Discovery decides it doesn’t need stores to reach consumers on Planet Earth
Discovery Communications, best known for its more than 100 television networks including Discovery Channel and Animal Planet, has announced it will close its 103 mall-based and standalone stores and lay off 1,000 employees, 25% of its work force.
“By eliminating our owned and operated brick-and-mortar storefronts, which are cost-intensive and complicated businesses, Discovery can focus its efforts on high-growth, e-commerce and licensing operations,” says David Zaslav, who took over as president and CEO of Discovery in January.
Consumers will still be able to buy Discovery products—including DVDs of its hit TV series Planet Earth and such specialty items as telescopes and a radio-controlled hammerhead shark for swimming pool fun—in retail stores. Discovery Communications will continue to sell Animal Planet-related items at Toys ‘R’ Us stores and has a deal with Hudson Group to operate Discovery Channel Airport Stores in U.S. airports.
But the company will put its focus on selling merchandise via the Internet, television and catalog. The primary web site, Discoverystore.com, gets 12 million unique visitors a year, and e-commerce sales are up 144% this year over last, the company says.
Discovery says it posted record e-commerce growth and sales last year, but does not disclose those results. Internet Retailer estimates that Discovery Communications had $45.8 million in Internet sales in 2006, placing it No. 186 in the Internet Retailer Top 500 Guide. Those sales represented a 34% increase over $34.2 million in 2005, Internet Retailer estimates.
Discovery’s decision does not mean many other retailers will close their stores, says analyst Patti Freeman Evans of JupiterResearch. “It just means they have never quite gotten the return from their physical stores they had hoped.”
She notes that other media companies have launched store chains and then backed off. For instance, the Walt Disney Company sold its 313 stores in 2004 to The Children’s Place Retail Stores Inc. and Time Warner retreated from a foray into selling merchandise through stores.
Discovery Communications is owned by Discovery Holding, which is two-thirds owned by Liberty Media, parent company of several online retailers, including QVC, No. 14 in the Internet Retailer Top 500 Guide.
Kelley Day, senior vice president of Discover Interactive, will speak at the Internet Retailer Conference & Exhibition, June 4-7 in San Jose, in a session entitled Beyond Credit Cards: E-Checks, PayPal, Google Checkout and Much More .
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