Consistent strategy builds profitable retail: Ron Johnson, Disney's vp of retail business development, GM, Wal-Mart, discusses licensees and going global

DSN Retailing Today, Sept 12, 2005

Disney Consumer Products is a division of The Walt Disney Co. that extends the Disney brand to a broad range of merchandise including apparel, toys, home decor, games, food, beverages, electronics and more. Disney established its presence in Northwest Arkansas in 2000 and today employs 15 people.

CNWA: TALK ABOUT THE ROLE OF THE LOCAL DISNEY TEAM, ITS PURPOSE, STRUCTURE AND EXPECTATIONS FOR GROWTH.

RJ: Our team is here to help Wal-Mart utilize the Disney brand in its stores to drive profitable sales growth and make the shopping experience more enjoyable. We don't release our growth plans for specific accounts, but I will tell you that Wal-Mart is growing market share of DCP merchandise in every country in which we do business together. Our growth planning is part of the joint business planning process we have in place with Wal-Mart's Global Supplier Development Team.

CNWA: GIVEN THE ROLE YOU DESCRIBED, WHAT INITIATIVES ARE UNDER WAY TO BE AN EVEN MORE EFFECTIVE PARTNER WITH DISNEY LICENSEES AND WAL-MART?

RJ: We have two primary focus areas to drive profitable growth with Wal-Mart globally. The first is key items and working with Wal-Mart preferred suppliers to develop items that deliver strong consumer value and offer significant volume opportunities. The second is the Magic of Disney and creating fun corporate marketing events that make the shopping experience fun while providing Wal-Mart a competitive advantage when compared to other retailers.

CNWA: WHAT'S GOING ON IN TERMS OF MERCHANDISING TO ELEVATE THE RETAILTAINMENT ASPECT OF DISNEY LICENSED PRODUCTS?

RJ: Eduardo Castro-Wright is a great addition to the operations group for Wal-Mart. He was very successful in Mexico at pulling together product from all departments around the store into one location to maximize sales and exposure on entertainment driven initiatives. He is now bringing that same focus to the United States.

A current example is "Cinderella" merchandise that will be pulled together in all stores this fall to take full advantage of the Platinum DVD release and the very significant marketing campaign behind this release. That type of focus from Wal-Mart operations never happened 12 months ago. At DCP, we know from experience in other countries and with other retailers in the United States, that this works both short term to drive sales and long term to deliver destination shoppers on our character franchises.

Wal-Mart business on Cinderella and the Disney Princesses franchise will benefit in years to come from this merchandising effort. Of course we will still have key items and a strong retailtainment package happening at the same time in stores. The difference is that now consumers will be able to find the associated merchandise in one location without having to shop every department throughout the store, which can be a challenge in a 195,000-square-foot supercenter.

CNWA: THE DESIRE FOR DIFFERENTIATION ON THE PART OF RETAILERS HAS FUELED DEMAND FOR EXCLUSIVE SUPPLIER AND BRAND RELATIONSHIPS.

WHAT'S DISNEY'S PHILOSOPHY IN THIS REGARD AND WHAT SHOULD WE LOOK FOR GOING FORWARD?

RJ: Historically, it has been my experience that Wal-Mart merchandising has not been as aggressive as other retailers when it comes to exclusivity on items and brands with the exception of private labels. I believe this is because Wal-Mart wants to compete and they are confident that they can offer a better consumer value due to their global sourcing and supply chain advantages.

Because of a flexible business model, DCP has the ability to offer Wal-Mart solutions that many vendors/suppliers cannot provide. We have given Wal-Mart a "slice of the Disney brand" that is exclusive to Wal-Mart globally. That brand is the Wonderful World of Disney. Wal-Mart is utilizing this exclusive branding in many markets today, but the biggest competitive advantage is in the United States where many baby boomers remember Sunday nights with our families watching Walt introduce us to the Wonderful World of Disney television event every week.

CNWA: DISNEY'S PROPERTIES ARE AMONG THE MOST RECOGNIZABLE IN THE WORLD. HOW IS THIS BRAND EQUITY BEING LEVERAGED TO DRIVE SALES OF LICENSED MERCHANDISE?

RJ: Honestly this is our biggest "miss" with Wal-Mart today--a consistent brand statement in their stores both in signing and product offering. We just recently completed a strategic meeting with a merchandising executive and her departmental executive team. Her comment at the end of the day was excellent. She said that she understood the equity of the Disney brand and that our research supported the assumptions they had internally for needing to improve/change the department. She went on to say that our brand had no consistent identity in product and signage across the store.

What does Disney stand for to the Wal-Mart shopper? The question is how do we, together, use the magic of the Disney brand across departments to deliver needed improvements without confusing the shopper. Needless to say we now have a new project that is top of mind for our team. Wonderful World of Disney is the branding solution for this, but that is only the tip of the iceberg when it comes to leveraging a brand. We now have to develop the accurate brand profiles, strategies, creative and ultimately product to support this positioning.