NRF: Disney Realizes Product Isn’t Everything

Discussion
Jan 14, 2011
Tom Ryan

“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.

His
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.
Gainer. “We’ve
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
guest is.”

What lessons can be gleaned from Disney Stores’ collapse into bankruptcy court? What do you think of Disney Stores’ ongoing reinvention efforts?

Please practice The RetailWire Golden Rule when submitting your comments.

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9 Comments on "NRF: Disney Realizes Product Isn’t Everything"


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Bob Phibbs
Guest
10 years 3 months ago

Disney realizes in a Groupon mentality retail environment where everyone else is concerned with deals, they can get a premium price for a premium experience. Where everyone is screaming mobile, the technology serves the customer, not the other way around.

Steve Montgomery
Guest
10 years 3 months ago

Disney sells dreams to children in its movies and amusement parks. There was a natural disappointment in a child (and thus the parents) going from either of those to a store that just sold merchandise. It appears Disney now understands that for them retail is about the experience as much if not more than the product.

David Dorf
Guest
10 years 3 months ago

I toured the Times Square store. It’s quite unique, well staffed, and has lots of merchandise. Disney knows the importance of the brand and wisely did not allow Disney Stores to die off. Buying the chain back from Children’s Place was a smart move, and their remodeling efforts will pay off. Their switch from product-focus to experience-focus has them going in the right direction.

Liz Crawford
Guest
10 years 3 months ago

Shoppers (and especially children) expect a Disney-branded experience in a Disney-branded environment. To deliver less that that tarnishes the brand.

It is good to see that Disney has a mantra around the guest experience, rather than the product. A Disney store can’t be a warehouse, nor should it be.

Brian Kelly
Guest
10 years 3 months ago
I disagree with the premise, “product isn’t everything.” The failure of Disney stores is directly linked to an increasing devolution of assortment integrity. I think you can trace the demise of Disney at Retail to the collapse of Disney Consumer Products. DCP’s flowering coincided with the renewal of Disney animated features (Beauty & The Beast, The Little Mermaid, The Lion King) which directly fed product development that enjoyed an unprecedented consumer acceptance. At that time, non-Disney retail collaboration was also quite good. The brand presence was ubiquitous at retail. The Disney Stores offered a tier of product not found even in premium levels of distribution. Of course this was at a time when Warner Bros. also launched stores. But WB did not have the legacy brands of the stature of Disney and within a few years lost its way and was shuttered. The first sign of weakness in Disney’s ability to stay abreast of consumer insight was the total miss on Toy Story. Shortly thereafter the caliber of product in the Disney Stores was undermined… Read more »
Gene Detroyer
Guest
10 years 3 months ago

All retailers should read this. Disney has the right idea and is ahead of the curve. Today, with online options, there is little need to go to most stores to purchase anything. Disney has created a reason. Successful brick and mortar stores will become a brand device, not a selling on property device. In the end, “The best 30 minutes of a child’s day” will sell more merchandise online or in-store than a traditional store walk through.

Ed Rosenbaum
Guest
10 years 3 months ago

The Disney name means an experience. Anything less and they have missed the mark. Now this will get them back to the basics. It should prove to have been an important learning experience.

Brian Kelly
Guest
10 years 3 months ago
Like Andy, from the Toy Story movies, our last little retailer headed off to college this fall. Our kids tracked along with the growth and collapse of Disney Consumer Products, the rise and fall of Disney Animation and the acquisition of Pixar. Disney stores 20 years ago were a mecca of retail excellence. Equal parts exceptional in-store experience matched by unique and special product at a fair price. However way more than experience, the failure of the Disney stores was a devolution and cratering of assortment integrity. IMHO There were two reasons for this. 1. The fall off of animation features after the Lion King. These films fed product development at DCP. 2. Disney outsourced the stores to the Children’s Place. Once they abdicated the brand to those who did not own it the assortment became pathetic and no longer set the promise that was naturally to be fulfilled by a visit to the Parks. So be careful. Retail takes balance. Even marketers as shrewd as Disney lose their way. Or as we like to… Read more »
M. Jericho Banks PhD
Guest
M. Jericho Banks PhD
10 years 3 months ago

Thirty-minute babysitting rather than “The best 30 minutes of a child’s day.” Despite descriptions of Disney stores as one commentator’s “quite unique” (there are no degrees or qualifiers of unique–something is either one-of-a-kind or not), they are no better or worse than game arcades or M&M stores to a kid. As our birth rate drops, how long can a kid-based bidness flourish?

This marketing model relies on the silly concept of “quality time” with a child. You cannot manage a child’s memories. Think of your childhood memories. Just a hunch, but they are not always of “quality times.” Time spent trumps quality time. It’s cool to take the kids to exciting places. But what they will remember most is you reading to them from the Narnia Chronicles or The Hobbit as they fall asleep next to you on the couch. And not from a Kindle. From a real book they can read to their children.

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