Kenversations™ - Oct 26, 2004

Kenversations™
Page 2 of 3

Near Disney theme parks and resorts, annual passes started selling like hotcakes. Disney fans had easier access to Disney shops at the parks and resorts, and could find the same merchandise during the casual visits. Everywhere else, people were discovering the ease of shopping online, especially Disney fans. With Disney aggressively pursuing an online presence as a destination, there was now an easy way to buy your Disney merchandise from the comfort of your own home. There was no need to deal with crowded malls full of other people’s screaming kids and unsupervised teenagers.

By relying too heavily on current animated features to move merchandise, by not offering compelling, unique products, by seeming to focus mainly on female toddlers, the Disney Stores were sliding into decline.

The Oriental Land Company saw the writing on the walls. The owner and operator of the Disney theme parks in Japan made a deal to take over the Disney Stores in Japan. It made sense to them. The stores could be treated as an extension of the highly popular theme parks and a single company could operate the entire location-based Disney presence in Japan.

Finally, instead of the Disney Stores becoming a brick-and-mortar extension of Disney's online presence and enticing ambassadors for the theme parks, resorts, and cruise ships, they became an expendable part of a corporation that some investment analysts and fans alike perceived as too gangly and overextended. After all, Paul Pressler and all of the other Disney Store execs from the heyday of the stores who had migrated to Walt Disney Parks and Attractions were now off at The Gap, Inc. (who knows where they will all migrate as a herd next), and there wasn't the emotional attachment to the Stores that the likes of Michael Eisner and Bob Iger have for ABC, which Disney kept pushing even through its fourth-place doldrums.

It says something when The Walt Disney Company will no longer own the Disney Stores but still owns The Mighty Ducks, a team in a professional sports league on verge of total collapse. I guess it is easier to sell the Stores.

So, now the North American Disney Stores are under the control of someone other than The Walt Disney Company or the Disney family.

The Children's Place is big on the “newborn to age 10�? demo, so the existing Disney Stores product lines should fit right in to the company.

Ezra Dabah, Chairman and Chief Executive Officer of The Children's Place was quoted as saying, "This exciting and unique opportunity gives us instant access to one of the most magical brands in the world, and is consistent with our goal of being the leading retail player in the newborn to age 10 category.�?

There’s that thing of calling Disney a “brand�? instead of thinking of it as a name. I know the folks over at SaveDisney.com frown on that. You certainly can’t blame Roy- Disney is HIS name. It is to be expected that as more and more people who make up the consumer population and move into position of power in these companies are people who never thought of Walt Disney as a person, but a thing, they’re going to think of “Disney�? as a brand, not a name. After all, there are “Disney�? films and there are “Touchstone�? films.

Those who frown on referring to Disney as a brand are right in that there is a danger in reducing the name to a brand. People are more likely to have loyalty to a name. They are more likely to identify with a name. People don’t get as emotional about brands.

Peter E. Murphy, Senior Executive Vice President and Chief Strategic Officer of The Walt Disney Company, said "The Children's Place management team has a proven track record of growing a unique and compelling retail concept.�? To me, this is a statement admitting that The Walt Disney Company can’t “grow unique and compelling retail concepts�? very well, or the Company would do it itself and retain total control. But what’s this about growth? Didn’t the Disney Stores just shrink down? Or is this more about same-store sales? Other quotes indicate that there will be new stores opened. Are they going to stock cool Disney stuff Disney itself wouldn't stock? If so, can they develop stuff for the theme park shops, too?

He goes on to say "We believe their commitment to quality, the Disney brand, and entertainment retailing will maximize the Disney Store opportunity." So, Murphy used the “brand�? designation as well. Characters become “franchises�?, and names become “brands�?.

I have to ask how another company can run a Disney business better than ‘Disney�?, especially when the Company runs stores in theme parks and The World of Disney stores? Of course, all one has to do is look at the Oriental Land Company for the answer to that question.