New Theme Player
When Walt Disney Co. opens its first ESPN store today, it will do so with fanfare and hoopla and the knowledge that it’s entering a riskier retail game.
Sportscaster Dick Vitale will be providing the color at the grand opening of the sports-themed store at the Glendale Galleria. However, the company that created the entertainment store concept with the opening of the Disney Store a decade ago now faces a much more competitive field.
The new venture, dubbed ESPN--The Store, is just the latest player in an increasingly crowded “retail-tainment” arena that includes Warner Bros. stores, chains associated with public broadcasting stations and newcomers such as Viacom and the Discovery Channel.
“We think an ESPN store is a quality idea,” said Disney Chief Executive Michael D. Eisner, a sports fan who had suggested the store. “But the entertainment store is a risky concept. This [venture] is not a shoo-in.”
While the ranks of stores that trade on studio fame or television notoriety is growing, so is the number of failed ventures. For example, a chain based on the cartoon world of Hanna-Barbera Inc. failed earlier this decade, and a Sesame Street chain, operated by a licensee of the public television program, hit a dead end and closed its stores in 1996.
The continuing spread of entertainment stores could lead to problems, industry analysts say. For instance, increased competition could spur price-cutting, which would probably erode profits. Also, the novelty may wear off.
“We’re not at the saturation point, but we’re getting close,” said New Jersey-based retail economist Kurt Barnard.
Like the other themed chains, the ESPN store will offer merchandise with a company logo, clothing and collectibles. It will have collector’s memorabilia such as jerseys signed by basketball superstars Michael Jordan ($950) and Magic Johnson ($450) and boxing gloves signed by Muhammad Ali ($350).
The store will also offer sporting equipment, such as mountain bikes and skateboards bearing the brand name X-Games, the name for ESPN’s “Extreme Games” competitions, and equipment such as binoculars and radio headphones.
The store, which will also have video games and news at interactive kiosks, will resemble a broadcast center, said Disney Store President Thomas Heymann, who will oversee the new venture. Like Eisner, Heymann is cautiously optimistic about the prospects of expanding the concept into a chain.
“This store is a pilot,” Heymann said. “There’s a lot of competition and not a lot of new concepts out there. However, this store concept is new and novelty is winning in the market.”
To be sure, entertainment stores are one of fastest growing sectors in retailing. There are now 440 Disney Stores in the United States and 191 abroad. Warner Bros.--Disney’s biggest rival--entered the retail fray at the Beverly Center in 1991 and has opened 134 U.S. stores and 40 abroad.
“The success of Disney and Warner Bros. is attracting others to this business,” said Peter Chernack, president of the Themed Entertainment Assn., a Burbank-based trade group that represents companies involved in building and operating theme stores, restaurants and the amusement parks. “Entertainment is a driving force in retailing.”
Retail industry analysts agree.
“There’s been a slowdown in mall sales and entertainment stores are a way to generate customer traffic,” said Ira Kalish, senior retail economist at the Los Angeles offices of Management Horizons, a division of Price Waterhouse. “For studios and television companies, it’s a way to generate sales and control more of their licensed merchandise.”
The stores are also a venue for increasing marketing and introducing new licensed merchandise. For example, new products based on characters in the film and video library of Turner Broadcasting--Scoobie Doo and the Wizard of Oz, for example--have been big sellers for Warner Bros., said Peter Starrett, president of that store division.
Red, sequined slippers for girls--a softer $16 version of Dorothy’s ruby slippers in the Wizard of Oz--are hot, he said. And adults are wild about cookie jars resembling the Tin Man, Lion and Scarecrow.
“We’re selling them for $45 each but we can’t keep them in the stores and collectors are reselling them on the Internet for as much $300,” Starrett said.
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Stores that attract children as well as adult buyers have a greater chance of success, said Dan Romanelli, president of Warner Bros. Worldwide Consumer Products.
“We hope other entertainment stores do well because it adds to the excitement of this kind of retailing,” Romanelli said.
Among those experiencing rapid growth is Store of Knowledge Inc., a Carson-based company that creates partnership stores with PBS affiliates. Affiliates receive a minority interest in the stores.
Since founding its first store three years ago--the KCET Store of Knowledge in Glendale--the company has opened 38 stores for 20 affiliates and plans to open 12 more by November and an additional 25 by November 1998.
A plush toy modeled after the animated aardvark known as Arthur and a video of the “Riverdance” production are two of the stronger selling new products at the stores.
Another learning-oriented company--the Bethesda, Md.-based Discovery Communications Inc., operator of the Discovery Channel--also has a rapid retail roll-out. Since venturing into the business in 1995, it has opened 17 stores in the U.S. and one in Britain. The chain offers a wide range of products, including videos, books, CD-ROMs and educational kits.
The company is building a flagship store in Washington, D.C. The three-level store will recreate the look of life in the sea and underground on one level, terrestrial life on another, and outer space, aviation and science on the third.
That store will open in February and a second flagship store--in San Francisco--will open in November 1998.
“We’ve had modest profits thus far,” said company spokesman Jim Boyle.
Viacom is the latest company to enter the retail arena; it opened its first Viacom Entertainment Store in Chicago in May. The store offers products based on Viacom’s many properties--Star Trek, MTV, Paramount Studios and Nickelodeon.
However, some industry analysts question the company’s decision to use the Viacom name instead of the better-known names of its properties. Some say the store is struggling.
Despite that, Viacom spokeswoman Susan Duffy said store business is “exceeding expectations.” She said the company now plans to open several Nickelodeon stores soon.
