NRF: Disney Realizes Product Isn’t Everything
“Retail is a daunting undertaking, even for a media giant
with $36 billion in annual revenue,” said Stephen Finney, SVP, global
retail operations, Disney Store, at a Super Session at the NRF convention.
The company found out first-hand watching Disney Stores languish for years
only to wind up in bankruptcy court in 2008.
One of the lessons Disney learned
was that product isn’t everything. While Mr. Finney contends Disney consumer
products are by far the most successful licensing business worldwide — whether
measuring market share, ROI, or product-development programs — a strategy
of simply sticking product in stores failed.
“The rationale had to be deeper for that purpose,” said Mr. Finney.
presentation covered the ongoing reinvention of Disney Stores into “imagination
parks” driven by RFID, iPod touch and other hyper-interactive technologies
and theatrical touches. Traffic at the first 19 stores renovated last year
are running 20 percent higher than un-renovated stores and other performance
metrics (customer satisfaction, conversion, margin, etc.) have all notably
improved. Another 25 will feature the remodel in 2011.
Other lessons learned:
The Experience: Embracing a mantra, “Best
30 minutes of a child’s day,” a team of 220 worked two years on bringing
the “Magic” of
its theme parks to retail. Among the “hero fixtures” are a station
where kids can assemble cars from the Disney-Pixar “Cars” movie,
a Magic Mirror in which girls can summon their favorite princess with a wand,
and Magical Trees programmable with changing colors and images. In a RetailWire interview,
Paul Gainer, VP, GM Disney Store, N.A., said, “We realized we needed to
make personalized experiences for children.”
Telling Stories: Although the high-tech features are the
buzz, the shift to merchandising stores by “stories” around characters
or theme rather than category (t-shirts, toys, etc.) was equally important.
“If a little girl wants to see all the Cinderella merchandise, it’s all
merchandised together. Toy Story 3 product is all together,” said Mr.
created new neighborhoods in the store design to really bring that story telling
out through the merchandising.”
The Need for Reinvestment: At the time of its bankruptcy,
Disney Stores hadn’t seen any significant investment in twenty years, said
Mr. Finney. Employing some self-deprecation, Mr. Finney said the stores resembled
him. If they had aged gracefully, the stores would have resembled Richard Gere
but ideally should resemble Jordin Sparks or Justin Bieber, he said.
Overexpansion Perils: With over 600 stores at its peak, Disney
currently has 370 stores worldwide but only plans modest growth going forward.
Said Mr. Gainer, “Our store count is at 220 stores in North America and
we really want to stay in that store count range because we feel we can deliver
on the quality of the experience with a focus on premier retail locations across
North America. … It’s very much a specialty store model.”
Service Counts: Employee manuals and training methods were
overhauled. A new POS system from Oracle has quickened checkout and includes
the capacity for mobile checkouts.
Despite the costs, the stores are projected
to be profitable based on “very
good” results so far, according to Mr. Gainer.
Mr. Gainer’s advice to other
retailers: “Think outside of the box but
have a vision in mind. We’ve used that vision statement: ‘The best 30 minutes
of a child’s day’ in all of our filters — product, store design, cast members,
guest service, etc. It’s about having a vision statement and knowing who your
What lessons can be gleaned from Disney Stores’ collapse into bankruptcy court? What do you think of Disney Stores’ ongoing reinvention efforts?