Retail partnerships are most successful when they give shoppers a reason to visit a physical store instead of simply ordering online. That’s exactly what Nordstrom is hoping to accomplish through its newly announced partnership with FAO Schwarz, one of the most recognizable names in the toy industry.
The collaboration goes far beyond adding another toy brand to Nordstrom’s shelves. It combines experiential retail, exclusive merchandise, and one of the most iconic names in American retail to create destinations that encourage families to spend more time—and money—in stores.
FAO Schwarz is one of the oldest toy retailers in the United States, founded in 1862 by Frederick August Otto Schwarz. The brand became famous for turning toy shopping into an experience rather than just a transaction. Many people recognize the giant dance-on piano featured in the movie Big, along with the toy soldiers, oversized stuffed animals, and interactive demonstrations that have become synonymous with the brand. Even after ownership changes and store closures over the years, FAO Schwarz has remained a symbol of premium toys and nostalgic retail experiences.
Under the new partnership, FAO Schwarz has opened a second New York City location inside Nordstrom’s flagship store—the first time in more than a century that the company has expanded to another New York location. Beyond the flagship, Nordstrom plans to bring FAO Schwarz products to all of its stores later this year while also expanding the assortment on its website. Selected stores will feature “The Jewel Box,” a store-within-a-store concept complete with live toy demonstrations, storytelling experiences, and interactive stations where customers can personalize products and participate in hands-on activities.
From a merchandising perspective, this move makes a great deal of sense. Department stores have struggled for years against online retailers that compete primarily on convenience and price. Nordstrom isn’t trying to win by offering the cheapest toys. Instead, it’s giving shoppers something Amazon can’t easily replicate: memorable in-store experiences that encourage families to browse, interact, and stay longer. Longer visits often translate into additional purchases across multiple departments, whether that’s apparel, shoes, beauty products, or home goods.
The partnership also benefits FAO Schwarz. Rather than investing heavily in opening dozens of standalone stores, the company gains access to Nordstrom’s nationwide footprint and customer base. Millions of shoppers who may not have visited a dedicated FAO Schwarz location will now encounter the brand while shopping for clothing, gifts, or cosmetics. This dramatically increases the brand’s visibility while reducing the costs associated with large-scale retail expansion.
Competitors are likely paying close attention. Department stores such as Macy’s, Bloomingdale’s, and Dillard’s have all invested in experiential shopping in various ways, but this partnership gives Nordstrom a differentiated attraction within the premium toy category. During the holiday season especially, families may choose Nordstrom specifically because it offers an experience that extends beyond traditional shopping.
Specialty toy retailers could also feel some pressure. While this partnership won’t replace dedicated toy stores, it gives Nordstrom a stronger position in the premium gifting market. Parents and grandparents looking for unique gifts may appreciate being able to shop for clothing, beauty products, and premium toys all in one trip.
Perhaps the biggest takeaway is that experiential retail continues to prove its value. As online shopping becomes increasingly efficient, physical stores must offer something that websites cannot. Interactive displays, personalization, demonstrations, and memorable moments create emotional connections that encourage repeat visits and strengthen brand loyalty.
Nordstrom’s partnership with FAO Schwarz isn’t simply about selling more toys. It’s about transforming shopping into entertainment once again. If successful, it could become another example of how traditional retailers can remain relevant by focusing on experiences instead of competing solely on price.
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