Disney Co.’s Chairman Hopes Mall Will Be a Magic Kingdom for Store

Disney land has moved to Costa Mesa. But the city of Anaheim couldn’t care less.

That’s because the House of Mouse--better known as the Walt Disney Co.--officially opened its third Disney Store on Saturday at South Coast Plaza. And if the 35,000-square-foot, all-Disney outlet is as successful as its predecessors in Glendale and San Francisco, the company could very well have its hands on the mouse that roars.

For years, Disney has sold trinkets, T-shirts and other apparel decorated with mouse ears and other cartoon characters in its theme parks. But it was not until the arrival of company Chairman Michael Eisner that the concept of a Disney Store actually got off the drawing board and into the malls.

Eisner, 45, was president of Paramount Pictures before signing on with Disney three years ago. Since then, he and President Frank Wells have been credited with turning the Burbank-based company from a dismal earnings performer into one of the stars of the entertainment industry, with profits that jumped 80% to $445 million in fiscal 1987.

The Disney stores are just one of the ways that Eisner is trying to exploit the company’s potential. With 8,000 items to satisfy hungry Disneyphiles, he reasoned, what better way to show off the products and put them within consumers’ easy reach?

The first Disney Store opened March 28 at the Glendale Galleria. Store No. 2 opened July 31 at Pier 39 in San Francisco. Since then, both have been successful beyond even Eisner’s initial expectations.

In a recent conversation with Times Staff Writer Mary Ann Galante, Eisner discussed the company’s retail operations, why it chose Orange County for its third store and how it plans to make the magic work here.

Q: Why is the Disney Co. getting into the retail business?

A: It’s a natural extension of our company and our company’s product. We have about 8,000 products that we license. They generally appear in our parks in California, Florida and Tokyo. We maintain approval and control over every single one of those 8,000 products.

We thought that we should make them available to more places in the country and under a banner that was controlled as well as the products are controlled.

Q: The Disney Co. has long-term intentions of opening shops in malls in major cities across the country. How big is the potential market?

A: On one hand, we are going to expand rapidly. Hopefully, within three years we will be a national specialty chain. On the other, we are going to do it in a cautious way so that we are not overcommitted if we see that the environment and the mood for specialty retail slows down.

Q: How soon will the company expand its stores outside of California?

A: I think we’ll be out of California with the next store. We will probably go to the East Coast, concentrate on both coasts first, and then go to the middle.

Q: How many Disney stores do you foresee in, say, three to five years?

A: It could be anywhere from 100 to 300 or 400! If we went as far as 300 or 400 we would probably tax our operations here, but I would say 100 to 200. We are walking before we run. We opened two stores; they’re smashing. We’re opening the third store in the most successful shopping center in Southern California, and we anticipate it will be a smash.

We have spent the most money per square foot on the Orange County store. We have to make the store particularly good because of its proximity to Disneyland and the knowledge that people there have of Disneyland. If that store isn’t as successful as we hope, we will move on.

We are scouring the country for locations. But when we go into a location, we not only want to get into a quality regional mall but we want to be the quality location in a quality regional mall. And that’s not easy.

Q: How successful do you see the Orange County location being?

A: Let me put it this way. The other stores are the “Star Wars” or the ET or the “Raiders of the Lost Ark” of the retails. They are successful beyond any of the estimates that we had projected.

I don’t want to give sales per square foot, but as far as I know, it’s higher than anybody else in malls that we’re in. We have a lot of people calling us up not believing figures, asking us to confirm them.

Q: Is it over, say, $130 per square foot?

A: It’s over that by leaps and bounds. We’re more like 5 or 6 times that.

We’ve only been open for seven months in Glendale and three months in San Francisco. You have to see how these stores do over the long run. They’ve had initially a very wide receptivity.

You know, we have training for people in our stores the way we train people in our parks. Our people who work in the stores are cast members. And people who come to our stores to buy are guests. A sales person is trained to act the part, and we have our backstage areas and our on-stage areas. We treat the stores exactly the way we treat the rest of our company--which is from a theatrical point of view.

Q: Why do you anticipate the Orange County store will be so successful?

A: Orange County is very successful as a whole. It has built this fantastic music center, and South Coast Plaza is a terrific development. And my son goes down there to play hockey, so it’s someplace I can go visit.

Q: What made now the right time to start opening stores?

A: The stores have been developed by Stephen Burke (formerly director of business development and now vice president of the Disney stores), who comes out of our consumer product division. He watched the sales, the kind of atmosphere we create on (Disneyland’s) Main Street. He saw what happened to Walt Disney World and Disney Village and with our licensees around the world. He saw what happened to Main Street in Japan. He simply came in and made a presentation that said if it can happen in all these places, why not in the regional shopping centers?

Q: How long had the Disney Co. been mulling over the concept?

A: How long before we opened the first one? About 10 minutes.

Q: Do you see the company developing Disney stores inside department stores or specialty stores?

A: We’d had people ask us to do that. But we think that the stand-alone, dedicated Disney concept is the best way to go inside the regional shopping centers.

Q: Isn’t there concern that a Disney Store in Orange County will conflict with retail sales at Disneyland?

A: No. Orange County has a tremendous population base. It’s very pro-Disney, as it were, because of Disneyland. South Coast Plaza is the most successful shopping center in Southern California, and the management at the South Coast Plaza has let us acquire a good site.

Q: Why wasn’t Orange County chosen as the location for the first Disney Store?

A: It wasn’t available first. Glendale was the first one available, and Glendale also is a short drive from our studios. So we all go smell it, feel it, taste it, touch it.

Q: Do you see the Disney Store in Costa Mesa affecting attendance at the park?

A: I think the only possibility would be an improvement, in that it further advertises and promotes the Disney image in a very positive way. It’s not a per-se entertainment attraction. There is an entertainment value in South Coast Plaza because it’s a wonderfully spirited place. But there are no Pirates of the Caribbean rides there.

Q: The Disney stores are going to be Disney owned and operated. Are you considering franchising?

A: No, we aren’t. For the moment, it is too important for us to maintain the quality. The only way you can absolutely know you will maintain quality is you’ll be able to walk in the stores and say, “You’re not smiling,” as opposed to calling up a franchise and saying, “By the way, one of your cast members is not smiling.” Control is very important--for the absolute necessity of maintaining the quality.

Q: Tell me about your advertising philosophy. What are you going to do to promote the stores?

A: To date, advertising hasn’t been necessary. The malls themselves generate foot traffic. And word of mouth generates specific traffic for our store. The Pier 39 store has become a festival tourist destination resort. People get out on that pier and they see Disney and they’ve got to run over. I don’t think it would be necessary to advertise.

One thing that’s great about the mall is that the mall itself is an event. People actually go to the mall as entertainment. This is not a stand-alone store in a downtown area.

Q: Will there be merchandise at the Disney Store that isn’t at the park?

A: With 8,000 different items under license, there will be all types of merchandise in these stores through every possible source. We will have park merchandise in the stores. We will have merchandise that is not in the park. And we will have merchandise that is designed specifically for the stores.

There will be everything you can imagine. I was just at Duke (University) speaking, and I opened it up for ideas for new kinds of merchandise, and some girl suggested tooth paste. I thought that was great.

There’ll be everything from apparel, to video, to plush toys, to furniture, to high-priced items, to Disney memorabilia, to jewelry, to watches, to everything!

Q: Where is the merchandise manufactured?

A: Our merchandise is manufactured all over the world. Some of the stuff we have comes out of France. Most of the stuff comes out of the United States. Some of our licensees’ merchandise is from the Far East. Apparel is manufactured here and abroad.

Q: How big a demand is there to be a licensee?

A: It’s an avalanche of requests right at this moment. We make our selection based on the quality of the product.

Q: Other than quality, why might you turn down a potential licensee?

A: We would turn down a licensee if we had already given a license for a certain product to a competitor. Or because of quality and the ability to fill a commitment to make merchandise.

Q: Do you get requests for products that would not be compatible with the Disney image?

A: I think it would be rather clear to anybody what is compatible and what isn’t compatible to the Disney Co. But I suspect that our consumer products division gets amusing requests all the time.

Q: Will there be any merchandise unique to Orange County?

A: I suspect there will. Orange County has its own image and its own appeal. I suspect that Mickey Mouse will find his way on sweatshirts and T-shirts that relate to things in Orange County.

Q: Is it likely that every time there’s a new ride at the park, we’ll be able to buy products tied to it?

A: I don’t know whether every time there will be products at the stores. That would be more traditional in Disneyland.

But I would hope that every time there’s a new release of our classic movies, there’ll be something in the stores to remind you of that. I would hope that when we put out a new video of Mickey Mouse cartoons or of a Disney movie, the video will be sold in the stores. And when something is happening of some importance in the Disney Co., it will be reflected in the stores.

The stores are a great image . . . Especially if we have a lot of them around the country.

Q: Yet isn’t there a limited niche for Disney merchandise? How do you avoid reaching the saturation point for Goofy statues or Mickey Mouse watches?

A: There is a finite market for everything. But the one thing that seems to have a rather large acceptance is family-oriented merchandise. We’re a family company, and most people have come from a family or are going into a family or a part of the family. Most people have children, grandchildren, wives . . . There’s nobody that we would exclude from being a potential customer. Everybody must know at least one kid.

Q: Why does the merchandise have such wide appeal?

A: I think it’s because it has been a consistent trademark for 50 or 60 years, and the characters are non-threatening. We are not a political organization. The company has always been concerned with quality first. And Mickey Mouse is the star.

Q: How do you see the retailing aspect affecting the Walt Disney Co.?

A: It should be very important as part of our future growth.

Q: Does Disney have a future in retailing other than the stores we’ve been talking about?

A: No. Our retailing is strictly going to be confined to Disney products. We’re in show business. We’re not going to be in the shoe business.

Q: So you don’t see the company going into manufacturing?

A: Absolutely not. We may manufacture a few T-shirts, but we’re not going to manufacture lines of furniture, fur coats and things like that.

Q: Do you eventually foresee the company opening amusement parks in China and the Soviet Union?

A: If eventually goes way past my lifetime, I would say yes. But if eventually is in my lifetime, I’m not sure.