In the current economic environment, a lot of companies are cutting back costs wherever they can in hopes of boosting earnings, but entertainment giant Walt Disney (NYSE: DIS) is taking a different approach and spending in hopes of boosting its sales.
Disney is hoping that by completely revamping its retail stores that it will be able to lure in more customers, keep them longer, and encourage more sales. In order to make the best of their new marketing direction, they have enlisted the aid of one of the greatest (in my opinion) retail designers out there, Steve Jobs.
If you walk through any mall where there is an Apple (NASDAQ: AAPL) store, you will definitely notice that store is packed with people. People looking to buy new computers, phones, software, or just get a little help from the genius bar fill the stores. I have never walked by the Apple store in my local mall without seeing it full, and whenever I see how full it is, I always walk inside to see if something new had come out that I missed. This is what Disney is hoping to achieve.
Currently, if you walk into a Disney store you are going to see floor to ceiling toys, but not much else. Never any big crowds, and really nothing to do except buy toys. This is great, but Disney wants more, Disney wants their stores to be a "place to be" much in the way Apple has done with their stores.
In order to achieve this sort of "attraction" companies must spend, and spend a lot. Disney is aware of this, and their plan is going to cost an estimated $1 million for every store that it updates. Considering that they plan to overhaul 340 stores, and open additional ones as well, it is definitely a big undertaking, but in the end will definitely pay off if the company can achieve its goals.
Bringing in Steve Jobs is a definite step in the right direction. Apple has exploded lately, largely due to its iPhone and iPod business, but its computer sales are moving up nicely as well. A big reason for that is the Apple retail stores that offer great service and allow buyers the chance to come in a get lessons and a live person to help with problems. Compare that to the 800 numbers you have to call for other computers, and there is really no comparison. Job's idea to create and spread Apple stores has been a vital component in Apple's gaining popularity.
Disney envisions some major changes, and aims to turn their stores more into an amusement part sort of attraction. The new stores will have rides, movie theaters, and other little tricks that are sure to entice kids to beg their parents to take them to their local Disney store for an afternoon of fun.
You can expect to see a lot of traits that you have become accustomed to at Apple stores. Employees will have mobile check out devices, and the stores will offer that "community" feel that Apple is known for. Kids will be able to play around the store while their parents shop on kiosks, while employees walk around with iPhones capable of controlling all the action in the stores.
It is a very ambitious undertaking for Disney, but in the end, it will put it in a very good position once consumer spending picks up again. I, for one, cannot wait to get into one of these new stores!
What are your thoughts on this? Do you think Disney is making the right decision, or should the company be cutting costs instead of expanding? I think it is a great move on the company's part, and expect that 4 or 5 years down the road the company's stores will be overflowing with kids having a good time, and parents pulling out those credit cards more and more.











Reader Comments (Page 1 of 1)
10-14-2009 @ 1:01AM
Steve said...
I am a Disney shareholder, and I am adamantly against this idea.
Yes, I admit: it does sound interesting, and sales probably will be juiced...for a while.
But is spending this money the best use of capital? Shouldn't Disney be going after higher-margin licensing opportunities?
With the Marvel buyout, merchandising sales at Disney Stores (or Imagination Park, one of the proposed alternate names for this venture) might benefit. Nevertheless, Disney tried retail before and failed. As a shareholder, I am scared, truth be told...