Licensing programs remain both an opportunity and a challenge for supermarket video sections.
The opportunity: adding pizzazz to stores and sparking multiple purchases through cross merchandising with popular brands around the store.
The challenge: coordinating interdepartmental programs and motivate at times less than enthusiastic vendor personnel.
Other challenges can include size limitations of video departments and the fact that unless a product has gone direct to video, the main publicity push came months earlier, when the show debuted in the movies or on television. This can help explain why children's videos are among the most successful when it comes to licensing.
The mother of all video licensing programs relates to a movie series that will likely come to store shelves in a few months: Star Wars.
When the first "Star Wars" movie opened on May 25, 1977, the movie licensing industry barely existed, according to the Hollywood Reporter. There were no licensed toys in the stores and no indication of how the series' success would create licensed product demand. Now with the final installment, "Star Wars: Episode III -- Revenge of the Sith" in theaters, and ultimately headed for the home entertainment market, creator George Lucas has deals with about 400 licensees in more than 30 countries covering thousands of products, the report said.
Since the release of the first movie, Star Wars merchandising programs have generated $9 billion in retail sales, about three times the movies' worldwide box office of $3.4 billion, the report said.
Individual properties aside, licensing programs attached to children's products in general work especially well. Some of the top license programs of 2004 were It's Happy Bunny, Bratz, Care Bears, My Little Pony and Strawberry Shortcake, according to the International Licensing Industry Merchandisers' Association, New York. Among the top licensed products were Bratz luggage, back-to-school accessories, stationery and headwear; My Little Pony backpacks, rolling backpacks and totes; Cesar SA's Barbie/costumes; and a variety of other apparel, costumes, footwear and accessories.
But when it comes to movies in particular, the initial public excitement has long since passed by the time DVDs and the licensing programs behind them arrive in supermarkets, retailers said.
Typically, licensing programs "are not based on video and DVD, they are based on film or television -- the original presentation," said Ira Mayer, president of EPM Communications, New York, a publishing, research and consulting firm. "Videos and DVDs, typically, are a secondary medium. When a movie or television show comes out, that's where the primary licensing thrust is going to be. The fact that it's put out on DVD afterwards can sometimes help in the sales of that licensed merchandise, but that merchandise is based on the original property."
Re-establishing interest in a licensed property in the video department is "a matter of trying to create a mini-store in a store," he said, "where you're aggregating a variety of merchandise."
"Whenever they do a promotion like that, and really push a movie with Frito-Lay or whoever is sponsoring some of this stuff, it's already in the stores," agreed Ray Wolsieffer, video specialist for Bashas', Chandler, Ariz. "It's usually pushing for the theater."
Wolsieffer added that one of the things keeping his chain from merchandising licensed materials along with videos is simply that its video rental departments are too small to accommodate the point-of-purchase materials.
Whether B&R Stores, Lincoln, Neb., will coordinate a cross-merchandising program with licensed Star Wars merchandise when the movie reaches video is difficult to say, said Bob Gettner, video buyer/coordinator, "because it all depends on whether I'm approached by another department saying, 'I'm building this display -- do you want to put movies by them, or vice versa?' The initiative would come from outside the video department."
Gettner is quick to point out that he is not saying cross merchandising isn't valuable. "It definitely has its benefits," he said. "It's just a very time-consuming type of process to make that happen, and when you don't get a lot of vendor support, it makes it that much harder."
Vendor support, Gettner noted, is "really not very good. We don't get a lot of response. A lot of times if there is a deal with a pizza or something that has some advertising on it for a movie, I find out [information] way after the fact."
It would "be nice for them to at least come and offer it to us. I don't see that very often. It's very rare, and I've been doing this business a long time now," he added.
Debbie Ries, senior vice president of sales for HIT Entertainment, Allen, Texas, recommended that whenever possible, supermarkets provide signage and pull products together to make it easy for moms.
"If a mom can see their child's favorite character, and doesn't have to go down different aisles to look for things like party goods, T-shirts and videos, it's a lot easier," Ries said, especially since they probably have kids in tow.
"If you pull it all together for her, she's likely to purchase more than one item of this, which is all incremental for the grocer. And the kids are a great help, because if they see the sign for Barney or Thomas [the Tank Engine] they'll go, 'Ahh!' It really helps to bring parents over to that part of the store. It's entertainment, it's fun and exciting, and you can have a variety of price points all the way from a coloring book to the DVD."
A major challenge for the kids' business has been the trend away from VHS and to DVD, Ries noted. "It's been a challenge because parents have not been as quick to convert as retailers have been quick to convert the space."
Luckily for supermarket executives, that lag time presents plenty of opportunity -- specifically, in lower-priced VHS. "As a format, it is not being supported as much as it should and could be," Ries said. "There are still something like 96 million VCRs in America, so there is definitely a very big audience for that."
There is a "real opportunity as the mass market moves into more and more grocery for grocery to move more and more into home entertainment products, and for building programs around them. It brings some of that excitement of movies and strong brands and licensed properties that kids love," Ries said.
This fall, HIT will release "Barney's Land of Make Believe." The purple dinosaur's latest vehicle will arrive in stores Aug. 30 and will be priced at $16.99 for DVD and $12.99 for VHS. A tie-in program with partner Scholastic Books is in place.
The company also has significant programs in the works for "Bob's Big Plan!," and the Thomas the Tank Engine line, which is celebrating its 60th anniversary with its first direct-to-home feature-length video this fall, she said.
Even among those retailers who have viewed licensing programs as a galaxy far, far away, the immediate future is exciting, thanks to George Lucas.
Expectations "are high on Star Wars, of course," said Greg Rediske, president of Video Management Co., Tacoma, Wash. "Star Wars is a huge property that will be sold by every grocery store that does video sales."
"In general, my stores have never done much at all with licensed merchandise," Rediske added. "These generally fall outside the realm of grocery stores. Star Wars figures and so forth are usually in the mass merchants. Barbie has done pretty well, but little else in this area. I'm sure there are exceptions, but not in our stores."
Good news for retailers is media reports that there is a plan is to keep the Star Wars franchise going. In the works are, among other things, books, video games and even television programming.
"I think there is a great opportunity for [video licensing] to grow," Ries concluded. "Supermarkets are, I believe, recommitted to the category."