Disney World Columns > Larry Pontius

The Disney Store Crisis

No, that's not a typo. When it comes to the Disney Stores it did all start with a Mike: Michael Eisner. He gave the go-ahead for the Disney Stores program in 1984, the same year he became CEO of the Disney Company. Three years later, in March of 1987, the first Disney Store was opened in Glendale, California (not far from the home of Walt Disney Imagineering at 1401 Flower Street).

What happened in the 16 years since then has been gnawed to the bone by the media and their retailing and financial "experts"; the company was too greedy and over built, wrong merchandise, wrong management, and a long list of other wrongs.

However, all of that is speculation under the bridge now. The once 740-strong chain of stores has been reduced to 480 and, as you may have recently read, the Disney Company has hired Goldman Sachs to sell what's left of TDS. In late September, Fortune Magazine reported that the stores in North America and Europe could bring as much as $500 million.

Still, you can't help but wonder what Walt would think.

Would he have given the go-ahead in the first place? There are reasons to believe he might not have.

Walt had licensed manufacturers to produce and sell Disney merchandise for almost as long as his company had existed. His brother Roy signed the first contract for Disney merchandising in early February of 1930, giving the George Borgfeldt Company of New York the right to manufacture and sell Mickey and Minnie toys. Things really took off in 1932 when Kay Kamen, a Kansas City advertising man, was contracted to represent the company with all kinds of manufacturers. He soon signed deals for Mickey Mouse ice cream cones, Mickey and Minnie trains, Mickey Mouse watches, and on and on.

Clearly, Walt realized the financial possibilities in Disney merchandise. But he was satisfied to collect the rewards for more than 20 years without taking what would seem to be the next obvious step - sell the stuff yourself. Why? If I had to guess, I'd say it's because he knew better; instinctively knew that the best path was to follow the business axiom, "Stick with what you do best." He was a master at entertainment, but retailing is another world, a world in which he had little interest.

Now you're thinking, "What about the stores at Disneyland?" I did, too, until I though about it. When you do, you realize they're only an afterthought. If you're going to build a Main Street, a Frontier Town, a New Orleans Square and other lands you naturally have to have stores. And once you make that decision it's only natural that they have Disney merchandise in them - especially in Walt's "cross plug" way of thinking.

Then, I remembered reading about one of the earliest rules Walt laid down about the Emporium on Main Street and the other Disneyland stores. The merchandise sold there couldn't be sold by stores outside the berm. If you wanted it, you had to come to Disneyland. Smart marketing move, but it doesn't sound like a man set on creating a retail empire. More like a genius sticking with what he did best - entertainment.

But for a moment, let's forget those reasons against. Let's imagine that someone or something convinced Walt Disney that a chain of Disney retail stores across the country could be a great engine of found revenue and for cross plugging the movies and theme parks. Let's say he gave a nod to the project.

Now, ask ourselves again; what would Walt think of what happened to The Disney Stores? I have to believe he would be incredibly disappointed. Not just because a substantial investment in money and time has failed miserably. Although that certainly would have raised an angry eyebrow, he had faced plenty of similar situations in the past, all the way from Oswald to Fantasia to his first contact with ABC, the network his company now owns. He knew how to pick up the pieces and move on.

No, what would have disappointed him most, I believe, is why it happened.

To get an answer you have to go to ground zero, as Walt often did (for a great example, have a look at page 290 of Bob Thomas' delightful biography of Walt featuring the Jungle Cruise, Walt, and Dick Nunis, then a Disneyland manager in Adventureland). Unfortunately, I don't travel much, but I was lucky enough to be able to ask questions of a number of Disney Store cast members from around the country through the Internet.

I'm sure they won't mind me anonymously quoting some of their comments, starting with what I think may be the most important one:

"It makes me wonder why the big cheeses never listened to us....the hard working, in the trenches, Disney loving cast members!"

There were several thoughts like this about over-building:

"There were just way too many stores. In the early days there may have been one or two per market and the guests who visited the stores did so as a destination. Now the stores are more like McDonald's, one every few miles or so it seems."

Quite a few of these kinds of comments were made regarding the "professional retail management" team brought in when the over-grown chain first slumped:

"They have forgotten Walt and the magic that he brought to us. I hate to say it but we've become like every other retail chain."

"Some genius decided that we needed to have sales every week. How can you expect to have a profit when you are constantly having sales, and training your guests to wait for things to go on sale?"

Please click here for What Would Walt Think? The Disney Store Crisis - Part 2

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A former vice president of marketing for Disneyland and Walt Disney World, Larry Pontius is the author of Waking Walt, a thriller that brings Walt Disney back from cryonic suspension. Larry lives in Florida with his wife and a large, orange dog named Samson.

For more information about Larry Pontius please visit his website at www.wakingwalt.com.