POTTER'S LICENSE NOT MAGIC TO RETAILERS

STEPHANIE LOUGHRAN

ST. LOUIS -- Despite some industry analysts' high expectations for Harry Potter merchandise, several retailers surveyed by SN said that they have chosen to limit their offerings of licensed goods based on the hugely popular books.

The first Harry Potter movie, "Harry Potter and the Sorcerer's Stone," hits theaters this Friday, but retailers are hesitant about fully embracing the property because they perceive a lack of consumer interest in the products and because of disappointing turns on previous "hot" movie properties.

"All the other outlets have had their [Harry Potter] merchandise marked down, the kids are not as into it as they were early on, and there's not a lot of hype around it in St. Louis," said Jean Hoff, general merchandise category manager, Schnuck Markets, based here.

According to one anonymous retail source who experimented with Harry Potter goods last Christmas, "it was a real bomb."

The source said he anticipated the highly hyped film to bolster the wizard's popularity only minimally, since the target audience for the movie -- 11- to 17-year-olds -- is not drawn to licensed products.

Brad Ahlbrand, general merchandise/health and beauty care category manager for Buehler Food Markets, Jasper, Ind., said the retailer had to choose its Harry Potter-related items carefully because of the abundance of fourth-quarter inventory.

He also said his stores "didn't do well with the Grinch last year."

Buehler's chose to roll out a Harry Potter Legos set, according to Ahlbrand, "because it would be the best with price points," although he could not give a specific retail price. The sets are displayed on floorstand shippers in the toy section, noted Ahlbrand.

Other retailers, like Harp's Food Stores, Springdale, Ark., are promoting the Harry Potter books at a 25% off the discounted price to help spur gift purchases for the holidays.

"We're looking for an image and a move on books," said Bob Yehling, director of general merchandise for Harp's. He also said there was a lack of Harry Potter items when he visited several product shows, so he decided not to stock them.

According to a published report, there are less than 90 U.S. licensing partners for the literary and movie character, compared to 200 partners for other blockbuster movies like Batman.

Nonetheless, some analysts said they expect the movie's popularity will boost sales of Harry Potter-related merchandise considerably.

"The movie is going to be extremely successful, and coupled with the already established audience of millions of readers, it will add up to a successful licensing program," said Charles Riotto, president, International Licensing Industry Merchandisers' Association, New York.

Carole Orgel Postal, president of New York-based COP Corp., an international retail and licensing consultancy, predicted that the Harry Potter license would exceed expectations.

"I think it will do fantastic," she said. "There's been a tremendous amount of marketing and [public relations] in the last couple of years, and it's been handled very strategically."

For supermarkets, Riotto stressed that knowing the store demographics and appropriate price points are key factors in creating a successful licensing rollout.

"[Retailers] should think about trying to get the best deal from the manufacturer and start off being a little cautious in terms of stocking merchandise in the beginning," he said. "Be conscious of how merchandise is moving following the movie's release."

Riotto also said supermarkets would have the most success by offering licensed novelty and gift items that are under $10.

Harry Potter licensed products available in supermarkets include Hallmark greeting cards, Johnson & Johnson oral care products, Mead binders and Zak Designs drinkware, according to Warner Bros., Burbank, Calif.