As the back-to-school season heats up this month, supermarket buyers are proceeding cautiously in promoting licensed goods, focusing instead on value-added items.
"Licensed items aren't what they once were," said John Massaua, senior vice president of purchasing and merchandising at Millbrook Distribution Services, Leicester, Mass.
The distributor is offering its customers fewer licensed goods this season. As far as theatrical hits, "Basically, there was 'Small Soldiers' and 'Godzilla,' which has been a bust from our view," he commented.
Millbrook invested in more value-added items such as canvas binders like Mead's Trapper Keepers, which feature pockets and notebooks.
Last year licensed products achieved slow sell-through for Bashas' Markets, Chandler, Ariz., said Jeff Manning, vice president of general merchandise. So this season the retailer assembled an offering of basic back-to-school staples with classic licensed properties like Looney Tunes included in the mix.
The chain's number of stockkeeping units devoted to back-to-school promotional items is down about 10%, reported Manning. "We're selling a lot less, perhaps because [shoppers] are buying it a lot cheaper somewhere else."
To maintain shopper interest in its school supplies, Bashas' will introduce new items in its back-to-school ads every few weeks. The merchandise ranges from imported pens and calculators that retail for $5 to planners and date books, priced from $5.99 to $10. "These are items we can make some money on," Manning stated.
Harps Food Stores, Springdale, Ark., puts the blame for slow-moving licensed goods on Wal-Mart Supercenters, Bentonville, Ark. "Wal-Mart uses those basically as zero-margin blow-out items," said Art Bundy, the chain's nonfood director.
To compete against the mass merchandiser, Harps buys overruns and close-out merchandise that is purchased at lower costs. The retailer's goal for back to school is to make a 40% margin on sales. According to Bundy, "fresh, current licensed merchandise purchased direct from manufacturers drops margins to 5% or less."
Harps' back-to-school inventory consists of 250 supplies retailing for up to $24 for electronic calculators. Hair-styling appliances, tagged at $10, also sell well, said Bundy.
The chain promotes back-to-school merchandise in a six-page tabloid insert that includes several automotive items that appeal to college students returning to school with their cars.
Associated Wholesalers Inc., York, Pa., again held the line on licensed goods. "We didn't go overboard last year with licensed back-to-school products. Some people that did, however, didn't get the return," said Charles Yahn, vice president of general merchandise.
AWI's store-level displays featured popular properties like Rugrats, Blues Clues, Disney and Looney Tunes, said John Prengaman, AWI's general-merchandise category manager.
Writing instruments, including mechanical pencils and erasable pens, and basic paper products also are getting emphasis, he said.
In the licensed arena at Associated Wholesale Grocers, Kansas City, Kan., Rugrats, Winnie the Pooh and Looney Tunes are the hot items, according to Dick Swain, president.
Swain said Associated retailers are offering a wide array of licensed choices from binders and backpacks to theme books, and that "they [vendors] put these licenses pretty much on everything [in school supplies]." Pricing overall was comparable to last year, with backpacks priced up to $9.99 and binders retailing to $13.99.
Fairway Foods, Minneapolis, reports good movement with licensed merchandise so far, said Jim DuCharme, general-merchandise buyer, who envisions a strong back-to-school selling season.
Bookings from 350 retailers that Fairway supplies through its 200-item back-to-school order guide were up 12% over last year, according to the buyer.
"We pushed our ad vehicle this year a lot harder and so retailers booked correspondingly to cover the ad," DuCharme said. Price points top out at $15 to $19 for backpacks and Trapper Keepers.
Gary Schloss, vice president of general merchandise at Carr Gottstein Foods, Anchorage, Alaska, is a proponent of licensed goods. "People increasingly shop for back-to-school looking for more fashion-type licensed items, knowing these will be available then. This helps put them in more of a buying mood," he said.
The retailer increased its licensed assortments considerably this year with eight to 10 in-line 4-feet-wide prepack merchandisers with Looney Tunes, Winnie the Pooh and Rugrats merchandise.
The chain's fashion offering with licensed products is twice as much as last year. Merchandise includes Harley Davidson backpacks, sports-themed backpacks, zipper binders and pouches and Godzilla lunch kits. Items are displayed on shippers.
The retailer also is promoting binders, pencil pouches, planners, portfolios and wire binders from Stuart Hall and in Rugrats characters from Nickelodeon.
"These displayers save space and feature good graphics. The point-of-sale materials are really eye-catching to the consumer," stressed the nonfood executive.
Carr Gottstein has also set aside 8 to 12 feet of space for Learning Horizons products from American Greetings. The retailer tested a Learning Horizons in-and-out at a few stores last season. Sales warranted a chainwide rollout this year.
Schloss endorsed the content of the products and its graphics. "The products are educational with good learning materials for kids. It has good graphics," he said.
Since kids are using computers more than ever, the retailer may run computer paper rather than filler paper as an advertising loss leader," said Schloss.