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.