UF 12/8/97
Boy & girl looking at profusion of toys at F.A.O. Schwartz store. Photograph by Arthur Gerlach

FAO Schwarz closes: Read Fortune’s 1940 story about its rise

Jul 15, 2015

F.A.O. Schwarz, the iconic toy store on Manhattan’s Fifth Avenue, will close its doors on Wednesday, felled by high rents in a prime shopping district and competition from online retailers. The last remaining store of a retailer that at its peak had 40 locations, F.A.O. Schwarz was as important on any tourist’s itinerary as nearby Tiffany & Co or Bergdorf Goodman. Throughout the decades, it drew kids wanting to see everything from a sporty 1930s car with a trailer dragging a panda to the g iant illuminated keyboard that Tom Hanks and Robert Loggia danced on in the 1988 movie “Big." To read how much of a trailblazer F.A.O. Schwarz used to be, read this classic Fortune story from 1940.

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F.A.O. Schwarz: The Toyshop

Look up and eastward from the old streets of downtown New York, look over the crimson banners of the auction houses on University Place, and you will see an ancient wall of brick jutting into the sky, throwing its shadow upon the roofs and chimney pots of Union Square. If the sun is bright or the neon lights in full flush, you can read on that expanse of grimy brick a faded legend: "F. A. O. Schwarz—Toys of All Kinds." Painted in plain, white letters, the words create a nostalgic stir in the beholder, especially if he is a New Yorker who can recall grandfatherly tales of horses whinnying at stable doors in Washington Square, of grooms shouting in cobbled byways, and country carts bumping along with loads of aromatic hay. It is, indeed, an old, old sign, thickly brushed in the times when Santa Claus sometimes had an "e" at the end of his honored name.

Now that space upon the high wall has small value. Indeed, it has so little, despite a metropolis hungering for room to cry its wares, that in the sixty years since the painters stood back to cock an eye at their finished job, nobody has come along to hire the space and thus blot out the antique legend. There's a Childs restaurant on the ground floor, where once the toy bazaar's windows sent a tinsel glitter out over the Christmas snow; and the rooms above, where the eyes of dolls stared unblinking among the treasures of German toytowns, stand empty.

Ride fifty blocks uptown, and you will see that name set up again, neat and bright, in inch-high block letters of wood that occupy a one-foot length of the most valuable space on earth: a Fifth Avenue show window. The letters, gleaming white and blue amid the sawdust of a rodeo exhibit (with rocking horses at a hand gallop), repeat the name "F. A. O. Schwarz" and nothing more, nothing about toys. It's no longer necessary for the Schwarz store to shout. This low Whisper will serve. Everybody knows it is the chief toy emporium of the world, unique because it is the biggest store that sells nothing but toys. Even a King (Prajadhipok that was—of Siam that was) could have told you, happen you met him in the palmy days of Bangkok, that Schwarz's was the best place to buy toys; for it was there he bought his music boxes and little lambs that hummed the Barcarole. "He was so polite-the King was. 'Wouldn't let me lift the packages. Took them up in his own little hands. In his own little hands."

Not so long ago space of the kind occupied by those tiny letters rented at nearly $2,000 a front foot. Even now, when the rentals of 1929 are only a memory to most landlords, the price would be big enough to make grandfather bat an eye. Thus it is plain that to bring that toy-store name to the corner of Fifty-eighth Street and Fifth Avenue was costly and daring. The cost is easily appreciated; the daring is not. This store did not follow others. It led the way, a wise bellwether, ringing melodiously a toy bell. That first big sign was painted only ten years after Tiffany hung up his shingle in Union Square; the tiny letters were set in the Fifth Avenue window ten years before Tiffany opened its new store a block down the street.

Walk through F. A. O. Schwarz's door (preferably with a youngster's hand clutching yours) and, when the Avenue's unquiet has waned into a proper hush, you should understand why the toyshop has held the New Yorker's affection for these generations. If the hand that holds yours is the hand of a sailor to be, you may feel its grip grow suddenly tighter, because, just inside the door, is a $200 sailboat, red hulled and white sailed, all ready for the launching. Or a sporty one-cylinder automobile with a trailer in which a plump panda, awake for once in his sleepy life, sits with an expectant stare. There are Teddy bears, too, but the first-floor theme is the doll: dolls dancing a minuet in Martha Washington gowns, dolls flirting behind a Cádiz fan, or singing lullabies in sweet, tiny voices, or even blowing soap bubbles.

Such affairs, however, are for girls and sissies, not for sailors and flyers; so you are tugged quickly toward the curved flight of stairs because the noises that come down there are irresistible. A locomotive hoots in the thrilling key of the Santa Fe Chief an airplane motor sputters to the warm-up point. And your companion, being able to hear unheard music, listens to drums rolling and red-coated buglers sounding "Boots and saddles!" to an old-fashioned squadron. Books, horses, games, houses, and King Arthur tents-all these and hundreds of other playthings fill the floor that runs back over a hundred feet and turns into fascinating corners that hold rows of bicycles in stands and electric automobiles and ornamented saddles, flung on the rail fence of a swell log cabin. It seems a sort of child's heaven, baffling to report, so the best thing is to look again at the frontispiece, which shows two kids already there. Not that the picture is half the show, or even a tenth. There are thousands of other toys, including some never seen before and others that have been unwavering favorites ever since F. A. O. began his business, since the time when Thomas Edison might have been seen in the old store, carefully deliberating between one doll and another or smiling at the grimace of jack-in-the-box.

When the U.S. had few toys

The history of the house of Schwarz says that the first man of the American family, having settled at Baltimore in the 1850'S, sold toys and fancy goods in a store owned by a certain Schwerdtmann, one among tens of thousands of Germans who came to that city in the three decades before the Civil War. This Schwarz was named Henry, a native of Herford, Westphalia, where his father had been a goldsmith and had once done himself the honor of making a gold bathtub for Jerome Bonaparte, then kinging it a bit in those parts. The U.S. at that time had few toys. True, some Yankees had been making drums. Others had cast model toys in iron, and there were homemade dolls for sale here and there. Perhaps Henry sold some in their store. It isn't known whether the toys they handled were domestic manufactures or imported goods. That the shop did not at first become exclusively a toy store is shown by the story that, in the midst of the Civil War, when the mayor of Baltimore urged every citizen to show his true colors, the store did a rushing business in Union flags.

It wasn't a long time until Henry's letters home had caused the emigration of his brothers, Gustave and Frederick August Otto; and they were followed by their younger brother, Richard. All of them served their apprenticeships in the Baltimore store. In 1870 Frederick decided to strike out on his own and opened his first small store in New York on Broadway at Ninth Street. The painters for that beautiful big sign off Union Square weren't actually on the job until 1880. Only Henry, the eldest brother, remained in Baltimore. At about the time F. A. O. came to New York, Gustave opened his own store in Philadelphia, and Richard also set up in business in Chicago. He later moved to Boston.

Early years under F.A.O.

You can tell that the brothers were good businessmen when you learn that they at once skillfully co-ordinated their buying and thus gained so much influence abroad that they were soon able to contract with certain toymakers for their whole output. Other American buyers often hurried into the German towns with money and orders only to find that a Schwarz (one or the other) had been there beforehand. Such foresight often gave the brothers the exclusive rights in the U.S. for new merchandise, a great advantage because, then as now, purchasers of toys liked uncommon and rare things. Good prices were paid in New York for music boxes made in Switzerland, where the craft still remains a family skill: and the family's agents in Paris kept a firm hand on that city's specialty of complex mechanical toys. Once in London, where the brothers regularly visited their agent, one of them came upon the wooden perambulator, and he sent a large order of them to the U.S. This was the first appearance of modern baby carriages in New York, and the brothers were for many years the largest sellers of them.

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These years were comfortable ones. F. A. O. had his own business. There was no partnership with his brothers-only vigorous, intelligent co-operation. When the Christmas season was over, they may have compared notes, but the fact that Lingersin the family memory is not an exchange of figures or sales records, but the telegram that one brother would send to the other after the bustle: "The battle is won." F. A. O. sailed to the Leipzig Fair every spring to make his purchases for the coming holidays. He visited all the toymakers of France and England and became a familiar figure in such toy centers as Nuremberg, where the old German life, painstaking and pious and frugal, went smoothly on. He had few rivals in New York. The one who survives in memory is another Schwarz, a terrifying upstart in Brooklyn, whose presence and name became known only when unhappy customers brought their complaints to the Schwarz. They say that this conflict provided the first legal case of a lawyer who later became well known, and that, when F. A. O. retained him to exorcise the devil, the youngster jumped to it, wrote a thumping letter to F. A. O. in which the destruction of the rival was planned—and then mailed the letter to the wrong Schwarz!

A son, Henry F. Schwarz, entered the business and became a partner while it was on the Square. When it moved to West Twenty-third Street, he began to assume more of his father's burdens. The store maintained its comfortable pace. The stories of that time are all in the easygoing category. Miss Jenny and Miss Sarah grew old behind their counters. The dames of the first families passed on, but the new generations had been well instructed as to where they should buy their toys. The names on the. charge books never grew less, either in number or quality. The ladies in the workroom made huge Jack Horner pies, full of gifts under the paper crust. At Easter time they fixed baskets to hold flowers and toy rabbits. They took eggs of papier-mâché, trimmed them in pretty colors, and then filled them with presents. One story tells of a public dinner in honor of Richard Mansfield, who was playing Cyrano. The committee asked Mr. Schwarz to have a doll made in the semblance of the actor. Two of the salesladies went to a matinee, made sketches and notes, and thus fashioned a doll. Mr. Mansfield was pleased, especially by the nose.

The century turned. F. A. O. was now approaching his middle sixties. His business was well established and earning close to $100,000 a year. He was happy in his success, but it is easy to tell, from the stories of him, that he liked the old times best, would rather see a carriage with a smart pair than any number of the new auto-wagons. Once, when he was meticulously scrutinizing a shipment from Germany and attaching his usual notes to the samples, he suddenly reached down and picked up a spring-wound automobile, sent as a hopeful sample. At the wheel a goggled and dustered driver sat, desperately bent over, desperately staring ahead. F. A. O. fussed over it, not greatly pleased. At last his unfailing good humor came to his aid, and he wrote out the note to be attached: "Automobile with crazy racer."

Click to enlarge. Photographs by Arthur Gerlach

There were "cat torpedoes" in those days, little detonating bombs that were made, according to a catalogue, "especially to interrupt the duets of Thomas and Maria." In 1906 the U.S. consul at Augsburg reported that 9,895 tons of toys had been shipped to this country before September 1. A little later the Billiken doll, which had a Teddybear body and a gargoyle head, was sold by the millions, and F. A. O. learned a little more about the strange fancies of children. All the counters and warehouses were emptied in 1910, a good one for toy stores. In that year the store moved to Fifth Avenue and Thirty-first Street. Soon after the new doors opened, F. A. O. died, leaving the store to his family.

The value of exclusiveness

Really, so far as the success of the store is concerned, the story might conceivably end right here. The work had been done. F. A. O. had made the name a byword for exclusiveness, quality, and dependability. Thus you hear these two phrases about him among the oldsters: "He always tried to get what was good and exclusive," and: "They always believed Schwarz." The listing of an item in his catalogue was a boon to a manufacturer. Other stores would order at once. And the manufacturers—those abroad as well as those at home—were always eager to have his verdict before they began production. When he said: "This is good. What can you do for me?" the toymakers always knew what he meant. It wasn't a cut in price but an increase—an increase required because he wanted the toy improved for his customers.

Hitherto, the business had not faced the special peril of importers: war. The British blockade in World War I became almost wholly effective at once, although a small number of toys came through the Netherlands for a while. The imports had represented about 75 per cent 0 Schwarz's sales. These were now cut off and the American toy industry was not equipped to imitate them. The Schwarz individuality, based on the ability to get exclusive merchandise, was endangered. The dolls of Sonneberg and Coburg had to be replaced; also the toys of Nuremberg and the ornaments of Lauscha—those bright stars and colored balls the carriage trade treasured from generation to generation. Of course there was a whispering campaign, too. Just as today, when it suits some fancies to circulate the absurdity that Hitler's picture is on the wall of the store office, so there were then equally fantastic rumors. Even among those who did not believe the stories there were some persons who did not want to patronize a store that was known for its large importations of German goods. As a result, thousands of charge customers closed their accounts.

There was nothing to do about the Whispering campaign, except to hope for the War's end and that with it the foolish stories would be forgotten and good toys and good business would return. But the son, Henry, who was the head of the business then, saw that even when the War ended things would never be quite the same and that it would be essential to develop, through American manufacturers, merchandise that would be of the standard and exclusive quality on which the store's reputation was based. That is what ultimately happened. But when the blockade was finally lifted, the ships brought a large accumulation of toys from the Dutch warehouses; and although some of the stock had been damaged by careless storage, much was in good shape and brought high profits.

The big department stores by this time were buying abroad and at home with vigor and skill, yet they were no handier than the newest recruit to the Schwarz staff, Charles Stroebel, born and bred in Nuremberg, who, in the trade's opinion, knows as much about toys as any man going. He and Mr. Schwarz went to Germany together on buying trips, but the store carried more and more American goods and their quality improved under the protection of a 70 per cent tariff. There were Kiddie Kars, tricycles, automobiles, composition dolls, excellent games, and iron toys. Lionel had already made the first trolley cars; then it put a lot of money into dies and machinery, perfected an electric railway, and by 1927 was doing a business of $1 million a year, with Schwarz as its biggest retail account.

Mr. Henry Schwarz died in 1925 and his place was taken by Theodore Baettenhausen, who retired five years later. In addition to Mr. Stroebel, Mr. Schwarz had also taken into the business a young man named Philip Kirkham, who was the husband of Mrs. Schwarz's niece. Aided by another F. A. O. Schwarz, young grandson of the founder and a lawyer, these men carried on a prosperous business until once more the same old pressure that had forced the previous removals exerted itself again. In 1931, shortly after Mr. Baettenhausen's retirement, the store moved up to Fifty-eighth Street.

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The store today

That this change to the spacious floors and curving stairs at Fifty-eighth Street was an excellent stroke of judgment is shown by a glance at the sales volume for the years just previous to the move and the years after. In 1928 the store had the largest sales of its history, over $1,200,000, and 1929 was almost as good. But in 1930 came a sharp drop of about 30 per cent. The next year, first in the new store, although business conditions were much worse, brought sales almost as high as the 1930 figure. New low figures were touched in 1932 and 1933 when sales went just under $700,000, but in 1934 there came a good recovery, though they lost money for the fourth consecutive year. Soon sales passed the million mark again, and there they stay. The best opinion in the Schwarz office is that, had they remained at the old place, the sales would have gone much lower and stayed low, and that eventually it would have been impossible to carry on the business in the old way.

During the last ten years the percentage of imports in the store's stock has been even less than it was in the 1920's. In 1938, the last typical year, imports represented only about 25 per cent of sales. There were two chief reasons: the foreign product, particularly with the tariff, was now more expensive and did not appeal to customers who were watching their pennies; and the American toymakers had improved their products and, in some categories, excelled the imported articles. Early in 1939 F. A. O. Schwarz decided not to buy any more German toys. Today over 95 per cent of its merchandise is made in the U.S. Music boxes still come from Switzerland and the British send over toy soldiers and planes, even barrage balloons. Fifty-seven cases, including a lot of fine woolen animals, recently arrived from England in one day.

Rhine wine doesn't flow in appreciable quantity at 200 Fifth Avenue, the toymakers' wholesale center, and the only violin music is the crickety strain of a toy fiddle. Yet it is there that the industry, which now directly employs 40,000 people to make toys worth at retail about $240 million a year, maintains its headquarters. And it is here that Buyer Stroebel, with an understandable sigh for the pleasant towns and the music of the ancient inns, must now go to find most of his new items and to replenish the stock of 12,000 items that the store carries. For Mr. Stroebel is an indefatigable buyer, always ready to see salesmen, always combing the "market" to fill in all the many categories that go to make up a toy store: dolls (stuffed) and dolls (hard); kindergarten toys; wheel goods; push and pull toys: science toys. Altogether he buys from 750 different "manufacturers," some of them one-man or one-woman enterprises.

The store's own manufactures account for about 5 per cent of the volume. These items are chiefly playhouses, dollhouses, and toy garages. Schwarz scored a notable victory this year when it added to its list the magnetic doll, invented by Mrs. Alice Crawford of New York, who put a small magnet into a doll's palm, thus causing metal-bound objects, such as a bouquet of paper flowers, to stick to the hand. The doll manufacturers rejected the innovation. Mr. Stroebel approved of it, and the store's production department perfected the device so that the magnet is now imbedded in the doll's palm and is nicely painted over. The store bought standard dolls and altered them. The demand by other stores was so large that Schwarz made an arrangement permitting the manufacturers to produce the doll for sale in other cities. Though the manufacturers couldn't see it at first, the magnetic doll plainly had what the trade fondly refers to as "play value" in the jargon that it has picked up from the child psychologists who have had so much to say in recent years about "educational toys" and the important function of the right plaything; At the height of the fever the Schwarz store went so far out of its accustomed paths as to hire a woman psychologist. Educational toys can be found, along with everything else, at F. A. O. Schwarz, though they fill Charles Stroebel with no great enthusiasm. But he can point to the magnetic doll as one of many evidences that he can spot "play value" with all the clear, unaffected insight of a six-year-old.

In this and other ways Schwarz continually tries to make its merchandise better than that in the department stores, or at least tries to make it different. It will pay a dollmaker a higher price for a standard doll if he will agree, for instance, to put it into a new box, add an undershirt to the wardrobe and an extra pair of shoes. Such buying tends to lift the prices to Schwarz, but this increase is not so great as it might be if the store didn't have something to offer in return, such as cash on the barrelhead and large orders early in the season. Thus, Mr. Stroebel, having asked for certain improvements in a doll, may give an order for thirty-six dozen in April, which is in sharp contrast to an order for three dozen hastily sent in during October or later. Of course, it follows that, having bought an individual doll; the store can charge a good price for it, with no competition to worry about.

There is not, however, in all of this domestic business the profit margin that the store made with German toys. Once it sold the old-fashioned German rocking horse, made with real calfskin, for $50 to $100, and there was a skin-covered horse with cabriolet that sold for $200. In the old days, too, there were music boxes, fitted into cabinets of inlaid woods, that sold for $200. The best music box now in the store, one with eight tunes, sells for $35. You can find a gilded cage from France with two bright-colored birds that sing prettily and flirt their tails. This will cost $95; and if you have a canary that won't trill, these toys will teach him a useful lesson. However, the great bulk of sales since 1930 has been in toys of more moderate prices. The average transaction was about $11 in the boom days; in 1930 it fell to $8; and last year it was about $5.50. (The average in department stores was under $2.) It was obvious that the number of sales would have to be increased; so F. A. O. Schwarz set out to obtain a far greater number of customers. The store accepted the challenge of the department stores on prices and exerted all its skill in buying. The result: 1939 showed a 70 per cent increase over the number of sales in 1930.

A store that sells nothing but toys has to make a better than average gross margin in order to sustain the expenses of a slack season and of the sudden expansion at Christmas time. Department stores do well to nuke an average gross margin of 40 per cent. The usual trade discount on standard items is 40 to 45 per cent. F. A. O. Schwarz, however, manages to maintain a margin that is much nearer 50 per cent. It is remarkable that this margin is achieved despite the reduction in the more profitable imports. Back in 1933, when the store was still importing a good proportion of its toys, the margin was 47.5 per cent. It rose to nearly 50 per cent by 1937; and last year, with imports all but eliminated, it was still nearly 49 per cent. Today sharp and skillful buying of domestic manufactures must play the essential part in Schwarz's economy, the part that imports once played. To accomplish this, Mr. Stroebel must persuade manufacturers to produce for him nonstandard items on which there is no standard price, no basis for comparison by customers in the mood for shopping. It is enough to say that he does so well that the margin on such items is enough to make up for all the standard and competitive items that must be carried at the ordinary 40 to 45 per cent margin. However, the trend toward lower-priced items and the increased overhead have reduced the net profit from the 10 per cent of the good old days to about 5 per cent, which has been earned for the last five years.

Next to the tremendous power of the store's reputation and its Fifth Avenue site, the most important factors counteracting the partial loss of the old exclusiveness are the selling force and a catalogue of proved potency. There is a normal staff of twenty-five men and women selling on the two floors. Several of them have been employed for fifteen years, five or six are veterans of twenty years' service or more. There is a dearth of blondes, a complete absence of the bright-young-thing type. They are never required to "run a book," as most department store sellers are. They are free to sell in any part of the store, which makes things easier for the customer and promotes a personal relationship between the clerk and the customer. Except for a discreet understanding that dresses are not to be too bright, there are no rules to govern them, and especially there are no pep talks and orders to put pressure on wavering customers. Each one, upon entering the employ, receives a few mild hints as to the store's traditions. Somehow or other they are brought to understand that they are not to give noticeable recognition to public figures who may come into the store. Henry Ford and Wallace Beery are often there, buying with deliberation, but there is no flutter. Even at Christmas time, when the sales staff is increased to 100, business goes smoothly because many of the extra hands are former employees, chiefly women who left to be married.

The regular stock numbers 12,000 items, of which 1,100 are listed in the Christmas catalogue published at an annual cost of S15,000. There are smaller spring and Easter editions. Many a darling sentence may be found in the descriptions, especially in the literature of Dv-dee, the doll that wets its bed if encouraged 'by the introduction of water. "Not much need be said about Dy-dee. Most children know her well, that she drinks from a nursing bottle and needs the intimate care a child will give her, adding much to the joy of playing with her." The list includes items that, like Dy-dee, can be bought in other stores, but the items are generally restricted to objects that Schwarz controls and to good sellers. An item that goes well in one year will be published until its sales wane. Staple items, such as roller skates, are left out on the theory that nobody is likely to send far from home for such an article.

The catalogue is sent out to 50,000 customers and to some thousands of others who have asked for it or have signed their names in the visitors' register, which lies suggestively open near the first-floor elevators. An average of fifteen new names is entered every day and the addresses are in all the states, Hawaii, Africa, and South America. Fifty-five per cent of the store's annual business is done in the items listed in the catalogue whether ordered by mail or in person. Mail-order business alone accounts for 15 per cent of the annual volume. A breakdown of the 1939 catalogue reveals that 1,101 separate items are listed and that 42,290 of them were sold for a total of $133,108.

The success of the catalogue, especially when the store did away with an old rule that restricted distribution to customers whose purchases were at least $25 a year, led to the establishment of several branch stores.* It seemed that if mere sketches of toys worked so well, then a showing of the merchandise itself would have even better results. The first branch was opened in Southampton, Long Island, in 1933; later it had to be closed because the improvement of the highways to New York made it easy for the customers to come to the main store. Meanwhile, the store had written to the customers in Massachusetts and asked if a branch was needed, and on what street in Boston it should be. Newbury Street was most frequently suggested and there the shop was opened. It has been expanded four times. A similar success was made with a store at Ardmore, Pennsylvania. Smaller stores were also established at Miami Beach and Palm Beach, open during the winter season. During the summer there is a store at Hyannis. These branch stores now do 15 per cent of the annual business. And last month a branch was opened in White Plains to serve New York's Westchester County.

The management regards the problem of selling as a simple one in comparison to the complexity of stock control and shipping. These jobs cause no difficulty during the first ten months of the year. The Easter business, 10 per cent of the annual volume, can be handled by the normal staff, but in November and December, when 60 per cent of the business is done, the tasks of showing goods and shipping them are hard ones. F. A. O. Schwarz sells more on some days between December 5 and December 15 than it does in the entire month of January or February or July or August. The daily volume often passes the $30,000 mark. Once it passed the $35,000 mark. When you consider the toyshop's special need of space and free aisles and, in addition, consider the special character of Schwarz's customers, you can appreciate what the managers mean by saying: "You can't understand our business until you've seen it in December."

In the old days a solution was painfully achieved by working to exhaustion, working on Sundays and until every midnight, and then dragging back to the shipping room early in the morning. The goods were jammed into vast storerooms under and above the selling floors. Orders for thousands of items came flowing upstairs all day and until late at night, causing inevitable confusion.

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Once the store was set up at its present address, the management had to find a handy warehouse elsewhere. For the first time in the history of the store the selling floors and the warehouse space were separated-by five long blocks. The store now has two floors in the Goodyear building, each measuring about 17,000 square feet. In September another floor is added. All three floors are packed to the ceilings with the Christmas merchandise. The inspection takes place during the autumn and the repacking is also started then. Each item has a serial number and each category is kept in numbered aisles. By this system an order from the selling floor for an item marked “21-40” can be readily found in the fortieth tier of aisle No. 21. Thus, instead of looking madly about for "1 Gene Autry Holster and Gun Set," the shipping clerks have only to find “21-40” and put a shipping label on it. Over a hundred packers are at work in the few weeks before Christmas.

Since so many of the customers carry their purchases with them from the store, it is necessary to keep trucks running constantly between the warehouse and the store in the busy season. The danger of overselling a particular item is now avoided by a close watch on the stock at the warehouse. If, as often happens, a heavy run starts on a certain item, a warning is telephoned from the store to the warehouse. And before the demand can exhaust the supply, the warehouse foreman, in turn, notifies the store. The demand for the article is then stopped by a very simple device: the article is taken off the floor so that late shoppers cannot sec it. Usually the orders taper off and there is enough of the item left to fill any orders that might be belatedly made by a student of the catalogue.

War and peace and Schwarz

Toys being an imitation of life, it follows that a toy store is also such an imitation. Wc have seen that in the silent decades before 'World War I, F. A. O. Schwarz's store reflected, in the liveliest manner, the life of the German toy towns. It was a reflection that revealed not only the craftsmanship and honor and happiness of an important social being, the Schwarzwald peasant, but, even more important, it reflected a frugal economy that permitted F. A. O. and his brothers to slap down a bundle of dollars and thus make sure of their chief commodity in the New World: exclusiveness. It was nothing then (so it seems) for F. A. O. to greet the artisans of a triumphant town—triumphant because they had invented a toy or novel doll—and, long before any other importer could hear the news, make a deal whereby Schwarz alone could put the treasure in his window.

Schwarz's store, now more than ever, imitates the life of the U.S. It strives, through timely show windows, to catch an eye already influenced by some public event—a holiday, a ballet. It maintains its position and its exclusiveness by the skill of its own merchandising; and, as we have seen, the management's foresight led to vigorous development of a new prestige among American toymakers that has taken the place of the founder's prestige in Europe. To this creation of a new individuality must be added the powerful influences of its location, which is the essence of exclusiveness; for the people who shop at Bergdorf Goodman's and at Tiffany's, or take tea at the Plaza, go to Schwarz's because of its atmosphere and convenience. They are not the sort who will travel ten blocks to match prices on a sailboat or a doll. The possibility of a peace in Europe, with a consequent resumption of German toy exports, is of little significance to the future of the store. Its management believes that the old days will never return, that present conditions will be kept unchanged. The industry, too, believes that the store is bound to find continued good fortune.

* The stores founded by the other brothers had closed before and during the World War.

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