The Rise and (Semi) Fall of The Disney Store

Have you been to a mall in the last 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.

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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.

Disney set out to find ways to expand their reach in consumer products, and one of the ideas 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.

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.

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.

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 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.

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. 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.