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MORE THAN CHILD'S PLAY : DISNEY, WARNER STORES BEAT EXPECTATIONS.

Byline: Dave McNary Daily News Staff Writer

The Disney Stores, now at more than 540 outlets after less than a decade in operation, are proof that there is no such thing as too much Mickey Mouse.

Walt Disney Co.'s most important property remains as attractive in the marketplace in 1996 as he was in 1933 when the first Mickey Mouse watch was sold.

When Disney launched the chain in March 1987 with a small prototype store at the Glendale Galleria, it faced the danger of overexposing Mickey, Minnie and Goofy. The goal was synergy, using the strengths of core theme parks and characters both to promote existing enterprise and move into new areas of business.

It succeeded beyond expectations. At that point, Disney's annual revenues were $2.17 billion. They exceeded $12 billion last year. Sales of consumer products went from $130 million in 1986 to $2.15 billion in a decade.

Disney Stores, which have always used a movie-set motif and large video screen showing an endless loop of characters and theme parks, now operates 139 stores in 10 countries outside the United States. Each outlet is staffed by employees trained to be unfailingly cheerful with a dress-and-appearance code dating back to the 1950s.

About half of each store is devoted to apparel with the rest selling a dizzying variety of merchandise, from mass-market items like Mickey Mouse key chains, knapsacks, toothbrushes and clocks to high-end porcelain figures.

Disney's biggest rival, Time Warner Inc., was so impressed with the stores that it began to imitate the idea in 1991. Now there are 161 Warner Studio Stores, including a nine-floor flagship on Fifth Avenue in New York, with 75,000 square feet, and 23 stores overseas.

Warner recently announced plans to open a store in Times Square as part of leasing the entire 23 stories of the One Times Square building. And it will add 25 stores next year.

The stores are here to stay, analysts say.

``The Disney and Warner chains are like the Coke and Pepsi of the retail business,'' said Frederick Marx, head of retail consultants Marx Layne & Co., of Bloomfield Hills, Mich. ``If you operate a shopping mall, you want these chains.''

Marx said Disney and Warner have managed to keep the merchandise mix constantly updated. ``They stay fresh,'' he said. ``They're just not another store selling athletic shoes or T-shirts. They are constantly reinventing themselves.''

Both operate mostly in shopping malls with sales staffers greeting customers as they walk into stores, but the Warner stores are far more informal. Disney employees, or ``cast members'' as they're called within the company, wear letterman sweaters while Warner's are in T-shirts.

``I find the Disney stores to be very well-mannered and orderly,'' said North Hollywood-based comedy writer and performer Robin Roberts. ``I think the Warner store has more of a sense of humor, like having this huge Daffy Duck at the entrance with a voice trying to sell you a bunch of watches from inside his coat.''

Roberts was particularly impressed on a recent visit with an $8 Wily Coyote and Roadrunner salt-and-pepper shaker, marked down from $15, and the Central Perk coffee mugs and creamers from the TV show ``Friends.''

``Everything is lovely and safe in the Disney store. It's like going to Disneyland,'' she said. ``The Warner store is much more flamboyant and lively.''

Retail analysts say each chain is helping the other succeed by fueling the habit of buying character merchandise. And most of what's offered is exclusive to the chains - about 70 percent for Disney and about 90 percent for Warner.

Store managers for Warner put in 16 weeks of training. When it started the stores, Disney's training course for managers was eight weeks, including two at headquarters. Disney does not disclose the current training schedule.

Mark Kissel, a retail leasing consultant based in Rockville, Md., said the attention to detail pays off. ``I look at the success of the Disney and Warner stores as an extension of the increasing sophistication of brand marketing,'' he said. ``You look at Bugs and Mickey, and those images have remained successful even though they are decades old.

``What we have here is very shrewd marketing plan to keep these characters alive and extending their utility beyond film.''

Neither company breaks out information on the chains in the required financial reporting, but both chains carry solid reputations on Wall Street.

John Eckes, an entertainment industry analyst with Standard & Poor's, said the retail stores give Disney and Time Warner a way to take some of the uncertainty out of the business of family film. ``A movie may or may not do well at the box office, but the stores really expand its revenue potential,'' he said.

Hoarld Vogel, an entertainment industry analyst with Cowan & Co. said Disney's sales from the stores this year might have been slightly hurt by failure of ``The Hunchback of Notre Dame'' to meet expectations at theaters. ``But that's not going to mean much over the long term,'' he added. ``People want to buy Disney products, particularly the `101 Dalmatians' items.''

Vogel said both chains should be able to continue expanding the number of outlets they operate at a 10 percent rate without significant problems. Kissel agreed that both operations can sustain enough consumer interest to keep expanding the chains for many more years.

``Just like adults remember Mickey and Bugs, kids today will remember Pocahontas and Lion King when they're adults,'' Kissel said. ``It's very sophisticated brand marketing.''

For developers, the stores are attractive because of their broad appeal.

``Ann Taylor is a great store, but it does not appeal to 4-year-olds, and it would be hard for me to believe that a child would get excited about going to Borders, for example,'' Kissel said. ``Any concept that can cut across age groups is going to do very well.''

Disney tried six years ago to expand the concept into the fast-food arena and opened two Mickey's Kitchens next to stores before ditching the idea. More successful was the high-end Disney Gallery store that opened two years ago in Santa Ana as the first of about half a dozen now in operation.

Disney is also expanding the concept into cyberspace and recently launched a World Wide Web site for the stores, with more than 250 items available through credit cards. Rebecca Buxton, spokeswoman for Disney Online, said initial response is above predictions but gave no specific figures.

``We are definitely looking for substantial growth in the on-line shopping area,'' she said. ``It could become phenomenal and go through the roof.''

Disney launched its on-line operations a year ago and then started a Web site in February, strictly as a promotional and informational location, with the Disney Stores chain as one of the dozen destinations on the site for several months.

Buxton noted that Disney's decision to move into on-line shopping is coming at a time when U.S. shoppers generally have become familiar with the idea of making a purchase through a personal computer. ``This should be the first real cyber-Christmas,'' she said.

Marx said the decision to sell on the Internet should pay off because Disney has not rushed into it.

``They use a lot of restraint to make sure the quality is there,'' he said. ``There really is a rhythm and a pacing to the business. It's become one of the new megabrands like Nike and Coca Cola.''

Kissel points out that Disney and Warner have conquered two major fears among developers, that a concept might appeal only to a limited age group and that there might be overexposure of cartoon characters.

``It's a delicate line from people feeling amused to where they start to get repulsed by seeing the same character over and over,'' he noted.

According to Kissel, Disney and Warner are actually lucky to have each other, because two concepts competing against each other is healthier long-term than one. ``Both have clarity of marketing and mass-market appeal,'' Kissel said. ``And they're highly sought after by developers.''

DISNEY STORES

Typical greeting: Welcome to the Disney Store, may I help you?

Typical staffing during peak shopping: 10 to 12 employees

Typical size: 4,000 to 6,000 square feet

Current major displays: ``Bad to the Bone'' puppies from 101 Dalmatians; Disney characters in Mickey's Magical Music Shoppe

Most expensive item: $6,800 for a cel of the dwarfs from ``Snow White and the Seven Dwarfs.''

Least expensive item: $2 for a ``Toy Story'' key chain

Well-stocked current item: ``101 Dalmatians'' plush toy puppies, $15 each.

Amount of store devoted to apparel: 50 percent

First store: Glendale Galleria, Glendale, March 1987.

Current number of stores: at least 543, including 139 outside the U.S., plus six Disney Gallery stores

1997 expansion plans: Not available, expected to be at least 50

WARNER STUDIO STORES

Typical greeting: How ya' doing, sir?

Typical staffing during peak shopping: 10 to 12 employees

Typical size: 7,000 to 9,000 square feet

Current displays: 12-foot-high Bugs Bunny; Crawl-through Marvin's Rocket from ``Space Jam,''; talking Daffy Duck selling watches

Most expensive item: $2,250 for Friz Freeling cel drawing of Bugs Bunny playing baseball

Least expensive: $2 Bugs Bunny Halloween candle

Well-stocked current item: Bugs Bunny-Michael Jordan embroidered ``Space Jam'' sweat shirt, $44 each

Amount of store devoted to apparel: 60 percent

First store: Beverly Center, West Hollywood, September 1991

Current number of stores: 161, including 23 overseas

1997 expansion plans: 15 domestic, 10 international

CAPTION(S):

2 Photos, 2 Boxes

Photo: (1--Color) Disney is still going strong at the Glendale Galleria, where its first store opened.

(2--Color) Warner Bros. stores followed Disney to Glendale - and around the world.

Myung J. Chun/Daily News

Box: (1--Color) DISNEY STORES (See text)

(2--Color) WARNER STUDIO STORES (See text)
COPYRIGHT 1996 Daily News
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1996, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

 
Article Details
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Title Annotation:BUSINESS
Publication:Daily News (Los Angeles, CA)
Article Type:Statistical Data Included
Geographic Code:1USA
Date:Dec 1, 1996
Words:1628
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