LICENSED GOODS, VALUE-ADDED MERCHANDISE MOVING BTS

JOEL ELSON

Licensed goods are a hot commodity for back-to-school supermarket promotions this year, which kicked off the first few weeks of August.

Buyers SN surveyed also are mixing their school-supply sets with better-quality sports apparel, sell-through videos, prepaid telephone cards and scientific calculators. Many downplayed loss-leader filler-papers for a second year in a row, featuring only one or two selections.

Although filler-paper costs were slightly lower than last year, supermarkets continued to de-emphasize low-margin and loss leader paper products, instead promoting more profitable items in the licensed area through ads and store-level displays.

"We downplayed commodity filler-paper products and 40-count theme books due to the cost of paper, and made value-added and licensed products a more prominent part of the program," said Greg Huls, nonfood buyer at Spartan Stores, Grand Rapids, Mich.

"This is the time of year kids will buy licensed products. They can relate to the various cartoon characters in lunch boxes, scratchpads and theme books," explained Gary Schloss, vice president of general merchandise at Carr Gottstein Foods, Anchorage, Alaska. Here's how back-to-school was shaping up at grocery stores around the country.

At Minneapolis-based Nash Finch Co., retailers are using 25% more licensed properties in back-to-school promotions compared with a year ago.

A back-to-school program that broke Aug. 5 features a 12-item spread of Looney Tunes characters in theme books, portfolios, pens and pencils, dictionaries, binders, crayons and lunch bags.

"Looney Tunes always does well, and with this complete program, retailers can get behind it for their customers. We carried some Looney Tunes last year that weren't featured significantly," said Monte Wood, Nash Finch's nonfood buyer.

Nash Finch accounts also highlighted licensed products like Barbie, "Pocahontas" and "The Lion King." The NFL, NBA and Coca-Cola were also featured, "a natural license tie-in at back-to-school," Wood said. Major league baseball merchandise also appeals to kids, he added.

Although the wholesaler offered retailers "Hunchback of Notre Dame" items, he said they often hold off ordering until they actually see the product. "I was a little leery about what kind of broad appeal Hunchback would have, coming on the heels of Pocahontas," Wood said.

The 75 corporate Nash Finch stores support back-to-school promotions with 8-foot to 144-foot display spaces, while their independents created sets in lobby and seasonal areas.

Retailers supplied by Spartan Stores upgraded back-to-school variety with better-quality products, including sweat shirts priced at $19.99, compared with $14.99 one year ago.

Consumers seem willing to trade up in back-to-school, Huls said. "We've seen this happen in other categories such as stationery," he said.

Spartan retailers used Looney Tunes and Coca-Cola items and featured the R.L. Stein Goosebumps paperback books, geared to kids aged 8 to 12 and priced from $2 to $3.

Retailers supplied by Spartan had promotions on items ranging from backpacks to socks and underwear with merchandising on pallets, as well as floor and endcap displays.

The back-to-school product line-up at Harps Food Stores, Springdale, Ark., included licensed Looney Tunes items and pen-and-pencil sets priced at two for $3.

The chain offered everyday filler paper priced at $1, as a buy-one, get-one-free ad feature, the same price as last year.

While last year's higher paper cost affected movement, sales should be better this year, said Art Bundy, Harps' director of nonfood.

Harps, whose top price was $8.96 for a scientific calculator, promoted lunch kits with a vacuum bottle at $3.96. The chain discovered the kits at one of the many close-out shows it attends and started the program July 31. "This was an extremely hot price for an item Wal-Mart sells for $5.96," Bundy said.

The retailer shipped orders between 24 and 144 of the lunch kits to stores for the program, using 40 feet of gondola display space and endcaps.

Carr Gottstein broke its back-to-school assortment with an increased amount of licensed products, including Coca-Cola, Looney Tunes, Bugs Bunny, Felix the Cat and others.

The fourth quarter is a strong time of year for licensed products that appeal to young kids, said Schloss. "They're attracted to NFL, baseball and basketball-type things," he said.

Carr emphasized its back-to-school effort with a four-page full-color circular, with a headline that reinforced the idea that its stores are school-supply headquarters. Price points ranged from 59 cents for a 10-pack of pencils to $16.99 for binders.

"We started our program about 10 days earlier than last year to be out there before the competition from Wal-Mart and Kmart started. They're usually out early, and so we have to be, too," Schloss said.

Retailers who are supplied with back-to-school from their co-op warehouse, Associated Food Stores, Salt Lake City, trimmed prices by 5% to remain competitive with area discount operators and mass merchandisers.

The mix overall was "a shade lower than last year due to increased competition from Target and other mass merchandisers. These retailers push this category pretty hard so you must be in the ballpark,"said Mike Adamson, Associated Food Stores' communications manager and advertising coordinator for general merchandise.

Associated's retailers cut the number of licensed items from last year. Stores featured basics such as 150-count filler paper, priced at 79 cents compared to a 200-count short cut at 99 cents last year. Ads, launched Aug. 7, also promoted 70-count, wide-lined notebooks at two for 88 cents. Among licensed products was the Yikes pencil line from Empire Berol, which retailed at 99 cents.

"Last year we had a couple more licensed items, which are needed in the mix. But licensed items only did fair last year. That's one reason for shying away from more this year. If your licensed item isn't on the button you can get burned pretty bad," said Adamson.

He said despite mounting back-to-school competition the category has done well in past years. "Even with this increased competition retail sell-through has been good, based on our good shopper foot-traffic," Adamson said. Associated placed merchandise order for back-to-school as early as April.

Retailers position back-to-school as a store-level event, with school bus fixtures supplied by vendors and product stacks arranged around it. Seasonal area sets draw attention to the promoted items, Adamson said.

Back-to-school at Pay Less Super Markets, Anderson, Ind.,kicked off Aug 1., and centered around basics such as pencils, folders and filler paper priced $1 to $5. Licensed items were in lower-end products.

Back-to-school merchandising at Associated Wholesalers Inc., York, Pa., also shifted ad emphasis away from filler-paper promotions and relied more on lunch kits, backpacks, Crayola products and Energizer batteries.

Copies of "Homeward Bound II" sell-through videos priced at $13.99 were made part of school-supply displays this year, and all prepaid telephone cards were discounted 30% at AWI.

Full-page inserts and in-store signing alerted shoppers to the back-to-school sets, with filler-paper specials limited to a buy-one, get-one-free 100-count pack priced at $1. "We gave it away this year and so you don't make any money on that," said Charles Yahn, vice president of general merchandise at AWI.