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Macy's, FAO to Expand Relationship?

We previously blogged about the deal between FAO Schwartz and Macy's to bring a store-within-a-store to the former Marshall Field's flagship on State Street in Chicago. But it turns out this may not be a one-off deal. According to the Chicago Tribune, if the outlet is a success, the chains might expand the relationship to other markets.

"If things go well, we would roll out to other Macy's, first in the northern territory and then maybe broader," said Schmults.

The test comes at a time when Macy's and FAO Schwarz are striving to reinvent themselves. Macy's created a national department store when it bought and converted hundreds of regional department store chains, including Marshall Field's, to Macy's. FAO Schwarz, once a national chain, filed for bankruptcy protection in 2003, then was resurrected under new ownership the following year.

If the experiment works, Macy's and FAO would be reclaiming ground lost to mass-market firms years ago when discounters, including Wal-Mart Stores Inc. and Target Corp., took command of the toy business with wide selections of popular toys at low prices.

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