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Animation Studio Stores: The Sophisticated Retail Outlet

Why all the studio stores? Control, control, control. Teresa Klein investigates the many profitable facets of studio stores.

Just as computers and the art of animation have become more and more sophisticated and specialized, so have the retail outlets for distribution of animation-based products. No longer are the Donald Duck-versus-Daffy Duck battles for mass-market retail shelf space satisfactory for licensed animated products. Studios have, in fact, taken a large part of their retail financial futures into their own hands by launching and operating their own retail stores, and manufacturing their own merchandise. Ten years ago, The Walt Disney Company opened its first The Disney Store in Glendale, California. Four years later, in 1991, Warner Bros. opened its first Warner Bros. Studio Store in Los Angeles. Now there are more than 430 Disney Stores in the United States and over 170 in 11 other countries around the world. Warner Bros. Studio Stores top 161, with that number expected to pass 180 by year's end. The number of international Warner Bros. stores tripled in 1996, to more than 22, with debut locations in Japan and Australia and additional locations in Singapore and Hong Kong. According to the company, 1997 will see the addition of 15 more international units by year's end. "The International Studio Stores division will continue to expand its presence in 1997, with additional store openings to include entries into Indonesia and Guam, and a Tokyo flagship in the Ginza district," according to Warner Bros. Consumer Products.

The Warner Bros. New York City flagship Studio Store at Fifth Avenue and 57th Street has nine floors and 75,000 square feet of retail space. © Warner Bros.

Warner Bros. feels that, since their debut, the Studio Stores have "captivated consumers with their 'movie-studio, back-lot' design, interactive attractions, dramatic multimedia environments, and diverse assortment of high-quality merchandise." The company estimates that each store features over 2,500 products. "The Studio Stores represent a significant factor in the growth of the Consumer Products division," explains Dan Romanelli, President of Warner Bros. Consumer Products. "When we open stores internationally, they create attention, excitement and traffic. They showcase the Warner Bros. brands in what has become known as a unique shopping and entertainment experience." The Disney Store combines retail and entertainment in a way that "makes each visit seem like a trip to Disneyland." The Disney Store is about treating the shopper to a special shopping adventure. Even a store's design and theme start "with a story line that is utilized to create a visual `story-telling experience' for shoppers." Larger-than-life character statues, video walls and specially crafted merchandising displays also help to create a unique experience. Merchandise themes are changed every six to eight weeks. Service is also of the highest importance to The Disney Store chain. According to The Disney Store, "cast members (employees) have a reputation for treating each and every guest like a special visitor." Plus, employees are "extensively trained in Disney traditions and history," and "value the Disney name and work diligently to uphold The Disney Store's high standards of excellence."

The Disney Store at 711 Fifth Avenue in New York City. © Walt Disney Company. All Rights Reserved.

Competition Leads to Entrepreneurial Opportunities

While these two leading animation studios maintain their dominance in the animation field, their creative juices are constantly being challenged by other studios adding or expanding animation divisions. Twentieth Century Fox will release its first full-length animated feature Anastasia this holiday season, and Universal Studios and Viacom are two other competitors. Not only are these and other studios vying for theatrical dollars, but also for overall consumer retail dollars. As retail sales for licensed merchandise topped $109.5 billion in 1996, an increase of 6.5 percent over 1995 (The Licensing Letter, June 1, 1997), the importance of capturing and maintaining a loyal customer is more important than ever. As owners and operators of their own retail outlets, studios have created win-win situations for themselves and their shareholders. By having their own store, they are virtually guaranteed a sale. For if a customer walks into a Disney Store or a Warner Bros. Studio Store, they are there for a specific character. For example, if a consumer is looking for Mickey Mouse merchandise, they wouldn't go into a Warner Bros. Studio Store.

"Other licensers have opened, or are planning to open, their own retail outlets to supplement licensing income," says Rich Levitt, editor of The Licensing Book trade magazine. "None have done so more aggressively than Warner Bros. While the Warner Bros. Studio Stores have occupied prime real-estate worldwide, they have also been highly effective as a tool to show the [mass-market] retailer the merchandising power of the classic licenses."

The Warner Bros. Flagship store features

Event Properties Offer Limited Sales Window Because of consumer demand, mass marketers quite often concern themselves with merchandising of licensed products based on the feature film(s) of the month. On the average, this provides a four-to-eight week time frame on which to capitalize on the hype surrounding a movie's release. Traffic-building, in-store marketing programs are one way to take advantage of this limited window of opportunity. These may include endcaps, free-standing displays, window displays, or in-store boutiques. But these merchandising programs are not limited in use to just the mass marketers. Even though specialized studio stores feature their own products, they still must capitalize on an event film's same brief window of opportunity that the mass marketers do. Only, they have a little more flexibility in which to do it. For example, this past summer, the Warner Bros. Studio Store flagship location on 57th Street and Fifth Avenue in New York City dedicated the entire first floor to the movie Batman & Robin, complete with life-size models of the movie's "frozen characters." In addition, actors' costumes were displayed on additional floors of the monster nine-story, 75,00-square-foot store. Likewise, The Disney Store prominently featured Hercules merchandise, from clothes to toys to shoes, at the front of its stores during the film's period of release.

Disney regularly changes its' store-front to promote current properties. During the theatrical release of Hercules, the front of many Disney Stores were altered to say

In addition to having more space to work with, these specialized stores feature a large percentage of exclusive merchandise that consumers cannot purchase outside of the respective chain. Only a small amount of The Disney Store's merchandise is available outside of the stores as licensed product. The majority is what is know as "private-label merchandise." Warner Bros. says that about 80% of its store's products generally are private-label goods not available outside the Warner chain. "Still," according to The Licensing Letter, "by their presence in major malls and shopping areas, the stores presumably aid licensed-product sales [in other stores] by showcasing characters and movies."

The Licensing Letter also reports, "In some cases, the profitability of the store becomes secondary to larger marketing goals. The store fronts act as 'billboards' for the brand or property in very high-traffic locations. For Warner or Disney, frontage can promote merchandise tied to the event of the moment, as Warner is doing [did do] for Batman & Robin, Disney for Hercules. Also, the specialty stores can be merchandising labs, with data and trends given to licensees (whose merchandise is likely distributed through other channels) and other retailers."

Television Extends a Property's Life

Because of the brief window of sales opportunity due to the short theatrical life of feature films, animated series based on the films often enable studios and their licensees to broaden their lines and extend the life of a property. Warner Bros. and Disney are both well practiced at this.For Warner Bros., one of the best examples of an animated series carrying on the popularity of a live-action feature film is Batman. Although Batman: The Animated Series is appropriate for a wider age range of children than the live-action movies, this animated series is what keeps sales of licensed merchandise going. In particular, the action-figure toy line by Hasbro Toy Group appears on The Toy Book magazine's "What's Hot!" list consistently month after month. Superman, which debuted as a new animated series in the fall of 1996, is also on its way to becoming a new live-action movie.

The list of Disney animated feature films that have made the transition to television series include The Little Mermaid, due for re-release in theaters this holiday season; The Lion King, with the series Around the World with Timon & Pumbaa; Aladdin; and the soon-to-be-animated Hercules. Other studios have also realized the profitability of animation following live-action movies. The biggest movie of the summer of 1997, Sony's Men In Black, debuted this fall as an animated series. Also in 1998, watch for Sony's Godzilla feature movie around the end of May. An animated series is already slated to follow in the fall of 1998.

Classics Lead to Profits But let's step back again to those profitable animated classic characters. Disney has them, and Warner Bros. has a lot of them since they acquired Turner Broadcasting Systems with its Hanna-Barbera library in 1996. The challenge classic characters present to the studios is "freshness." Consumers want to know "What's new?" Retailers want to know, "What have you done for me lately?" They don't want old characters that are going to sit on their shelves or hang from their racks; they want something that is going to sell - a new, fresh look applied to an old favorite. When selling to the mass-market retailers, the studios have to remind buyers of the on-going strength of a classic character and how they can best maximize the property's long-term prospects.

Warner Bros. Studio Stores section off the stores into types of merchandise, such as the Animation Art Gallery pictured here. © Warner Bros.

Owning one's own stores comes in handy again with the marketing of classic merchandise. Stores can be a testing ground for popularity before introducing classic product into the mass-market outlets, or one can choose to be exclusive, which is a driving factor to the appeal of specialized stores. As Warner Bros. Consumer Products' Rob Gruen told The Licensing Book, "There is no question that the Warner Bros. Studio Stores have made a major impact on our overall retail strategies. I've always felt that you have to showcase your brands to demonstrate their viability at retail. The stores have proven to be the ultimate showcase for Looney Tunes, Batman, and other DC Comics properties. Yes, they make money, but more, they say to retail, 'Look what you can do with this property.'"

Furthermore, what can be done with merchandise based on a property, whether it is the latest theatrical event or a long-time favorite, is wide open when you're the owner of the property and the retail store in which it is sold. From mugs, to t-shirts to action figures to stuffed animals, products that animated characters are portrayed on have to battle for the mass-market retail shelf space which is becoming more and more scarce. What better way for a studio to guarantee prominent placement on store shelves but then to have a store filled exclusively with its own products?

Teresa A. Klein is a freelance writer, specializing in toys, licensing and related industries. She serves on the board of directors for the non-profit organizations, Women In Toys and Editorial Freelancers Association, and was editor of The Toy Book and founding editor of Specialty Retailer magazines. She resides in New Jersey with her husband and two preschool-aged children.