Disney is creating a coast-to-coast retail sequel stretching from Southern California to Times Square.
This story first appeared in the January 6, 2010 issue of WWD. Subscribe Today.
The Burbank, Calif.-based company is taking an interactive theme park-style approach to revamping its retail profile, and this year will open 20 doors featuring a new store design.
Although details are under wraps, the tech-heavy retail concept will have elements reminiscent of Disney’s original Anaheim, Calif., theme park, and is designed as an interactive experience to lure young fans.
About 340 stores, a combination of existing locations and new leases, will be launched in the next five years. An undisclosed Southern California space will be the first to bow, and renovations will begin soon on an estimated 25,000-square-foot space at 1540 Broadway, between 45th and 46th Streets, in Times Square. Disney’s first Times Square store closed in 2000.
The new concept will feature an assortment of Disney products; interactive displays for children using Disney characters and themes (a “magic mirror” is one such element); theme park-style attractions like a “princess castle” in the store, and a children’s theater with customized viewing material, such as movie clips from Disney’s recent releases.
“The thought is to use technology to create an immersive experience, to do something completely different,” said Shawn Turner, a spokeswoman for Disney Stores North America. “Tech plays a big part in people’s lives today, but we will still be true to what Disney is, incorporating storytelling and have part of the theme park experience.”
The Times Square store will be the last of the 20 units to unveil the concept this year.
“We are being very aggressive with the launch in trying to turn out something new and fresh to reinvigorate our retail business,” Turner said. “In order to do that, you have to offer the consumer something that is unique and very different, especially in this market. That’s where our focus is right now.”
The ambitious build-outs — an estimated $1 million for the larger flagships, on average — indicate Apple founder Steve Jobs’ influence on Disney since the studio acquired Pixar in 2006 and Jobs became a Disney board member. It took almost two years to plan and execute the new retail concept, including the construction of a prototype store — fully functional and stocked — in a Glendale, Calif., warehouse.
Analysts said technology alone wouldn’t drive merchandise sales.
“If you look at most of the studios, with varying degrees of sophistication, they try to be tech agnostic; I think the winning strategy for these guys is to focus on the content,” said Matthew Harrigan, a senior analyst with Wunderlich Securities Inc. “The immersive experience is a big draw, but whether it will translate to merchandise sales that can offset the costs will be hard to say.”
Disney Stores launched in 1987 and at one point there were more than 600 locations, which hawked licensed products, from pricy animation cells to stuffed animals and toys, costumes and higher-end lifestyle goods. But by 2002, the stores were losing money and, in 2004, after sales at Disney stores fell in three of the preceding quarters, the company sold the retail locations to The Children’s Place.
However, demand for licensed Hollywood studio goods peaked and Disney had over-expanded. In May 2008, Disney again took over the chain in a deal completed in conjunction with the bankruptcy proceedings of The Children’s Place subsidiaries Hoop Retail Stores and Hoop Canada, which ran the stores.
Disney wasn’t spared the effect of the downturn in consumer spending. Its consumer product sales fell 12 percent in the fourth quarter to $646 million. Operating profit in Disney’s consumer-products division dropped 22 percent for the year, to $609 million.
Jim Fielding, president of Disney Stores Worldwide, said last month the company decided not to renew leases at some of its stores, and will continue to “consider opportunities to maximize the distribution of its current locations.”