Borders Group will help select, manage and provide the inventory for the books, music and video departments of all FAO Inc. stores—which includes FAO Schwarz, Zany Brainy, and the Right Start stores—under a new, nonbinding agreement between the two retail companies. The agreement also calls for Borders to experiment with offering toys and educational products from FAO in its stores beginning this fall.
The initiatives are the first ones planned as part of a new collaboration between the two retail giants signaled by a letter of intent signed by Borders and FAO last week. "It signifies that we'll be thinking of ways that the two companies can work together," said Borders spokesperson Anne Roman. "The customer base similarities here make us attractive collaborators and hopefully in the end customers will benefit from having the thinking of both companies."
Books currently make up about 10% of FAO's sales, a percentage that is not expected to change with Borders's involvement, said FAO spokesperson Renee Hollinger. She said the company was looking to improve its selection of children's books, music and movies through Borders's expertise. FAO emerged from bankruptcy in May and has since been working to rebuild its inventory and restore normal working relationships with its suppliers.
Many details of the arrangement have not yet been determined, including whether Borders will have a branded presence inside FAO's stores or play a strictly behind-the-scenes role. Likewise, Roman said it's unclear whether Borders will brand the toys and educational products it stocks from FAO with that company's name. Borders's experiment with stocking FAO products will start on a very small scale, with up to 25 superstores and 12 Waldenbooks carrying them this fall. Still to be decided—how many products to stock, and whether they will be clustered in one place or dispersed throughout the store. With music sales sagging, Borders might find it more profitable to clear out some CDs. But, said Roman, "I think it would be too early to predict that this product would be displacing something else."
