Disney Aims for Bigger Share of Retailing With Revamp of Stores and New Products
By BRUCE ORWALL
Staff Reporter of THE WALL STREET JOURNAL
COSTA MESA, Calif. -- At the South Coast Plaza mall here, Walt Disney Co. will be showing off a new look Wednesday morning for its struggling Disney Stores chain. But that's just the most visible element of a broader overhaul in Disney's consumer-products unit, whose faltering performance has been a nagging problem for the entertainment giant.
The new Disney Store in Costa Mesa is a prototype that Disney plans to roll out in varying degrees to about 600 of its stores world-wide over the next three years. The cost: more than $300 million. Disney plans to close the remaining 140 stores as their leases expire, which will take several years.
The revamped stores will dispense with the chain's pink-and-green color scheme and window displays featuring Mickey and other Disney characters at play -- design changes that reflect Disney's attempt to move beyond character-based goods. The stores' adult-oriented merchandise will focus more on parenting rather than general goods like leather jackets and Disney overalls, which are being phased out. And the whole effort will be supported with the first-ever television advertising campaign for the Disney Stores.
Disney Stores are getting a new look that includes interactive kiosks (above) where customers can browse the company's Web site and order products they don't find at the store.
The idea is to reverse a sales slump that, combined with problems in Disney's global licensing program, shouldered a major share of the blame for the company's recent earnings slump. Analysts and investors have been skeptical of a consumer-products turnaround at Disney, fearing that consumers may be tired both of specialty retail stores and character-driven merchandise that is often based on new movie releases. Indeed, rivals Time Warner Inc. and Viacom Inc. are scaling back their own studio-store businesses, the Warner Bros. and Nickelodeon stores, respectively.
But try telling that to Andrew P. Mooney, the new president of Disney Consumer Products Worldwide. In his first substantive interview since joining Disney from Nike Inc., where he was chief marketing officer and head of global apparel, the Scottish-born Mr. Mooney characterizes Disney as a sleeping giant, not a faded icon, in the consumer-products business.
With its well-known brand and high consumer trust, Mr. Mooney aims to transform Disney into "an incredible consumer-products company." Annual retail sales of Disney products around the world are about $13 billion, but Mr. Mooney complains that Disney is "the least visible $13 billion consumer-products brand around." He thinks that, over time, he can ramp it up to an eye-popping $75 billion, or about 1% of the global market.
That's a tall order. Analysts such as Salomon Smith Barney's Jill Krutick say the Disney Stores face lift is impressive, as are Mr. Mooney's ambitions. But she notes that it will take 18 months or longer to determine whether some of Disney's new plans will work: "It's a wait and see."
snip<>
Yesterday's WSJ
Jim |
