Discovery develops long-term retail strategy

When Discovery Communications Incorporated (DCI) talks about expanding its media outlets, the company has more in mind than magazines and television....
October 1, 1996

When Discovery Communications Incorporated (DCI) talks about expanding its media outlets, the company has more in mind than magazines and television.

The international communications company views retail stores as an integral part of its media mix.

Along with the recent announcement of new children’s television services in the U.S. and Latin America, DCI says it also plans to expand its retail stores, particularly those targeted at children, with the launch this year of two Discovery Kids stores in the United States.

Discovery currently has a chain of 132 outlets across the U.S., with 16 of those operating under the Discovery Channel banner, 113 under the name The Nature Company and three called Scientific Revolution. The bulk of these stores-116-have been acquired over the past two months.

‘[DCI's] business is to satisfy people’s curiosity. We realized that we need to reach the consumer in a variety of ways,’ says Jim Boyle, senior vice president, corporate communications for DCI.

Discovery entered the retail marketplace in 1991 when home videos and CD-ROM products began to be offered in some 10,000 retail outlets across the U.S. Through that experience, DCI became aware of the power of having a branded store similar to the leaders in this field, Warner Bros. and the Walt Disney Company.

‘We felt that economically it made sense to have our own store base where we could have products beyond just media products that embody the Discovery lifestyle,’ says Boyle.

The first purchase of 16 Discovery stores in the U.S. showed DCI the power of the retail sector. ‘We began to reap the benefits of working with local cable operators. By purchasing or bartering for local avail time on local cable systems in which the stores operate, [we noticed that] retail sales went up instantly, on average 20 percent,’ says Boyle.

DCI recently merged its retail operations at the former Nature Company’s headquarters in Berkeley, California, under the umbrella business unit Discovery Retail and Theme. DCI is now deciding if it should operate under one brand name or remain with the three existing store names.

In the meantime, two flagship mega-stores are in the works: one in Washington, D.C., with 25,000 square feet, and another 14,000- to 15,000-square-foot store for the West Coast. Airport stores will be added and children’s kiosks in each store will also be expanded.

Children currently account for as much as 25 percent of the $150 million that the stores generate in retail sales. Boyle says that children between two and 17 years watch Discovery at least once a month.

DCI offers an alternative for parents who want ‘programming that they can trust, that will be educational as well as entertaining to kids,’ says Boyle. ‘We believe that it makes sense for us as a company to expand into more of a children’s focus,’ says Boyle.

Promotional tie-ins between retail and programming will include popular themes. A recent promotion on the Galapagos Islands proved very successful for both ratings and traffic flow generated in stores.

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