Viacom Is Hardly A Household Name
It ought to be easy. With TV icons ranging from I Love Lucy to Beavis & Butt-head to Star Trek, Viacom Inc.'s flagship store on Chicago's fashionable Michigan Avenue should be raking in sales. But it's not working out that way. Until the holiday rush, local retail observers say there were more tourists than buyers in the $20-million, 15,000-square-foot store. The holidays are helping, but Art Steinberg, president of retail consultant Greenhouse Inc., says the store is more "theater" than retailing.
Nonetheless, Viacom Retail Group President Thomas Haas insists that sales at the flagship store are in line with the company's expectations. When the store opened last May, Haas's predecessor predicted it would generate as much as $18 million annually. Now Haas is mum on numbers and details about when, or if, other Viacom stores--or the planned MTV and Star Trek stores--will open. Besides the Chicago flagship, Viacom has also opened three Nickelodeon stores with products from its kids' shows.
"SIDESHOW." The $10 billion entertainment theme-store industry is a good business "if you are first," says Larry Haverty, an analyst with Boston's State Street Research. Viacom is far from that. Walt Disney Co. already has 590 stores and Time Warner Inc. has 185 Warner Bros. Inc. stores. Neither Disney nor Warner discloses store results, but industry observers say sales could exceed $400 per square foot, more than double the average retail store's sales. That would put Disney and Warner revenues at between an estimated $3 billion and $4 billion annually, they figure.
Why hasn't Viacom done better? One problem is brand recognition. Mariangela Piccione, 11, and her brother Anthony, 7, of Janesville, Wis., were on hand for the Dec. 8 opening of the latest Nickelodeon store in Schaumburg, Ill. While they thought the store was "cool," neither they--nor more importantly, their parents--recognized the name of Nickelodeon's parent, Viacom. Unlike Disney, "Viacom is like a department store of brands," says consultant Steinberg.
Not surprisingly, the strongest sales generator at the Viacom store has been Nickelodeon products, a brand with recognition, which accounts for 40% of sales. These outpace the nostalgia items like Lucy pajamas or models of Star Trek's starship, the Enterprise--which retails for $10,000. This has prompted Viacom to change its focus, with plans to open more smaller, kids-oriented Nickelodeon stores all based in malls.
The confused brand image combined with Viacom's late entry makes the retail venture little more than a "sideshow" to its other businesses, says State Street's Haverty. But that could change if Viacom perseveres and gets several dozen stores up and running. Then, analysts say, sales could reach $2.5 billion. But Viacom may find it a long trek from "cool" to profitable.