Hamleys and the Disney Store: Business Strategies

Subject: Case Studies
Pages: 17
Words: 5113
Reading time:
18 min
Study level: PhD

Introduction

Rob and Pablo, the co-proprietors of SNOG (a chain of U.K.-based yogurt shops), mention that the secret behind their success lies not only in the type of product they sell but rather in the way in which they make each transaction an “experience” for their customers. What these two entrepreneurs are referring to is the general ambiance and “feel” that permeates a particular store or shopping area (Birkett, 20 – 21). As Maklan and Klaus (2011) indicate, some of the most successful stores in the world rely not only on their product offerings to gain repeat customers but making shopping at their stores “an experience” due to how an ordinary shopping venture is enhanced through colorful displays, friendly customer service representatives and a general feeling of cheerfulness that pervades a particular store location (Maklan and Klaus, 771 – 792). What must be understood is that success in a particular retailing venture involves not only selling products but ensuring repeat business (Ting-Yueh and Horng Shun-Ching, 2401 – 416). While there are various methods of doing this such as, discount sales and promotions, one of the most widely utilized practices has been to enhance a customer’s shopping experience by incorporating methods of visual appeal, sensory stimulation as well as behavioral modification. In other words, stores try to appeal to the various senses of a customer in such a way that the “experience” of having their senses stimulated in this particular manner results in repeated patronage despite the lack of any apparent promotion or sale (Yi & Gong 1513 – 15120). It must also be noted that the “experience” provided y stores isn’t limited to sensory stimulation but can also include the very products themselves which act as a means of experience enhancement (Yi & Gong 1513 – 15120). This can constitute a wide variety of possible stimuli such as the taste of food, the feel of clothing, or the excitement attained from watching a movie in a theatre. Taking this into consideration this paper will examine the “experience” created by two stores in the London area that compete in the same industry. The chosen subjects for this paper will be the London Disney Store and Hamleys on Oxford Street. Both locations serve the same consumer demographic, namely children and young teens, yet do so in a distinctly unique fashion for each other. The prevailing theme within the Disney store has been one centered on Disney characters and Disney movie-inspired thematic backgrounds which capture the wonder and fascination that most children associate with a film from Disney’s franchise of dozens of popular movies and shows. Hamleys on the other hand focuses more on a more diverse area of products and themes within its store. What’s present in Hamleys isn’t a single overriding theme as seen in the case of the Disney store rather what is present is multiple themes spread out on each level of the store, each within its microcosm of product displays and thematic backgrounds that enhance a customer’s buying experience. Taking both cases into consideration what this paper will attempt to accomplish is an examination of the varied strategies utilized by both stores and compare them to prevailing theories and guidelines regarding retailing and consumer decision-making processes. It is assumed that through this investigative study what will come out is a revelation regarding how successful each store has been with regards to its competitive environment in terms of being able to capture its target demographic in light of the methods and processes it utilizes to accomplish this.

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Target Segments

As mentioned earlier both stores target the same consumer demographic (young children aged 3 to 13) yet within this demographic there are distinct differences between the children that go to Hamleys and those that go to the Disney store. While it may be true that Disney targets the same age demographic as Hamleys, a majority of its consumer base is aged 3 to 10. Hamleys on the other hand has a propensity to have more consumers aged 8 to 14. The reason behind this is connected to the product offerings of each store and how each appeals to the particular consumer base. One of the strengths of the Disney store is the popularity of its product offerings created through its film and cartoon franchise. As such, its product base constitutes mostly toys, clothes, and other such items with cartoon and movie themes in mind. The inherent limitation though of this particular strategy is that it limits consumer demographics to a certain extent. For example, in the study of Brakus, Schmitt, and Zarantonello (2009) which examined various young consumer demographics and their preference for particular products it was observed that Disney products had a certain “expiry date” in terms of prolonged interest after children reached a certain age (10 and above) (Brakus, Schmitt, and Zarantonello, 52 – 55). Chakravorti (2011) explains that the reason behind this “expiry” so to speak is that children eventually learn to branch out into other interests that don’t necessarily involve Disney (Chakravorti, 123 – 126). This results in subsequent changes to product preferences to other brands such as Hot Wheels, Lego, Hornby, Revell, and other such brand names. Taking this into consideration, this can explain why despite targeting the same age demographic both stores have different percentages in terms of the number of children of a particular age that patronizes their products. It must also be mentioned that each store usually targets consumer demographics constituting families of average to high-income rates. This is evidenced by the fact that while the products in each store aren’t exactly expensive they aren’t necessarily cheap either (product prices vary between 20 pounds to 200 pounds with varying prices in between depending on the complexity of a particular type of product i.e. has electronics or not).

Consumer Preferences

In light of the revelations in the previous section, it can be stated that consumer preferences between each store are divided between age groups that prefer Disney products at the present to those that have “moved on” so to speak onto other product categories. While it may be true that this separation in preference does not apply to all cases it is seen in a majority of buyer purchasing behavior within both stores and as such can be utilized as the basis for creating an inference regarding consumer preferences. On average consumers from either Hamleys or Disney buy toys and other products that are associated with the latest popular culture trend. In the case of Disney, this can involve products that are associated with its latest film or cartoon release. It must be noted though that when comparing the ability of both stores to influence consumer preference regarding particular products the Disney Store has a far greater ability to do so as compared to Hamleys. This is because each Disney store is connected to the main managing arm of the Disney Corporation that handles product promotion and sales. As such each Disney store can coincide the release of a particular product line in the same season that a new movie or cartoon is released thus channeling consumer preferences towards a particular product. While Hamleys is capable of doing this with its range of products and corporate arrangements it cannot do so at the same rate and efficiency as the Disney store. Hamleys to a certain extent is at the mercy of the fickleness of consumer preference while the Disney stores can influence consumer preferences by encouraging the release of new movies and cartoons by the main office to draw more consumers to the store.

Theory of Martineau

Martineau states that “the total sum of the image is more than the sum of the functional factors”, in a way this can attribute to the “experience” that customers feel when shopping at the store and as such contributes to their positive feelings in shopping there.

Hamleys

In the case of Hamleys the overall layout, architecture, symbols, color, advertising, and sales personnel all collaborate to create an atmosphere of wonderment wherein children experience a whole new type of environment where they are overwhelmed with the sheer amount of toys in their sight. It is this feeling of shock at the image that the store provides that is the concept that drove it to become the largest toy store in the world and is at the core of its business model.

Disney

In the case of the Disney store, the overall layout, architecture, symbols, color, advertising, and sales personnel all collaborate to create an atmosphere of fantasy wherein children are introduced to the fantasy world created by Disney characters, films, and cartoons. It is the appeal of being able to be part of this world that is the “experience” that Disney is trying to impart to children and is at the heart of its business model as well.

Retail Mix

Range

Hamleys

Hamleys has a wide arrange of products for ages 1 to 14 through the sheer amount of brands it has in stock (more than 20) from which consumers can choose from a variety of products.

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Disney

Items in the Disney store are limited to only the Disney brand and have a limited appeal to children (ages 3 – 10) due to the overall style of Disney’s products.

Price

Both store locations have the same average price range of 20 to 200 pounds for most of their product line up.

Quality

Disney Product Quality

Disney is one of the world’s most well-known brands and the quality of its products within the store shows the level of dedication in ensuring that everything that is sold conforms to the high standards of quality that the store prides itself on. It must be noted that since everything within the store is produced by the same company there are no variances in product quality with all products having exceptional standards despite varying price ranges.

Hamleys Product Quality

An examination of the diverse array of products of Hamleys reveals an equally diverse array of product quality ranges. Since Hamleys doesn’t produce its products and instead buys them from manufacturers there are obvious differences in overall quality from one selection to another within the same type of toy genre. This of course is unavoidable however Hamleys does offset this by having toys that are not up to spec sold at significantly lower prices.

Layout

Hamleys Layout

When examining the overall layout utilized by Hamleys the entire store seems to mirror that of the department store Debenhams which is located nearby. This is because the method of product placement, how signs are placed, and design of the store itself just seems to be more akin to a department store. In a way, it can be stated that Hamleys can be considered nothing more than a very large department store specializing in toys and various products aimed at young children (Hargrave, 24 – 28).

Disney Store Layout

What is immediately obvious in the case of the Disney store layout is the fact that they attempted to emulate various aspects inherent to Disneyland itself. This comes in the form of the store consisting of a wide-open area with a plethora of Disney figures and castle-like structures. From a certain perspective, it can be assumed that the reason why they decorated the store in such a way was to enable customers to experience something new and unique which they haven’t seen in other stores. This would in effect encourage more future visits resulting in higher income streams for the store.

Colors

Hamleys

Red, orange, blue and yellow seem to be the predominant theme of Hamleys based on the observed surroundings.

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Disney Store

The Disney store on the other hand seemingly stuck to dark colors themes such as periwinkle blue and deep violets. Admittedly this does make the store seem a bit dark in several areas especially when you take into consideration the color of the ceiling which is normally dark blue.

Service offering

As Ma and Dub (2011) state, “customer service is the backbone for any successful retail establishment since through it we establish a personal connection with the customer in addressing their needs thus making their shopping experience a better one resulting in a greater likelihood of product patronage” (Ma and Dub, 83 – 98). Considering this particular view, the level of dedication to customer service by both locations was examined to determine how each store applied the concept of “creating a personal connection with the customer”. It was anticipated that since both stores dealt with toys and children that the examination should show an excellent dedication towards ensuring customer satisfaction with every interaction.

Hamleys Service Offering

In the case of Hamleys, all the floor staff was dressed with the “I am here to help you” slogan placed prominently at the back of each bright red shirt. This is a particularly appealing method of differentiating customer support staff and enables consumers to immediately identify and head towards someone that can resolve their issue. In most cases, customers have to hunt down a service assistant in some department stores due to the drab nature of the outfits that the company forces them to wear. In this case, the right red colors show how the company has made it as convenient as possible for consumers to connect with the company’s employees to have a better consumer experience.

Disney Service Offering

While Disney doesn’t have the same slogan etched on the back of their shirts they are also equally recognizable based on the color and styling of their outfits (still a bit drab though and could use a bit more brightness). Both stores have just about the same level of customer service competency however the employees at Disney stand out since aside from providing customer service they also interact with the children by providing them access to a variety of interactive displays and activities within the store that helps to endear the store staff to both the parents and the children.

Customer communication

When it comes to the customer communication strategies of both stores it was seen that Hamleys had far more store assistants as compared to Disney. Based on the number of observed store assistants within a given location, Hamleys has at least 3 more staff representatives per customer service assistant than Disney.

Disney Customer Communication

It was observed that buyers within the Disney store had a clear idea of what products Disney had and where. While this can be chalked up to the prevalence of Disney culture within the modern-day population it was seen that Disney has marked areas and prolific signage with which a customer could easily find exactly what they were looking for. As such from a standpoint of efficient customer communication Disney was able to establish a great means to connect with customers with fewer staff with an efficient and effective placement of signs throughout the store guiding them to where they wanted to go.

Hamleys Customer Communication

Hamleys on the other had a less than pleasing method of signage, the signs lacked the ability to sufficiently direct customers and they seemed more like a product list rather than an effective guide on where to go. The store does compensate for this by having a lot of in-store assistants however it is in the opinion of this paper that the store could implement a far more efficient means of operations with fewer staff if they just invested more into a better means of guiding customers to the products they are looking for. Based on observed behavior it was seen that a vast majority of all customer–staff assistant interactions consisted of asking where a particular product was within the store. It is based on this that it is highly recommended that the store reduce costs by lessening the number of employees while improving in-store indicators for all product lines.

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Location

One of the more interesting aspects of this case examination is the fact that both stores are situated near each other on Oxford Street. The pedestrian traffic alone that goes through Oxford Street daily is incentive enough to establish a store in such a location and as such both stores are ideally placed in being able to take advantage of the daily pedestrian traffic to popularize the store’s image and offerings through various window displays and offerings on the street. It must also be noted that aside from the number of people that traverse Oxford Street daily the location itself is home to a variety of commercial areas such as department stores, food chains, restaurants, snack bars, fashion boutiques, etc. The reason why this is particularly important is that when families in London go out to buy clothes and to eat out Oxford Street is one of the primary locations that they head to. It is based on this that having a toy store in such a location is advantageous since children would want to go to it after shopping with their parents for so long.

Disney

Store Ambience

It is rather regrettable that despite the fantasy world the store has been so effective in portraying its chosen color scheme leaves much to be desired. While the castle and figurine displays lend a lot towards creating a fun and exciting environment store visitors quickly notice that the color scheme when combined with the closed-off interiors slowly but surely starts to become depressing. On the other hand, it must be noted that the fun-filled activities that the in-store staff provides for children do make up for this to an extent and as such the experience provided by the store can be considered as adequate.

Physical Environment

The physical environment of the store can be defined as slightly claustrophobic, while the store did attempt to make the entire interior as wide as possible it offset this by putting up a lot of product displays and background elements such as castle ramparts and figurines the result is a space that seems wide yet cluttered at the same time.

Psychological Environment

The psychological environment provided by Disney is more or less a fun-filled one where the store management attempts to excite kids with not only product offerings but a variety of activities that they can take part in for free. This helps to create a connection between the kids and the store and results in a positive consumer experience which results in better product patronage.

Hamleys

Store Ambience

The store ambiance at Hamleys is bright, colorful, and most of all cheerful due to the types of displays that the store has incorporated into the various walls, banisters, and desks. Overall, the store exudes a feeling of activity wherein people cannot help but move quickly from one location to another. This is further enhanced by the use of a variety of background music that the store at times releases through speakers which helps to create not only a lively environment but one that is entertaining as well.

Physical Environment

The physical environment of the store itself is pretty wide and accommodating. Displays aren’t clustered or squeezed into particular areas but rather are given sufficient space to stand out on their own. This is particularly important since this gives customers the feeling that they are in a wide-open space instead of a tight and hard to maneuver in the shop.

Psychological Environment

The psychological environment at Hamleys is quite cheery and pleasant. The representatives are always kind and helpful, the environment brings about feelings of wonder and amazement while the music helps to excite people about shopping. Overall, the psychological environment at the store helps to create a rather positive experience that many people would enjoy.

SWOT Analysis

Disney Store

Strength Brand Awareness – The Disney brand is one of the most well known brands in the world and as such has a great deal of both local and international popularity. This along with its films and cartoon series has made Disney a staple of modern day popular culture and thus acts as a free method of advertising for various Disney stores located around the world.
Interactive Games and Displays– The Disney store has a variety of interactive games and displays within the store that it lets children use for free. This encourages parents to take children to the store in order to let them have fun. This in turn results in a higher potential for sales as children would like to buy the products they interacted with while at the store.
Weakness Dark Thematic Colors in the Store- While the overall theme of the store is based of Disneyland the interior colors are a bit too dark when taking into consideration the enclosed space of the store. It is due to this that some parents and maybe even children eventually get turned off by the color scheme and opt to go to other locations.
Vulnerable to Economic Low Points– The recent global economic downturn and the continuing debt crisis in Europe has shown vulnerabilities in the toy merchandising industry as demand drops due to an uncertain economic climate. With the European debt crisis possibly continuing well into 2012 this doesn’t bode well for the Disney store.
Opportunity Up and coming Disney Movies in 2012– With several new Disney movies coming on in 2012 this presents itself as a viable opportunity for the Oxford Street based Disney store to be the first mover among all the toy stores in the area by being the exclusive distributor of the various toys and merchandising products that will be released alongside the movies.
Threats Local Toy Stores in the Area– The main threat for the Disney store along Oxford street are other toy stores in the general area that eat into its market share.

SWOT Analysis

Hamleys

Strength Wide Variety of Goods – one of the advantages that Hamleys has over other toy stores in the local area is that it has a far larger selection of toys and merchandise due to it being the largest toy store in the world. This enables it to capture multiple market segments from various age ranges.
Well established Reputation within the Local Community – Hamleys has been around for more than 200 years and as such before other brands within the local area were even created the store had already been around and as such this has given it a well established and formidable reputation in not only the local community but throughout England as well.
Interactive Events and Games-On a daily basis the store has a wide variety of events and daily games for children thus increasing the flow of patrons into the store.
Weakness Inadequate Signage– One of the main perceived problems with the store is the fact that its system of signs used to direct customers is woefully inadequate resulting in many people hunt for up to 15 minutes for what they need instead of just 3 or 4 minutes.
Opportunity Upcoming Olympic Games in London –With the upcoming Olympic games in London this is sure to be bring a massive throng of tourists who might visit the store due to its significance as a tourist attraction within the London area.
Threats Competition from Local Stores- One of the main threats that Hamleys currently faces is competition from other toys stores in the general area that eat into its potential dominating position within the local area.

PESTLE

Disney Store

Political There are no political impacts in this case
Economic The European Debt Crisis– With the potential to send the entire European continent into a deep depression by 2012 this presents itself as a definite problem that the Disney store will face within the coming months as demand will be contingent on a solution presenting itself.
Social Cultural Significance – The Disney brand has become a ubiquitous aspect of today’s modern day culture and as such gives the company a distinct market advantage over other stores.
Technological Not Applicable
Legal Import Laws –Since Disney imports a large percentage of its product lineup new import laws to increase tariff rates may cause the store’s prices to go up as a direct result of such actions.
Environment Method of Production – It is actually quite interesting to note that a lot of the products available within the Disney store were made in China due to the relatively cheap labor. The problem with this though is the fact that many companies in China violate environmental laws and have no sense of environmental conservation as such it must be questioned whether the company is contributing to global pollution rates.

PESTLE

Hamleys

Political There are no political impacts in this case
Economic The European Debt Crisis– With the potential to send the entire European continent into a deep depression by 2012 this presents itself as a definite problem that the Disney store will face within the coming months as demand will be contingent on a solution presenting itself (Faithfull, 12).
Social Long term Community Relations – Since Hamleys has been around for so long it has developed an integral connection to not only the local community but to the culture of London as well thus enabling it to leverage its position as a cultural icon to gain consumers.
Technological Not Applicable
Legal Import Laws – Since Hamleys imports a large percentage of its product lineup new import laws to increase tariff rates may cause the store’s prices to go up as a direct result of such actions.
Environment Method of Production – It is actually quite interesting to note that a lot of the suppliers of the products at Hamley have their production facilities in China due to the relatively cheap labor. The problem with this though is the fact that many companies in China violate environmental laws and have no sense of environmental conservation as such it must be questioned whether Hamleys is contributing to global pollution rates by associating with such companies..

Cognitive Dimensions: Hamleys

Location Convenience

Since the store is located along Oxford Street which is near the heart of London this places it in a prime location which can be easily accessed by most methods of public and private transportation. This enables consumers to easily get to the store and head into other parts of the city at nearly all hours of the day.

Merchandise Suitability

It must be noted that while Hamleys’ claim to fame is that it is the largest toy store in the world it must be noted that this claim comes at the cost of high excess inventory cost. Most of the merchandise at the store isn’t sold daily and as such, this costs the company millions in annual revenue just to ensure that they are stored properly. Based on the lean business models advocated by many experts today one must wonder whether the Hamley business model is too excessive and wasteful due to the amount of storage space used versus the number of products sold.

Value for Price

Prices within Hamley have a range of 20 to 200 pounds for a wide assortment of goods, toys, and accessories and as such it can be stated that the price itself is well within normal boundaries that it can be stated as affordable by the local population (Ham.

Sales Effort and Store Service

Most, if not all, of the in-store staff, have been trained to be courteous to all shoppers and are all too willing to help. This is one of the strengths of the store and as such shows, the level of dedication the store has in providing an excellent experience to all shoppers.

The congeniality of the Store

As mentioned earlier, Hamleys has a layout akin to your average department store yet it offsets this by providing bright and flashy displays for customers. The average type of consumer in Hamleys usually consists of above-average income consumers.

Post-transaction Satisfaction

Based on observed behavior most consumers were pleased with their transactions and there were little if any product returns that were noticeable during the period of observation.

Cognitive Dimensions: Disney Store

Location Convenience

Since the store is located along Oxford Street which is near the heart of London this places it in a prime location which can be easily accessed by most methods of public and private transportation. This enables consumers to easily get to the store and head into other parts of the city at nearly all hours of the day.

Merchandise Suitability

Overall the Disney store has a medium-sized location with only its brands in stock. The store is not excessive in the number of products it has for sale rather it limits it to specific types and alternatives to them at various monthly intervals. This enables the store to take full advantage of its location without having to invest in unnecessary inventory space.

Value for Price

Prices within the Disney store have a range of 10 to 180 pounds for a wide assortment of goods, toys, and accessories, and as such it can be stated that the price itself is well within normal boundaries that it can be stated as affordable by the local population.

Sales Effort and Store Service

While Disney has only a few in-store staff it makes full use of them by having them provide various activities and means of entertainment for children visiting the store. Most of the staff is quite cordial and respectful and it shows that they like working with children.

The congeniality of the Store

One of the inherent problems with the Disney store is that while it does have a fantasy kingdom theme they tried too hard in emulating the feel of Disney World through the use of dark colors. This gives various areas of the store this dark depressing feeling and as such it really should be changed to something brighter.

Post-transaction Satisfaction

Based on observed behavior most consumers were pleased with their transactions and there were little if any product returns that were noticeable during the period of observation.

Conclusion

As seen in this paper both Hamleys and the Disney store have been successful in their way in implementing strategies that create an “experience” for their consumers. This has resulted in significant consumer patronage to both stores from large percentages of the local population. It must be noted though that each store has its weakness such as Hamley’s inventory expenses and the color scheme utilized by Disney but overall both locations have become icons of Oxford Street and will probably be staples of the location for quite some time.

Recommendation

It is recommended by this paper that in the case of Hamleys they should improve their in-store signage to help customers find their products more easily. In the case of Disney, it is recommended that they change their dark color scheme to something far less depressing.

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