Nickelodeon Takes A Page From Disney By Opening A New Retail Store

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Viacom’s (NASDAQ:VIAB) Nickelodeon has opened its first ever retail store in New York at a Toys”R”Us. Nickelodeon has taken a retail route to strengthen and promote its brand. Disney (NYSE:DIS) has been operating flagship stores across various countries for quite some time now, but it will be a new experience for Nickelodeon. While it will take some time and lot of effort for “Nick Shop” to match the experience provided by Disney stores, it is a step forward in the right direction, as it will help the network elevate its brand.

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Nick Shop

The new shop at the Times Square is spread across 1,000 sq. ft. and offers a retail experience packed with fun and adventure. The Nick Shop features exclusive products such as kids and adult apparel, accessories, plush toys, drinkware, home goods and more. The shop also features Nickelodeon characters including Dora the Explorer, Bubble Guppies, Team Umizoomi, Winx Club, SpongeBob SquarePants and Teenage Mutant Ninja Turtles. [1] Nickelodeon currently offers content in the store with the help of new interactive touch based screens, but it would need even more innovative ways such as hosting events like the Disney stores.

Nickelodeon Goes The Disney Way

Is Nickelodeon trying to go the Disney way? Disney markets its products through retail stores in North America, Western Europe, and Japan. The stores carry a wide variety of Disney merchandise and promote other businesses of the company. Disney currently owns and operates 216 stores in North America, 106 stores in Europe, and 47 stores in Japan. [2]

Disney stores allow children and families to connect with their favorite Disney characters in an interactive way. Disney stores are able to offer an unmatched experience to children by hosting various events such as daily store opening ritual where a child opens the store with a large key called ‘key of imagination’. Children are excited about the store primarily for the experience they get out of it. [3]

Does Disney create such environment to boost its retail revenues? Not really. Disney believes that if it continues to deliver on the child’s experience, which in turn delivers a family experience, and people create great memories at the Disney Store like they do at Disney theme parks, it would translate into elevation of the Disney brand. [2]

While Nickelodeon is at a very early stage of its retailing experience with its first flagship store being opened this week, it is clear that it aims to strengthen its brand. Nickelodeon network saw worse ratings in 2012 due to the lack of original programming. Later the network focused on content and was able to improve its ratings in late 2012 and early 2013.  It will be interesting to see how Nickelodeon offers great experience to children in order to elevate its brand, which in turn will be beneficial for the network.

Our price estimate for Viacom stands at $67, roughly in line with the current market price.

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Notes:
  1. Nickelodeon Opens First-Ever Branded Retail Destination; Launches 1,000 Square Foot ‘Nick Shop’ In Toys”R”Us Times Square, Viacom Press Release, May 29, 2013 []
  2. Disney’s SEC Filings [] []
  3. Strategize Magazine (U.S.), Issue – Fall 2011, Pg: 50-55 []
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