Have you been to a mall in the last, I don’t know, 30 years?
If so, odds are you’ve run into a Disney Store.
These little slices of Disney were everywhere in the 1990s.
Today?
Not so much, and that’s because the Disney Store is a great example of how sometimes
even a company like Disney can bite off more than it can chew.
Disney products are nothing new to most of us, and that’s because they’ve been around
for a really long time.
Walt Disney was quick to license out merchandise rights for Mickey Mouse back in 1929.
It was a clever way to bring in some extra money to fund his animations with virtually
no added effort.
What he began was a long tradition of putting famous Disney faces on everything from wristwatches
to shirts to diapers, and for decades it was a pretty dependable revenue stream for the company.
In 1986 Disney’s consumer products division brought in $72 million dollars.
The thing is, for as much money as that was, Disney was really just getting a small licensing
fee of around 7% for the products that were being sold.
So while they were getting plenty, it was just a slice of a larger pie.
Disney set out to find ways to expand their reach in consumer products, and one of the
ideas from their new head of business development, Steve Burke, was a Disney owned and operated
retail store.
Burke was allowed to rent a 2,000 square foot store in the Glendale Galleria, which was
a shopping mall about five miles from the Walt Disney studios.
The location was chosen so that Disney executives would be able to keep a close eye on the store,
and to see if there would be demand for such a store even with Disneyland close by.
Burke was able to put together the first ever Disney Store for just over $450,000, and the
test location was opened on March 28th, 1987.
The answer as it would turn out, is yes, there most definitely was a demand for such a store.
In its first year the store pulled in 2.4 million dollars in revenue.
That amounted to nearly $1,200 per square foot, which was more than three times the
industry average for specialty retail stores back then.
So that July a second store was opened in San Francisco, and in November a third was
opened in Orange County.
With all three locations doing well, the test was considered a success, which meant it was
time to expand.
Disney set out to find an executive with retail experience who could lead the stores.
However they found that most candidates, when asked what they’d do to improve the shops,
wanted to essentially turn the Disney Store into every other retail experience out there.
As it would often happen during its history, Disney realized that they themselves would
be the best ones to lead.
It would ultimately be easier for Disney to learn the ins and out of retail than expect
an outsider to learn the ins and out of Disney and its culture.
So Steve Burke, the man who came up with the very idea, was given the reigns of the Disney Store.
With a great proven idea, The Disney Store spread like wildfire.
By the end of the 1980s, two years later, there were 41 stores across the country.
By the end of 1991 that number would be 125.
At its peak in the 1997 there were 749 Disney Stores around the world with an operating
income of 893 million dollars.
A big improvement over that original $72 million.
The period of growth even lead to more experimentation.
In 1990 Disney took one of their stores and converted half of the space into a fast food
restaurant called Mickey’s Kitchen.
The venue sold healthy alternatives such as turkey hot dogs, meatless burgers, and various salads.
A second location would later open, but ultimately the venture would struggle to break even and
in 1992 both locations would be shut down.
The Disney Store was also used for more than just selling merch to fans.
With some stores being visited by as many as a million guests every year, Disney made
sure that the locations would be used for synergy, something Eisner loved.
Each shop had TV screens installed at the front of the store, along with larger screens
at the back, with both used to play tapes advertising everything from the Disney channel,
to new releases, to the theme parks.
In fact it wasn’t long before The Disney Store was selling over 10 million dollars
a year worth of theme park tickets.
So what happened?
Well the biggest downside to the Disney store was that being centered around Disney meant
their sales were fated to reflect how the rest of Disney was doing at the time.
From the late 1980s to the mid 1990s that was fantastic news because Disney was doing
great.
It was the Disney decade.
However as the steam on the Disney train began to die down in the late 90s, so did the sales
at Disney Stores across the world.
Disney films weren’t performing as well as they used to, and while many fans see them
as classics today, most of them weren’t pushing merchandise as well as the renaissance
films were.
The mistake Disney made was they expanded at a rate that assumed the Disney renaissance
would never end and that the public desire for all things Disney would never be sated.
Unfortunately for them that wasn’t the case.
The following period would be one of downsizing and evolution for the Disney Store.
Disney would attempt multiple redesigns of the shopping experience, and with each redesign
more stores, sometimes as many as 100, would be closed to cut costs.
In 2002 Disney would take a major step in a different direction by selling all of their
Japan based Disney Stores to the Oriental Land Company and switching to a licensing
business model instead of owning the stores outright.
They would continue that trend in North America two years later and sell all of their stores
to The Children’s Place in a similar manner.
It was a time where Disney didn’t own the Disney Store.
Sidenote, but at this point in order to retain ownership, Disney converted their flagship
Disney Store in New York City into a World of Disney.
While similar, the two stores were actually different businesses.
While The Disney Store was run by the Disney Consumer Product division, World of Disney
stores were owned by Disney Parks and Resorts.
In any case, that direction wouldn’t last long.
Four years later, in 2008, The Children’s Place Retail Stores would file for Chapter
11 bankruptcy, and two months after that it was announced that Disney would be buying
back it’s 220 Disney Stores.
Two years after that The Oriental Land Company would also sell it’s Disney Stores back
to Disney.
In order to start fresh with the reacquired stores, Disney announced in 2009 that they
would rebrand and relaunch their locations with the help of Apple CEO and Disney board
member, Steve Jobs.
Jobs would use his experience from launching the highly popular Apple stores to help Disney
reimagine the guest experience.
The Disney Store has changed in ownership, changed in style, and most importantly, changed
in size.
Today there are more than 200 locations in North America, more than 40 in Japan, and
over 70 spread out across the rest of the world.
An impressive number, but still a major difference from their peak.
They serve as a good reminder that even for Disney, while there may be a larger slice
of pie out there, you don’t want want to bite off more than you can chew.