Macy’s (M) and F.A.O Schwarz have nearly 300 years of retail experience between them, and now these ghosts of Christmas past will join forces to take on the new players who have stolen their market share, such as Wal-Mart (WMT) and Amazon.com (AMZN). FAO hopes to have 275 stores opened within Macy’s stores this fall and over 685 in the next two years.
The timing of the partnership is curious. Do life-sized bears and mini Ferraris sell well in a recession? Regardless, the pair-up may reveal a change in Macy’s’ long-term strategy. Macy’s is a mid-range priced department store and FAO, as personified by its famous Fifth Avenue NY store, is upscale all the way. Does this partnership tell us something about Macy’s future positioning plans? If you can’t beat Wal-Mart, then just don’t compete with them?