Apple and the Disney Store Effect
A new Apple Store is opening at the South Shore Plaza in Braintree, Massachusetts. This means there is now 4 Apple Stores within a 1 hour (by car) radius of my home. That’s great right? I think so. I think that means Apple has studied my surrounding area and has concluded there is a definite need for another brick and mortar store here. I think that means Apple has done extensive research on brand saturation and has determined that more is better.
I find myself incredibly fortunate that it is possible for me now to visit 4 Apple Stores in one day. Why does Boston get 4 Apple Stores and the entire United Kingdom gets one? But there does exist a problem with getting too big too fast. Just ask the Disney Store that this new Apple Store is replacing. Besides the obvious comment of Steve Jobs’ Apple replacing the Mouse as a touch of irony in light of the recent Pixar/Disney split, this marks scary territory for Apple within my community.
When I visited my first Disney Store, it was an event. There was only one Disney Store within driving distance of my suburban home outside of Philadelphia. And once there, the store offered an experience as unique as the Disneyland Gift Shop. Disney saw demand, and they fulfilled it. I don’t know if it was intentional or not, but the fact there was only one within miles added an exclusivity element to the shopping experience. And because of it, merchandise flew off the shelves and people made special trips to go to the Plaza at King of Prussia.
Then something interesting happened: I started seeing Disney Stores everywhere. It became ordinary. The question changed from, “Does this mall have a Disney Store?” to, “Where’s the Disney Store in this mall?” Despite selling boutique-like merchandise, the Disney Store became as commonplace as the Gap and the Museum Store. Incidentally the Museum Store went out of business, for the same reason. The Gap can change clothing lines every season, but how many things can you brand with Frank Lloyd Wright windows?
I totally understand the desire to grow. If I was running a chain of stores for malls, I would want to be in every mall in America. Although tempting, Apple should avoid this practice. They should learn from stores who balance demand and exclusivity and in turn, create profits. Stores like Crate and Barrel, Janie and Jack, and Restoration Hardware. Those brands are popular and that popularity also drives more business to vehicles like catalog and online that carry less overhead costs.
Bostonians are used to oversaturation. After all, there are Dunkin’ Donuts on every corner in New England. But Dunkin’ sells consumable products. You drink your coffee and you eat your donut and the next morning you repeat the process. The Apple Store is in danger of becoming commonplace in Boston and there’s only so many iMacs and iPods one can buy.
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great point! Warner Bros also had a brick and mortar retail chain, and you don’t see those around any more.
Apple is great because its still exclusive (even the iPod, even tho it owns the mp3 player market, its still a luxury item)
Let’s not make it into the next Sharper Image!
I spent 20 years working for Disney in marketing, and the number of Disney Stores simply wasn’t the cause of the decline and sale of the Disney stores.
Disney has hundreds of licenses to produce products for character-related merchandise and the stores were competing with these hundreds of retailers in the marketplace. There are other factors, too, such as changing consumer behavior in where merchandise is purchased.
For the most part Disney store merchandise was not something that needed to be purchased or tested at a brick-and-mortar store.
Although there are many similarities between the Disney Stores and Apple Stores (such as creating an inviting, exciting experience for the customer that encourages purchasing merchandise), the main purpose and need for the Disney Stores and Apple Stores is different.
Only in New England would someone worry about a company with a 3% market share oversaturing a metro area with 5 million people by adding a 4th store!
DF, Point taken. But although 3% marketshare is accurate over the home computing market, the real percentage at stake here is the 75% or higher marketshare that iPods carry in the portable digital music player category.
You can’t simply associate 5 million people with 4 stores. Each type of store creates bigger impact and carry more weight in the space than others. The Apple Store is one such store. For instance, if there were 2 IKEAs in the Boston area, that too would be oversaturated. But 2 Starbucks within the city would simply be too little.
Comparing the saturation of Apple Stores to IKEA or Disney ignores another important element: There may be 4 stores in the Boston metro area where you can buy an iMac, but think of how many Best Buys and Staples and other PC vendors there are in that same area.
A lot of people, especially those considering switching, want to go into a store and play around with a computer before they buy it. And since Apple hasn’t been advertising any other than the iPod recently, a strong retail presence is one way to get people to see their products and seriously consider buying them.
I agree with Joe.
And, if iPods were Apple’s only product they’d be ditching the stores.
Apple’s problem right now is that when Macs are sold amongst a plethora of Windows computers by sales staff who don’t care which platform you buy the Mac proportion of sales is very low. At the Apple Store the staff is very adept and successful at getting walk-in customers to buy.
Gregory’s conclusion, “If I was running a chain of stores for malls, I would want to be in every mall in America. Although tempting, Apple should avoid this practice. They should learn from stores who balance demand and exclusivity and in turn, create profits. Stores like Crate and Barrel, Janie and Jack, and Restoration Hardware. Those brands are popular and that popularity also drives more business to vehicles like catalog and online that carry less overhead costs… The Apple Store is in danger of becoming commonplace in Boston and there’s only so many iMacs and iPods one can buy.”, is flawed because it compares Oranges to Apples and completely misses the real reasons why Apple needs to expand the number of Apple Stores.
The Disney Stores, by the way, were never about “exclusivity”, and it needs to be said that the Disney Stores, when sold last year, were still in the top tier of sales performance for retail stores nationwide.
AppleMatters rocks, and I’d never want to suggest otherwise. In this one piece, though, I have a difference of opinion.
Available here:
http://www.macliberals.com/saucyblog/?p=69
I have to chime in here. I worked as a tradition trainer with The Disney Stores for over 10 years, starting my “career” fresh out of high school by participating in the grand opening of the first store (4th in the chain) outside of California. As Gregory mentions, it was an event for all the guest that came to the store for the first few years, some even comparing it to visiting one of the theme parks for a day. The first original 13 stores each had its own theme relative to the area; Bridgewater, NJ had a beach theme (Jersey Shore), Paramus was set in a theatre (closet proximity to NYC), etc.
Then each year after 1989 they had themed stores for those that opened in a 12-month period, and in the mid-90s it was limited to a generic theme. They originally touted that they would only be located in selective, upscale malls (I heard the original number was to be 100 worldwide), but that soon changed when the popularity of the stores took off. At one point they had over 500 stores domestically, and 160 overseas.
Their demise was that they oversaturated the market with “magic”. Can you imagine if there was a Disneyland located in each state? What killed them wasn’t their product line/ merchandise, but the fact that it simply was not an experience anymore going there. Why not just go to Walmart and pick up the same thing at a cheaper price?
I’m not too sure if the Apple Stores are going to have the same problem, but I agree that they should be very selective in which malls they locate themselves in, which by doing so still creates that “going to an event” feel.
Hehehehe. I’ll chime in again.
The Disney Stores were not intended to supplement the theme parks, and what killed them was the product line.
Disney Stores were intended to make a profit selling Disney merchandise and boost interest in (not supplement) theme park visits.
I worked very closely with Disney Stores nationwide and I can assure you that “oversaturation” did not kill them. As I’ve mentioned before the retail environment changed dramatically since the first Disney Store opened, and Disney no longer needed a non-core business unit. Disney found consumer interest in theme parks could be generated far easier via the internet. And, consumers suddenly were switching to the internet where it was faster and cheaper to buy Disney character merchandise (or they’d buy it at a mega-discounter such as WalMart which was expanding dramatically during this period).
Apple’s need for the Apple Stores is completely different from what Disney’s needs were. Though the “feel” of the Apple Stores is reminiscent of what it was like going to a Disney Store, the purpose of the stores is very different.
Everyone is entitled to express an opinion, but Gregory’s piece comparing Disney Stores to Apple Stores showed a complete lack of understanding on what he was pontificating. Watching CNBC, reading the WSJ or doing a Google search would have served him well before posting his article. As it is, I think Gregory sums it up best on his own web site where he states “Sometimes I open my mouth before thinking”. That really sums up the quality of his article!