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Saks Inc. announced yesterday that it plans to open FAO Schwarz toy boutiques inside a number of its department stores, selling toys, games, books, multimedia products and candy.

Saks is investing in FAO, which is in bankruptcy protection. In return, it will put boutiques in a number of its chains, including Parisian and Carson Pirie Scott. Its flagship Saks Fifth Avenue chain is not included; separate negotiations for that deal are ongoing.
KC's View:
This seems, at least in terms of the marketing synergies, similar to the deals Albertsons struck to open up Toys R Us boutiques inside a number of its stores, and CVS made with KB Toys.

Clearly, at a time when department stores are suffering through economic woes, this is a way for Saks to differentiate itself…and by allying itself with the famous upscale toy store, it creates a value network that should have broad appeal to shoppers.