Strategy

Disney's high hopes for Duffy

Stuffed bear is a raging success in Japan. But can it revive flagging sales at home?

A new teddy bear arrived on the shelves of a Disney World toy store in Florida in 2002, jostling for attention with more famous mice and fairy-tale princesses. The brown bear was run-of-the-mill, only distinguished from its non-Disney kin by silhouettes of Mickey Mouse on its face and paws. It sold well but not spectacularly, so the company had no idea that when it put Duffy the Disney Bear on sale at Tokyo DisneySea in 2004, that the toy would become a juggernaut. Yet today, Duffy accounts for 40% of the park’s merchandise revenue; bear-related sales are rationed, and visitors wait two hours to have photos taken with Duffy.

Could that success be recreated here? Disney, with its merchandise line flagging in the U.S., is about to find out. Eight years since his forgettable first appearance, Duffy is back. “We looked to Tokyo and said, ‘How amazing is this experience? We want to bring the entire thing here,'” says Dara Trujillo, Disney’s manager of merchandise, synergy and events. “We’re kind of welcoming him home, but in an entirely different fashion.”

Duffy actually started out nameless, but as his popularity grew in Japan, he was carefully incorporated into the Disney mythology. Company lore now holds that he was sewn by Minnie Mouse so Mickey wouldn’t get lonely while travelling. The marketing story has grown, too: Tokyo DisneySea now offers Duffy clothing, stage shows, restaurants and even popcorn. “It started off as a wonderful piece of product that was unique to the theme park,” says Trujillo. “And when, in the Japanese market, people started coming in and wanting everything Duffy, that spurred the product expansion.” The bear is also unique in that unlike other characters, who sprang from TV shows or movies, he is a souvenir given a story in the interest of selling more.

Disney’s plans for giving Duffy his own duchy within the U.S. Magic Kingdom start with its California Adventure and Epcot theme parks. Those sites have been revamped to include areas for visitors to pose for photographs with the bear. While Duffy products will only be available at Disney parks initially, analysts say the company will likely eventually offer the merchandise in its 300 retail stores across North America. Disney has closed more than 120 stores in the past two years as it struggled to keep its own merchandise competitive with lower-end retailers. “If I get a Woody [from Toy Story] doll at a Disney Store, it might not be the same Woody doll I can get at Toys ‘R’ Us, but to a kid it’s the same thing,” says Sean McGowan, an analyst with Needham & Co. “If the differences are subtle, consumers will go with the lower price.”

Duffy’s reintroduction creates a new, exclusive product line that distinguishes Disney’s parks and, potentially, stores from its competitors. “By introducing it at just a couple of parks, they can keep the demand high and keep people talking about it,” says Jim Silver, an analyst and editor-in-chief of Timetoplay.com. “Then, the next step is to roll it out in the other parks and then the Disney stores and then eventually the mass market. I think this is going to be a slow program.”

But observers also warn that Duffy’s Japanese stardom won’t necessarily translate to America. “There’s no shortage of products that were hot in Japan that never worked here,” says McGowan. “They may be leading themselves astray.”