FEATURE: Parents, grab the kiddies! “It’s a Small World”—Disneyland’s classic attraction featuring a pageantry of child dolls and a never-ending melody celebrating the joy of togetherness—is coming to a shopping mall near you. In October, the New York Times reported that The Walt Disney Corporation plans to pursue a sweeping plan to transform its retail locations into quasi-amusement parks packed with interactive games, rides and other novelties. This month, Disney confirmed that it would also open new flagships in coveted spots like Manhattan’s Times Square.
Disney’s move is in flagrant violation of the now widely accepted first rule of Recession Retailing—with consumer spending down, smart companies are hunkering down, closing locations, agressively managing inventory and generally cutting costs. Even before the economic downturn, many argued that, in some retail segments, access to unlimited free content and discounted merchandise via the world wide web was making it nearly impossible for location-based retailers to compete—think Blockbuster vs. Netflix or Amazon vs. Borders. So why would the largest media and entertainment conglomerate in the world decide to “buck the trend” by pouring money into its brick and mortar stores?
The genesis of Disney’s ambitions is no big secret—Apple CEO Steve Jobs sits on the Disney Board and, for some time, has urged the Company to be more creative in its approach to retailing. Jobs’ argument carries a certain legitimacy given his overwhelming success wth Apple’s retail locations. Like the Apple Store, Disney’s new “Imagination Parks” will be jam-packed with hip new gadgets and gizmos, but the real common thread is the emphasis placed on atmosphere. As Jim Fielding, president of Disney Stores worldwide notes, “The world does not need another place to sell Disney merchandise—this only works if it’s an experience.” Still—though it may appear to be the land of fairy princesses and talking rodent-chefs, this is still good old corporate America. Neither Disney nor Apple wants people to come bang on touch-screens, chat up the friendly sales people and leave without opening their wallets. On the contrary, they are simply making the bet that, amidst all the sampling and frolicking, people will accidently buy something.
This strategy is hardly new or earth-shattering. For years, Barnes & Noble has tricked people into buying titles like Greek Rural Postmen and Their Cancellation Numbers by offering comfy couches, piping-hot Joe and, as of this summer, unlimited free wi-fi! On face value, the B&N strategy doesn’t make much business sense. If you can read Skinny Bitch in the store in 20 minutes, why buy it for 20 bucks? Who wants an espresso-stained Men’s Health anyways? Yet, Barnes & Noble became the industry leader by actually encouraging shoppers to lounge and loiter. How many of us have entered a B&N superstore to “do-work” or “browse,” and emerged, dazed and confused, juggling 3 hardcovers and a latte. Mostly due to the broad-based slowdown in consumer spending, Barnes & Noble has had several quarters of underperformance. The book business has been a difficult one and, as a result, Barnes & Noble management has felt compelled to move into Ebooks in order to remain competitive with Amazon. Still, B&N’s strategy is reliant upon in-store demonstrations and free sampling, which reveals a continued emphasis on customer experience and a location-based retail strategy.
Accidental consumerism has driven profitability at both Apple and Barnes & Noble, so why wouldn’t it work for the architects of the Magic Kingdom? Well, unlike Disney’s animated films, the story here is not guaranteed to have a happy ending. Take 2006’s hot spot at the local mall—The Sharper Image. In its heyday, the high-tech electronic retailer attracted droves of shoppers who wanted to check out the store’s exotic offerings. Corporate planners paid little attention to inventory management and explicitly encouraged customers to linger and test out multiple devices. By 2008, the company had filed for Chapter 11 bankruptcy protection—the main factor being declining same-store sales in expensive locations. In other words: people simply didn’t buy enough stuff. They might go there and try the massage chair, but when it came to buying an electronic shaver, they just ordered one online for half the price.
So what are the lessons learned? Why have some companies succeeded in experience-driven retailing, while others have ended up cash-strapped and customer-less. I think price point and customer age demographic are two critical factors. Think about it—you are much more likely to accidently purchase a magazine then an Ionic Breeze Silent Air Purifier for $220+. True, Apple products aren’t exactly cheap. But once in the store, is Tracy’s Mom really going to condemn her daughter to eternal social loserdom by denying her a new I-Phone? Based on this analysis, Disney’s maneuver seems rather savvy—kids are the target audience and products can go for as little as 5 bucks.
Urban Outfitters is another company that has a good shot at capturing the accidental consumer. The clothier already relies heavily on atmosphere to attract its customer base of hip urban teenagers. Just imagine what they could do with touchscreens, headphones and a central common space. Take the waify fifteen year-old dawning a flannel shirt and ripped jeans. Watch as she samples tunes from that new hot indie band whilst scouring lookbooks filled with fall’s latest trends. Guaranteed she buys a bangle or two.
I think Disney’s bet is a good one and clearly there is an opportunity for other retailers to successfully replicate the strategy. However, I think the real takeaway here is the following: despite the seemingly inexorable forces of PayPal, Facebook and SeamlessWeb, there is still a compelling market demand for some form of shopping hub. What Apple, Barnes & Noble and now Disney all offer is the opportunity for a family outing, weeknight rendezvous or chance encounter. They promise human interaction and a space away from home or the workplace.
Thus, I think those who are calling for the death of the shopping mall or mega-store are significantly overstating the case. True—stores will continue to close and malls may be forced to downsize or come up with creative ways to fill space, but the best and most innovative companies should be able to take advantage of the shrinking number of retail destinations and establish themselves as local community centers. Americans may be bowling alone, but they’re still going to shop around other people—even if only by accident.
