DS news! Prepares to sell

[Luv2Roam]

Disney Stores cuts HQ staff by 140, readies sale
Reuters, 06.10.03, 4:07 PM ET

LOS ANGELES, June 10 (Reuters) - Walt Disney Co. (nyse: DIS - news - people) said on Tuesday it is laying off about 140 employees, or some 20 percent of its Disney Stores headquarters staff, and expects to select an investment bank in the next few weeks to help sell the money-losing unit.

The moves follow Disney's announcement on May 22 that it was aiming to reduce its number of North America stores to fewer than 300 from more than 380 as it prepared for a possible sale of the chain.

The North America Disney Stores, which sell everything from movie memorabilia to Mickey Mouse hats, peaked at about 550 outlets in 2000. Then Disney began closing locations, saying it had overbuilt after an initial flush of success.

The layoffs from the more than 600 total employees at Disney Stores' Glendale, California headquarters mark the first major staff cut at the main office since Disney began closing stores a few years ago, company spokesman Gary Foster said.

Disney's consumer products unit on Tuesday also said it had struck a deal for retailer Wal-Mart Stores Inc. (nyse: WMT - news - people) to carry exclusively some lunchboxes, action figures and other products in its Kim Possible line of merchandise from the Disney Channel cartoon about a young girl turned superhero.

Disney wants to pursue direct distribution relationships with major retailers rather than use third-party companies. It is also pursuing a larger direct deal with Wal-Mart, and is increasingly launching retail products based on Disney Channel shows.

Disney Chief Executive Michael Eisner said last week that even as the company seeks a buyer for its retail chain, it will restructure the stores to sell high-end merchandise, setting them apart from Wal-Mart.

Copyright 2003, Reuters News Service

 

[hopemax]

Disney Chief Executive Michael Eisner said last week that even as the company seeks a buyer for its retail chain, it will restructure the stores to sell high-end merchandise, setting them apart from Wal-Mart.

I don't know whether I want to laugh my head off or bang it against the keyboard. Did they just not notice they were turning the stores into the kid section at Walmart when they did it in the first place?

 

[Luv2Roam]

I agree hope -- That last sentence almost had me choking!
But that stuff doesn't sell -- remember? EVERYONE apparently wants that princess crap. And who can ever have too many plushes?

 

[Snow Brite]

Originally posted by Luv2Roam
The layoffs from the more than 600 total employees at Disney Stores' Glendale, California headquarters mark the first major staff cut at the main office since Disney began closing stores a few years ago, company spokesman Gary Foster said.


That just makes me mad. It is okay to just go around closing up stores (profit centers) but not to lay off people at HEADQUARTERS(overhead). And they wonder why it is a "money-losing" unit...

Jennifer

 

[PamOKW]

Glad to see I'm not the only one who choked on Eisner's final comment. How many comment cards did it take before someone finally started to listen? If they could do that right they might actually have a great product. Right now, I don't even bother going in and barely skim the catalogs. As sad as it is, I think the end is near for the Disney Stores....too little, too late.

It still kills me to see one of the Disney Stores in our area is now a "head shop".

 

[KNWVIKING]

I wonder what happens when/if they put the new stuff in the stores and suddenly the crowds return,product sells,money is made. Do they still sell them ? Does this do nothing more then raise the selling price ? Amazing strategy, fix the problem,then unload the stores.

 

[mjstaceyuofm]

The only way the Disney Stores can work is if they are dramatically reduced to the point that there are few enough to make them a less common experience. In this case, they needed to decrease supply to generate demand.

Bingo! Maybe something like 10-12 stores strategically placed in LARGE metropolitan markets that also double as a front for the catalog/internet merchandising... I'm hardly a retail guy so my logic may be totally flawed, but I think Scoops got something here with lowering the supply to increase demand. Put that together with some reduced OH costs by running the catalog/internet shipping business via those stores and a profit may pop up...

 

[Luv2Roam]

Another obstacle is convincing guests it's worth a return now.
I think the higher dollar amounts will sell. They just need to be a good product, and then not decide to put them on sale two weeks down the road.
Will I pay $40 - $50 a pop for the same ol Pooh on a blue sweatshirt or Mickey on a red? Nope.
But get something NEW in there and I will.

 

[maleficent1959]

The CMs at Homebase were told about the layoffs a week or two ago. I understand that it was not based on seniority but determined by department.

I think Scoop is right. I think the high-end stuff will do better in limited markets. Honestly, the high-end stuff just did not sell in our store except for the snowglobes at Christmas. Beautiful lithos and limited editions would collect dust on our walls until we transferred them to other stores that had guests looking for them. I imagine there are more buyers for the high-end merchandise in cities with a higher population base and per capita income than my little town in Florida, where it seemed nothing sold except the Wal-mart quality merchandise. Unfortunately, when Disney put TDS in B and C markets and malls that changed the stores from a unique experience to just another mass market retailer. When our store was new in our market it was a destination. Now we're just another store in the mall and the only destination shoppers we were getting were people that were coming in for park tickets or Disney dollars.

 

[Planogirl]

I wonder if there couldn't be a few more than 10-12 stores total though? I remember when there were about 3 locations in the Houston area and I heard that they were doing quite well at the time. One was in an upscale mall and the other two (I don't recall more) were in regular malls in nice suburbs. They had the usual collectibles and clothes for all ages. They also had a lot of visual appeal which has also been decreasing over time.

Disney Chief Executive Michael Eisner said last week that even as the company seeks a buyer for its retail chain, it will restructure the stores to sell high-end merchandise, setting them apart from Wal-Mart.

This guy continues to amaze me.

 

[PamOKW]

I don't see high-end merchandise as meaning Disney art, figurines, etc. If I could go to a Disney Store and find a lovely understated man's tie (like Eisner would wear) at a price of $40-$50 I would buy it. They could put 1,000 Pooh Fleece jackets reduced from $50 to $5 and I'll never buy a one of them. If I could get a quality golf shirt with a small Mickey I'd pay the $50-$60. A poor quality shirt in purple with a 5 inch Eeyore will stay on the rack no matter the price. If they would carry more of the home good items in the Disney Store I'd be interested. Better quality clothing, home items, decorative things, etc. Those I would love to purchase.

 

[YesDear]

Ditto Pam!!!

 

[doubletrouble_vb]

That's what I was thinking...give me a store where I can pick up unique Disneyesque stuff for my house and I'll buy. Lithographs...no thanks...jewelry...nope...christmas decorations...sure...knobs for draws yeah!!!

 

[VoiceofReason]

Since you seem to like copying news reports, you might want to include all of the report:
© Reuters 2003. All rights reserved. Republication or redistribution of Reuters content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters and the Reuters sphere logo are registered trademarks and trademarks of the Reuters group of companies around the world.

What do you have against the Disney Stores and their cast members?
The current cast members did not contribute to the state of the Disney Store chain, or to the current retail climate in this country.
How will you benefit when the current cast members lose their jobs and benefits?
Where was the uproar when other parts of the Disney Co. were closed or sold, such as Club Disney or the Anaheim Angels?
Why do you take personal pleasure in the possible closure or sale of the Disney Store chain?
Is it possible you were turned down to be a Disney cast member?
By the way, your name is mud over on the cast member board!

 

[Luv2Roam]

What's your agenda?

Gee -- what put a bee in your bonnet? To say it nicely.
Why would I have anything against CM's? That's ridiculous.
I know we all are interested in DS news. That's it.

Disgruntled CM I take it? Don't take it out on me!!

 

[Planogirl]

I suspect that many of the CM's are a bit sensitive right now and I guess that it's hard to blame them. I highly doubt that anyone thinks that they are to blame for current conditions but that doesn't change the fact that the DS is not working in its current state. I personally take no pleasure in all of this, I wish that we could have the old Disney Stores back complete with CM's!

 

[JudithM]

Luv2Roam, thank you for posting this news article.

The Disney Stores are rearranging deck chairs on a sinking Titanic, & they have been doing so for quite awhile. I, like Pam, don't bother going into my local Disney Store. I haven't stepped into a Disney Store since early December 2002 & that was only to trade pins with other guests. When the catalog comes in the mail, I look through it, but not much appeals to me anymore.

The Disney Stores don't have to only sell big ticket items. I used to buy a variety of items at the Disney Stores - watches, earrings, ties, quality clothing, picture frames, mugs, Christmas ornaments & decorations, baby gifts, wedding gifts, graduation gifts, etc. I cannot even remember the last item I bought in a Disney Store that was not a pin . So Luv2Roam, you are right ... how to convince me to even "think" about walking back into a Store that hasn't had merchandise that interests me.

I do agree that the supply of Disney Stores increased more than needed in some markets. At one time the Rochester, NY area had four Disney Stores. In the greater Washington, DC/Baltimore, MD area there were about two dozen stores before homebase started closing stores two years ago. Did Omaha, NE need two Disney Stores? These are just a few examples of oversaturating markets with Disney Stores. So much for specialty, novelty, etc.

Also, Disney as a company seems to be licensing their merchandise to other retailers.

Some of the Disney Store homebase managers (descision makers) are strictly retailers & didn't necessarily work their way up the Disney Store ladder. They don't understand that some guests come into the stores for a Disney fix.

The local CMs are the worker bees, & unfortunately they have very little, if any, say in management decisions. However, they tend to take the brunt of Disney Store guests comments in person, on bbs, etc. I think many local CMs feel the ship sinking. They have tried to offer suggestions, ideas, etc, but their comments tend to fall on deaf ears. Who knos the guests better than the CMs who work day to day in the Stores.

Oh well ...

 

[maleficent1959]

Pam, I'll give you the purple Eeyore t-shirt. But even some of the other things you mentioned were struggles. I was at the stores for five years. When the clothing quality was higher, with the accompanying higher prices, sure, there were some people who were willing to pay $50 or $60 bucks for a sweater or a golf shirt. But not enough people did. We had some fantastic watches, and of course there were guests that bought them at full price. But more people bought them on sale. Unfortunately it was much the same for many of our home lines. Yes, it sold. But often in quantities too small for the stores to maintain their profitability.

Occasionally Disney came out with limited edition-type home lines and when they came in we CMs were thrilled for our adult guests. There was a cute line of Mickey plastic dishes that was perfect for summer. We had waffle irons at Christmas. There was an adorable set of dessert dishes with an ice cream theme and many others. None of them did as well as we CMs in the stores thought they would. In fact, after the dessert dishes went to 75% off our ASM bought a bunch to break up and make into a mosiac table.

Some people think the general demise of niche marketing played into it, others think Disney oversaturated the market with stores, lots of people think Disney is solely to blame for not offering what the guests want or focusing on a few characters at the expense of others. There have been many personnel changes in the last four years or so while Disney tried to save the stores. Unfortunately, little seemed to make much headway.

Maybe trying to be everything to everyone was the problem. Field reports were telling them, for instance, that there was too much Pooh at the same time they were being told guests wanted more Pooh. Although I can't imagine that someone actually thought we needed more plush

I kind of like the idea of having nicer stuff exclusively in the stores. Through licensing, you can currently get Wal-mart quality at Wal-mart. The merchandise at Target is different and a little nicer (in my opinion). Wal-mart has that really cute Disney Baby line. You can buy higher quality Disney infant at Dillard's. I'm definitely no business major, but it seems that that kind of marketing is more specifically directed to differing guest needs rather than trying to accomodate everyone in one small store.

 

[Sorcerer]

Thank you, scoop and maleficent, for pointing out what many of us (TDS CMs) have been saying amongst ourselves for months now.

What keeps me going is that despite the small number of people on the DIS who seem to be unhappy with the current state of the stores, TDS is still making higher sales numbers across the board than last year. That doesn't automatically mean "profits", but it raises hopes.

I only hope that I am correct in inferring from these news reports that Disney is really trying to raise the bar with TDS and that, even if we're sold, the remaining stores will be better than ever.

I will continue to spread what Magic I can on my own local level. I invite any of you to visit me in my TDS so I can demonstrate to you that we DO have something for everyone - and I'll even steer clear of plush mountain!

Be negative if you must...continue to post the doom and gloom...my job with TDS - which recently moved me to NY from very sunny Va Beach - is to keep smiling, stay positive and exceed my guests expectations.

Considering the negative attitudes permeating the DIS, it should be easy to exceed expectations - most posters are expecting the worst

And - to borrow a phrase - if you ask me when we're closing, I'll tell you "9:30pm...just like the other stores in this mall".

Forgive those of us who take the doom and gloom to heart...this job is not just a job, it is a part of our lives. The job I left to work for TDS full time was "just a job". TDS is a dream - I enjoy every day that I'm there...even the days full of know it all guests who tell me "you don't know anything...this store is doomed to close". To those guests I'd like to say...I read the papers too. I know as much as you do. Just because I choose to hope for the best does not make me deaf dumb and blind.

Don't count TDS out yet...we still have a pulse. And I'm looking forward to October when we've been assured there will be new and exciting product.

 

[mickey4ver]

Claps loudly for Sorcerer, an intelligent, from the heart post!