Retailers are eyeing licensed merchandise based on hit videos, coupled with tie-in promotions, to drive sales from their video departments into the food aisles.
Disney's "Pocahontas," released last week with a tie-in to Nestle Chocolates, and the fourth-quarter release of "Toy Story," accompanied by more than 50 licensed products, offers retailers opportunities to execute big storewide promotions.
"Licensed products generate sales and sales generate profits. And, as for the future, when you hear about what's hot and what's coming up, you get involved," said Dennis Webrand, video supervisor at the 40-unit Harvey's, Nashville, Ga.
Rick Ang, video buyer for 17 Bel Air Markets, Sacramento, Calif., expects licensed products tied to the Disney hits to move very well, saying both video and the rest of the supermarket can benefit from the releases.
"If the kids see it in the movies, and then watch the video, then the extra tie-in products go very nicely," said Ang.
He works with grocery to promote sales of the video, as well as the tie-in merchandise. Posters, displays, banners, endcaps and even contests in the store are located both within the video department and in the grocery section of the store.
"The supporting companies, such as Nestle and Pillsbury, offer us a special pallet of merchandise to go with the videos for us to sell. It works pretty well," Ang said. Last year top chains like Albertson's broke the mold on routine video promotions with their merchandising efforts for "The Lion King," which the retailer turned into a storewide event that featured huge boutique-type displays of videos and related products.
Karen Raugast, executive editor of The Licensing Letter, New York, said supermarkets are beginning to take a cue from the department stores and mass merchandisers, which have been quite sophisticated in setting up in-store boutiques based on licensed properties.
"It's an opportunity for supermarkets," she said, adding, "They have not traditionally done these boutique setups using an entire section or endcap along with the videos." For Anita Reed, corporate video supervisor at Johnson Foods, Muskogee, Okla., "The Lion King" was the retailer's biggest promotional video, with "Cinderella" coming in a close second.
In conjunction with these two big titles, Reed merchandised related toys, books and shirts at the video department, as well as the rest of the store. She said candy tie-ins in the health and beauty care department also sold well.
"Licensed tie-in merchandise is very effective for us. They're the life of the video department, and encourage sales of videos. Grocery tie-ins also are a big help," she said.
According to Reed, there is a 60- to 90-day turnaround with tie-ins and mail-in rebates that help the grocery department. Pillsbury, General Mills and Nestle tie-ins and rebates work well for the grocery environment, said Larry Hage, regional supervisor and buyer for groceries and videos at C&K Markets, Brookings, Ore., which operates the 29-store Ray's Food Place. "We're not Toys R Us, but we have an advantage," he said. "Consumers will buy if a big splash is made in the store. Retailers should capitalize on it when the product is as hot as possible and then move on," said Raugast of the The Licensing Letter.
The best place to merchandise licensed properties often varies with the store and its parameters. Most chains have their video departments located near the entrance of the store, close to the checkouts and the service department. Others display videos in several different areas of the store. At some of Carr Gottstein Foods stores in Anchorage, Alaska, videos and tie-in merchandise are kept in the Photo-Sound area (electronics) where all 20 stores have video sell-through and rentals, said Gary Schloss, vice president of grocery and general merchandise.
"They seem to sell best there in the service area of the store. Customers are informed about the tie-ins and we give them every chance to get back money -- usually mail-in rebates that go along with the video purchase. It benefits the grocery sales also," he said.
At Ray's Food Place, products are cross-merchandised toward the front of the store, close to the video section.
"Our goal is to create a more open environment for people to browse. There's more space for standups and we can do better merchandising. In the lobby side of the store the video department is open and it's better to merchandise the videos and tie-ins there, rather than in the aisles where people are more hurried and crowded," said Hage.
Webrand of Harvey's said that point-of-purchase material supplied by the studios plus available merchandise has to be prominently shown. Shirley Decker, video buyer for Goff Food Stores, Haslett, Mich., finds that children's licensed products do best in the video area. "They're OK on sell-through, but they do even better on rental because they're long-term and we can keep them on the shelf forever."