CHARACTER-LICENSED PRODUCTS: A HOT PROPERTY

JUDY CORCORAN

Opportunities abound in the big business of entertainment- and character-licensed merchandise.

This holiday season will be no exception, as supermarkets can buy into a flood of products related to hits like "Toy Story" and "Twister," or older reissued hits such as "E.T." and "The Wizard of Oz."

"Toy Story" alone is going to be "huge," according to a spokesman at Disney's Buena Vista Home Video, Burbank, Calif. There are three times as many licensed products associated with the video release as there were with the theatrical release, he said.

Entertainment- and character-licensed products sold at retail accounted for $16.1 billion in sales last year, down from $17.2 billion reported in 1994, according to the monthly industry newsletter, Licensing Letter, New York.

In addition to "Toy Story," retailers also can tie into "Oliver & Company," "Flipper," "James and the Giant Peach," "Goosebumps," and "Mission: Impossible" with licensed products.

It may seem like a natural move for retailers to buy into licensed merchandise in an attempt to capitalize on the popular momentum and publicity such titles generate. This could be especially true if the goal is to build in-store excitement by creating an event out of the release, with large displays of the title and related products.

But it remains to be seen how involved retailers will get with such products.

For supermarkets, tie-ins with licensed goods present logistical problems between the different functions of the video buyer and nonfood buyer. Finding the space to merchandise these products also can be difficult, said retailers.

"The video department is part of general merchandise at Save Mart," said Steve Ergo, general merchandise buyer. "Licensed products could and should be merchandised with the videos. What's happening at store level, though, depends on the individual store's environment and size."

"A toy tie-in with a video may sound like a great idea to me," said another executive, who asked to remain anonymous, "but when the nonfood buyers say, 'Well, you have to buy that one way or we haven't had luck with this,' I need to listen to him. Lots of times it's better to have a coordinated effort."

At Save Mart, Ergo usually looks at licensed products that fit within the framework of their core business and avoids products that won't have a place on the shelves when the promotion is over.

"We try to stick with items that still relate to our regular sets, such as hair care items. If it's a licensed hair care item, we have a hair care section. If it's a plush toy, that's a stretch for us because we don't really carry plush toys on a year-round basis. We've developed a hair care customer, but we're not a toy store," he said.

Licensed products, like everything else, compete for space on supermarket shelves and in aisles. Matt Dillon, the video director at the 22-store, Concordia, Kan.-based Boogaart Retail Division of Fleming Cos., cited lack of space as the reason they don't carry more licensed tie-in products.

"They sell really well, but we're limited on space so we only carry them once in a while," Dillon said. Specifically, he noted that plush toys do well but T-shirts haven't been as successful.

Nash Finch Co., Minneapolis, is another company that has restrictions because of space. According to Cliff Feiock, video coordinator for 73 different departments, whether displays are set up in the video or grocery departments and which products do best depends on the individual store.

"We're not doing a whole lot with licensed products at this point," he said. "We are lining up with a major release, when possible, but in many stores, we don't have the room, so it's on a store-by-store basis."

Tom Fraley, the video coordinator for 37 of Homeland's 64 stores, based in Oklahoma City, said they don't carry licensed products too often. "But the plush toys have done quite well when they've tied-in with a major sell-through release," he said.

Teresa Spencer, treasurer of Bag 'N Save in Dover, Ohio, has had success selling T-shirts in the video department, although she admits they haven't done this lately.

"We're in the midst of changing video distributors, and they can get me promotional items with my ad dollars, so that's why we've backed off on carrying these items," she said.

Benita Corbin, video coordinator at Marsh Supermarkets, Indianapolis, has carried licensed product in grocery aisles in the past -- and reported little satisfaction.

"We had some hair products and bubble bath that just didn't do well," Corbin said. As a result, they currently don't carry any licensed tie-in products.

Another obstacle to investing in licensed merchandise is the short window of opportunity to cash in on hot licensed product, retailers cautioned.

Because the life span of a video licensed tie-in product can be relatively short, care must be taken not to overload on them, said Save Mart's Ergo.

"A movie the studio has really hyped, one that got a lot of media attention, and one that everyone jumped on the bandwagon for -- when the hoopla dies, it's over. Sales of licensed products drop off very strongly. And," he added, "the studios always have a new release down the line."

"If you bring in dolls, plush toys, lunch boxes, stationery and such, you could find yourself with a substantial amount of residual product, and no advertising to support it. We try to be very selective in those things we bring in," Ergo said.