HOT PROPERTIES?

KAREN RAUGUST

NEW YORK -- When it comes to investing in licensed properties this season, supermarket buyers will tread cautiously on rather uncertain ground.

This follows a less than stellar preview of licensed goods presented at this year's International Toy Fair, held here last month. No single license dominated the annual convention and many of the highest-profile licenses were ongoing properties rather than new introductions. At the same time, toy and other product marketers offered fewer stockkeeping units in each of their licensed lines.

Retailers, who remember merchandise related to "Star Wars: Episode I" collecting dust on their shelves, will try to avoid another such situation with this season's potentially hot entertainment licenses -- Harry Potter, Jurassic Park and Lord of the Rings. "It has caused us to check to make sure that movie studios are following through with promotion," said Charles Yahn, vice president of nonfood, Associated Wholesalers, York, Pa.

Grant Blanchard, nonfood manager, Macey's, Sandy, Utah, speculated that no matter how popular the licensed movie or character is, it is ultimately the price and whether the item is easily seen by the shopper that determines whether the items sell. "If you have a really good price on it, you can sell it. The price point is the most important element," he said.

The trade publication The Licensing Letter, New York, estimates that 45% to 50% of the $16.4 billion in toy sales are attributable to licensed products. Yet, unlike in years past, there was no consensus at Toy Fair on which license will break out, if any, as the next must-have property.

"There doesn't seem to be a new hot license," said Wendy Friedman, vice president of sales at Modern Publishing, New York, which markets coloring and activities books under license from Barbie and Fisher-Price, among others. "We're focusing on perennials."

Marty Brochstein, executive editor of The Licensing Letter, agreed. His outlook for the coming year is cautious. "There is business to be done, but not an outrageous amount of business. It helps if retailers keep their expectations within reason."

Despite fears, toymakers showed film-licensed products at the Toy Fair, including Hasbro's Monsters (licensed from Disney/Pixar), Planet of the Apes (Twentieth Century Fox) and MacFarlane Toys' Shrek (Dreamworks).

The property that many people think offers hot-selling potential this year is the third installment of "Jurassic Park III," due at the box office from Universal Studios on July 18. The video release is rumored for December. Universal will also launch "The Grinch" home video for Thanksgiving.

According to Brochstein, "Jurassic Park III" will be big not only because of the success of the two previous installments, but "because dinosaurs are always a big seller."

The first part of The Lord of the Rings trilogy, "The Fellowship of the Ring" from New Line Cinema, will hit theaters Dec. 19, though many of the retailers SN spoke with were not aware of the movie.

Also scheduled for the Thanksgiving season is the much-anticipated Harry Potter film, "Harry Potter and the Sorcerer's Stone," slated for Nov. 16. According to industry sources, Warner Bros. Studios has demonstrated tight control over the release of Potter merchandise -- perhaps to avoid the same kind of retail shelf backlog produced by Star Wars.

A limited number of Harry Potter licensed goods appeared on retailers' shelves during the fourth quarter that industry observers said met with mixed sell-through results.

A number of exhibitors, including master toy licensee Mattel and Hasbro's Tiger Electronics, Wizards of the Coast and Cap Candy divisions, showed Harry Potter merchandise. Most -- though they had eye-catching displays -- showed a narrow range of products.

While the percentage of toys sold through supermarkets and drug channels is small -- just 3.5%, according to the Port Washington, New York-based NPD Group's Toy Market Index -- makers of other product categories distributed through supermarkets exhibited at Toy Fair, notably book publishers and video distributors. More than 60 book publishers, mostly of children's titles, had booths at the show this year.

One of those was Golden Books, New York. The publisher, which claims a 31% share of the children's book category in supermarkets, holds licenses for Barbie, Cartoon Network, Nickelodeon, Hasbro and other properties. "We tend to be an afterthought [in drug and grocery channels] especially on the supermarket side," said Rich Maryyanek, Golden's senior vice president of marketing.

Maryyanek points out, however, that children's books, both licensed and generic, make sense in supermarkets for several reasons. Grocery retailers and children's book publishers have similar target markets; margins for books, at 50%, are higher than for other products; and 80% of book sales in supermarkets are impulse buys.

Modern Publishing also sells through the grocery channel. "We look at supermarkets as definitely a growth business," said Friedman. "We just have to figure out how to get in there in the best way."

"We're more and more getting into the grocery trade," said Robert Rawlins, director of sales, Learning Horizons, Cleveland, Ohio, a publisher of educational children's books and a subsidiary of American Greetings. "But floor space is a luxury," he added, noting that educational products are a more difficult sale than coloring and activity books. "Education is more of a contemplative sale," he said. Educational titles can work in supermarkets if the price point is less than $5, according to Rawlins.

Educational video lines, and their new extensions into categories outside home video such as toys and publishing, comprised a notable trend at Toy Fair. Examples included Artisan Entertainment's Baby Einstein and Global Icon's Baby Genius brands, both of which have authorized licensed books and toys, and Bakewell, England-based Just Group's Baby Bright, among others. More than 2 million Baby Einstein videos have been sold, according to Artisan.

Books are also being marketed in tie-ins with magazines. Learning Horizons introduced its first licensed line at Toy Fair, a series of workbooks and other educational products under the Parents magazine brand. The mass-market kindergarten and preschool line will be cross promoted in the magazine.

Among the preschool licenses attracting notice at the show, in addition to Clifford, was Bob the Builder, an animated series from the U.K., airing on Nickelodeon Nick Jr. network. HIT Entertainment, London, the licensor of Bob the Builder, announced its purchase of Barney licensor Dallas-based Lyrick Studios just prior to Toy Fair. (As part of the acquisition, Barney Publishing moved to Scholastic.)

In video, Lyrick Studios (which will continue to market videos under its new ownership) introduced a new Barney title, "Let's Go to the Zoo." Plush toys and books will support the launch.