Disneyland, Mattel Expect Billion-Dollar Sales Boon With 10-Year Deal : Merchandising: Both marketing giants see each other as top-of-the-line companies with images to match. This winter, the toy firm will open a store at the Anaheim park.

The 26-year-old Disneyland attraction “It’s a Small World,” a tribute to the world’s children, is about to get a new neighbor.

Come this winter, visitors will exit the ride directly into a store featuring toy products by Mattel Inc., which sponsors “Small World.”

The shop, which has been under construction for a December or January opening, will showcase existing Disney-themed product lines as well as merchandise exclusive to the theme park. Mattel’s most famous creation, Barbie, will also be on hand, along with other non-Disney items.

The as-yet-unnamed store is the latest development in a Disney-Mattel licensing agreement forged in 1987, when Mattel began manufacturing Disney toys for infants and preschoolers to establish a presence in those markets.

The relationship expanded last November, under a new 10-year agreement effective Jan. 1 of this year, to include Disney’s theme parks. Besides sponsoring “Small World” in Anaheim and at Florida’s Walt Disney World, Mattel sponsors the Autopia attraction at Euro Disneyland in France, tied to its line of Hot Wheels miniature toy cars.

A full line of company merchandise, primarily Disney related, is already available at the Mattel Store at Walt Disney World’s Lake Buena Vista Village and at kiosks at the French theme park.

Disneyland has hosted outside companies throughout its 37-year history: Hallmark Cards and Pendleton Woolen Mills were longtime participants, and Lorus currently offers watches at a shop on Main Street. But considering that Disney is a retailing giant in its own right--besides operating shops at the theme parks, it has 185 Disney Stores worldwide--why welcome another company to the fold?

“It’s part of the total relationship we have with Mattel,” says Peter M. Clark, senior vice president of participant affairs at Walt Disney Co. in Burbank. “It cements an important relationship with a very important company that does business with us. Over the years we’ve tried to work with fewer companies of higher quality and have more far-reaching agreements with them, involving them in more facets of (Disney operations).

“We always go after leaders in their category. So having participants such as Mattel allows Disney the best-known companies as sponsors, along with the financial remuneration we receive.”

Neither company would disclose financial terms of the agreement.

Actually, the Disney-Mattel connection began long ago, points out Donna Gibbs, director of media relations at Mattel in El Segundo. “We were the first toy maker to become a network television sponsor, with ‘The Mickey Mouse Club’ show in 1955,” she says. “We introduced the ‘Mousegetar’ (a guitar bearing a Mickey Mouse insignia) in 1956. And there was a little bit of collaboration through the years after that.”

The newest enterprise, like most things Disney, will mix commerce with caprice. “Because it’s built at the ‘Small World’ exit, we want the store to be intimate enough so that people feel warm and fuzzy,” Clark says. “We want to set the toys up so they look like they belong in a magical place like Disneyland. If you take Barbie, who from what I understand is every girl’s dream, and see her in a setting with some limited animation, that’s special.”

As “Small World” is one of Disneyland’s top 10 attractions, carrying up to 2,700 to 3,000 park guests per hour, the store should be beneficial to both companies.

Says Carol L. Palmer, an analyst for the Chicago financial research company Duff & Phelps: “You can see how Mattel’s toys would fit into Disneyland’s environment--Barbie is a whole fantasy concept. The store diversifies Disneyland a little bit, enhances their reach.”

The Mattel products to be sold exclusively at the theme parks are still in development, according to Gibbs, and therefore will not be available opening day. Among existing merchandise--marketed primarily through chains such as Toys ‘R’ Us, Target and K mart as well as the Disney Stores--is a line of plush toys and fashion dolls called Disney Classics, which were introduced last year for the re-release of the feature “101 Dalmatians”; the line also includes characters from “Cinderella,” “Beauty and the Beast,” “Sleeping Beauty” and Disney’s newest animated film, to be released this month, “Aladdin.”

The store will also stock infant and preschool items and plush toys based on characters from “Pinocchio” and “Bambi.” Next year, Mattel acquires the rights currently held by toy manufacturer Hasbro to make plush toys based on principal Disney characters Mickey and Minnie Mouse, Donald and Daisy Duck, Goofy and Pluto. It was previously licensed to use those figures only for its infant and preschool lines.

As for the distant future, Gibbs says, “we’ll be doing new characters as they are introduced, from movies and other areas of entertainment. There is also a potential for new categories beyond infant and preschool, plush toys and dolls.” She declined to offer specifics.

Gibbs expects the Disney agreement to bring in sales of $1 billion by the end of the decade. Disney’s consumer products division reaped close to that amount in revenues for the fiscal year ending September, 1992, up from $724 million the previous year. The division’s 1991 operating income was $229.8 million.

The Mattel store may have advantages extending beyond Disneyland’s perimeter. Says analyst Bruce Thorp, in the trust and investment management division of PNC Financial Corp. in Philadelphia: “(The store) is a way of cross-fertilizing the arrangement, a further link. It gets people to think of Mattel when they go to Disneyland, and to think of Disneyland when they see a Mattel product.

“So it enhances the relationship and reinforces the association in the mind of the consumer. Mattel’s success will be Disney’s success.”