) and Ritual, a vitamins startup, selling SKUs for hair loss and skin, as well as apparel and vitamins. However, it’s unclear how Hims—and its potential “Hers” brand—stands out, especially given its product overlap with other direct-to-consumer brands. While there’s an obvious value proposition in Hims’ ability to sell products online that male customers may not be comfortable purchasing in person, Dollar Shave Club is also developing products to combat hair loss.
  • Hims also has a lot in common with Harry’s, a company known for its shaving products and its massive fundraising, which ended up valuing the company at a whopping $475 million, forcing it to become a platform and holding company for other digitally-native brands in order to satisfy investors—a dubious plan in and of itself. Similarly, Honest Company’s excessive valuation deprived it of an acquisition by Unilever, which turned to competitor Seventh Generation instead—a company that grew much more sustainably, both in terms of valuation and SKUs, thereby preserving its optionality. As Hims beelines for more investment, it would do best to consider lessons from these other brands to avoid a similar fate.

3) Zalando, a German ecommerce company, is building a brand with a streetwear-oriented music festival.

What happened

  • Zalando, the German fashion ecommerce company likened to Amazon and Farfetch, first took over the former trade show Bread & Butter in June 2015. Today, Bread & Butter is a three-day long, consumer-facing festival in Berlin aimed at streetwear aficionados.
  • Catering to more than 30,000 guests, the 2018 festival will feature more than 40 pop-up shops, seven music stages headlined by artists like Princess Nokia and Stefflon Don, food courts, a pool, and talks on everything from sustainability to voguing. The event also includes 100 exclusive product drops and pre-launches from brands like Nike and 032c.

Why it matters

  • Zalando went into the festival industry in order to imbue life and emotion into a transactional and faceless company. In examining various segments of its customer base, the company found that fans of streetwear were digitally prolific, but wanted a way to engage with others offline. This led to Bread & Butter as it exists today, which provides a space to connect on music, art and culture with exclusive, one-time only and on-demand experiences that consumers won’t want to miss—a constructive combination of retail and entertainment.
  • The ecommerce company is also creating an “online shopping hub” for Bread & Butter that will live on its platform year-round, giving the festival a digital home and extending its life cycle beyond the three days. Providing Bread & Butter attendees a dedicated page on Zalando’s site starts to corral the demographic beyond the festival, and in the future, the company could morph it into a community where streetwear fans can network and leave feedback. Turning itself from a faceless retailer into a cultural touchstone and true brand that consumers can live and experience both online and offline will defend Zalando against other mass retailers and put it eons ahead of ecommerce platforms like Amazon, which lacks a cohesive story or identity, standing only for convenience and fast shipping.

4) Tiffany & Co. banks on its Fifth Avenue flagship, but will have to balance its legacy with the future of jewelry retail for long-term survival.

What happened

  • Tiffany has recently made a few strides in order to stay top-of-mind to consumers and expand its customer base. It launched the Blue Box Cafe in fall 2017, whose 40 seats can conjure waitlists upward of 1,000, and debuted a jewelry collection called Paper Flowers in May 2018 to cater to a younger demographic. It also has ramped up ecommerce, selling on Tmall via Alibaba, Net-a-porter.com, Farfetch.com and its own site. Now the company is announcing it will invest at least $250 million into its 78-year-old flagship store on Fifth Avenue—the same one featured in the iconic scene in “Breakfast at Tiffany’s.”

Why it matters

  • More than 90% of Tiffany & Co.’s revenue still stems from its 320 brick-and-mortar stores—a key factor in renovating the flagship location, which accounts for 10% of the company’s annual net sales. Though it has already commissioned A$AP Ferg and Elle Fanning to remix “Moon River,” a theme in “Breakfast at Tiffany’s,” it’s the in-store changes as opposed to the marketing of the flagship that will determine how Tiffany fares in the long run. Playing into its 181-year-old legacy and cinematic touchstones is part of the battle, but addressing what shopping trends and consumer interests will look like ten to 20 years down the line will determine the success of the renovation, much in the same vein as FAO Schwarz.
  • Brick-and-mortar gives Tiffany’s an indisputable advantage when it comes to sales—so far Tiffany’s CEO Alessandro Bogliolo says he’s pulling ideas from theaters and airports for lessons on how to move throngs of people through small patches of real estate—he doesn’t want customers to have to wait in line to try on jewelry. Pulling from other industries—especially those that focus on the experiential such as theme parks and sports venues—could help Tiffany & Co. innovate for the next era.