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'It's Time To Take Risks' — Are You Ready?

“It’s time to take risks … when consumers are ready to spend again, we will be ready”—Jim Fielding, president of Disney Stores Worldwide on a purported overhaul of his company's retail outlets in Europe and the U.S., quoted in the New York Times.

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Anyone out there feeling like they're willing to take a $340 million bet on the turnaround being right around the corner?

That's approximately how much Disney is thinking about shelling out on an overhaul its retail outlets, right now, in the very midst of a recession that has seen consumer spending drop off a cliff.

Seems like the folks at Disney have found the "spend money to make money" section in their business playbooks—with many of the plays apparently being drawn by Apple CEO and Disney board member Steve Jobs (he got his seat on the board as part of the deal that made Pixar a Disney property). The likely result: a fleet of stores—which may or may not wind up being rebranded to boot—"more akin to cozy entertainment hubs" than some of the existing "dog’s breakfast"-resembling outlets.

Highlights, according to the Times, are likely to include lots of innovations plus tricks imported from Apple's stores: free-floating, receipt-machine-toting staff members with the ability to let you pay for products anywhere in the store; personalized interactive displays and hidden tricks such as "magic" mirrors; even a "scent component" to complete the experience. So enticing are the stores rumored to be, some Disney execs tried to resist them on the grounds that "parents would try to use the stores as day care centers."

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Regardless of how you might feel about the House of Mouse, or your excitement level over its attempts to get adults to spend money by getting kids hooked on their products, the fact remains that Disney is one of the few companies out there right now that seems to be trying something new in an attempt to grow out of the recession. And, as evidence from previous recessions has taught us, companies that show foresight and take risks during down cycles tend to emerge strongest and grow fastest when the up cycles inevitably follow.

(Another example of the company's commitment to unusual strategies is the "Give a day, get a Disney day" programit's running just now. Not many companies offer free product during a recession—even if it is in return for a day of community service—but the brand-building potential behind it is phenomenal, and likely to be remembered even after the recession is over.)

Clearly, Disney is a company with designs on a successful future—and rather than sit around waiting for evidence that things are getting better, it's going on faith that good times are bound to return, and ensuring that it'll be ready to meet demand in new and exciting ways, and with a strong brand identity thrown in for good measure. That means it'll be leaps and bounds ahead of would-be competitors who have chosen to sit on their hands (or, more likely, their checkbooks) when those prized consumer dollars start flowing once again.

In addition to the strategic benefits of its current maneuvers, any money Disney does spend just now is likely to go further than it would have prior to the recession, or is likely to once general spending picks up. Anyone who's been in a mall recently will know how much further a theoretical dollar will go on many of the products there—as demand has dropped, so have prices. The same paradigm is at work for the companies that fill those mall units as well, with the service providers Disney will need to refit its stores all likely to be able to offer better deals than in recent years. And, while a representative of mall operator Simon Property Group declared that “no one comes in here and dictates terms,” a company with Disney's clout is likely eyeing the number of empty retail units across the country and coming to a different conclusion.

Of course, it could all backfire.

There's every chance that we could get the double-dip recession and accompanying chaos so many are predicting, and the execs responsible will find themselves facing some tough questions over their decision-making during this period.

But if it all goes well, it has "future management case study" written all over it.

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Phil Stott is a staff writer at Vault.com in New York. Originally from Scotland, he has also lived and worked in Japan, South Korea and Eastern Europe. He holds an MA in English Literature and Modern History, and a Masters in Research in Civil Engineering, both from the University of Dundee.

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