STERLING CHARACTERS

LISA SAXTON

Licensed baby accessories may seem frivolously cute to some parents, but to retailers the items look seriously profitable.

Plain bottles, for example, retailing for $2, can command a $4 retail with the simple application of Sylvester and Tweety or a Mountain Dew logo. And retailers said moms don't mind paying extra, because they want their little angels to look more like little hepcats.

"People aren't looking for value in these products; they're looking at the novelty," said Mitch Terry, general merchandise division sales manager at Fleming Cos.' Miami division. "These aren't price-competitive items. You get a higher retail, and you can get another 20% gross profit on most of these items; that's a minimum."

Manufacturers of baby products -- bottles, bibs, pacifiers, cups, spoons, shampoos, even diapers and some foods -- first dabbled with color and perhaps a teddy bear or two. Then came Mickey Mouse and the Muppets. Now, the licensed likenesses of Looney Tunes characters, "The Lion King" and Barney are gracing many a product, joined in the baby aisles by the logos of Pepsi, Perrier, Crayola and Lifesavers.

As reported by The Licensing Letter, retail sales of licensed infant products in 1993 totaled $395 million, an increase of 11.9% over the previous year.

"It has taken over," said Michele Arnault, national merchandise manager at McKesson Drug Co., a wholesaler based in San Francisco. "I know in the bottle segment, anything that has a picture or a logo on it, that's where the business is.

"And as mothers have children later, they have more spendable income," which is likely to perpetuate the licensing trend, she said.

"Licensed products are sold at a higher retail," said Lou Mullins, HBC supervisor at Burlington, Wash.-based Thrifty Food Stores. "We definitely benefit from that.

"I think it's probably a certainty to increase sales on everybody's part, especially the manufacturers'; they want new and different SKUs out there to gain additional space on the rack. That's the name of the game for the manufacturing segment," said Mullins.

While a retailer's margins on such products would depend on the individual chain, Wanda Lovelace, HBC buyer at Jons Markets, an 11-store chain based in Los Angeles, said, "We would carry equal to or better margins on the licensed items, compared to the regular, because people do buy it for the novelty and not the price."

Wyman Butler, nonfood merchandiser at Nashville, Ga.-based J.H. Harvey Co., said that after he convinced his company to put in power panels of licensed baby bottles, sales took off.

"In our hometown store here, we blew out 80-something bottles the first week on that power panel. The bottles had Dr. Pepper, Mountain Dew and logos like that. And we would have normally possibly sold two or three [plain] bottles."

Retailers reported that while people are buying the licensed items, Barney and the gang are also helping to expand profitability in the baby products aisle, which has been on the low side on profits. They voiced optimism that this trend will not lose steam anytime soon.

"Licenses have been building over the years," said Jane Jansch, general merchandise and HBC buyer at Copps Corp., Stevens Point, Wis. "And I think it will probably continue to be a trend for quite some time.

"We continually work with our [suppliers] on whatever licensing is going on. I think these products have brought back more interest into the baby category, which needed something new," said Jansch.

"These items help expand the category, that's for sure," said Thrifty Food's Mullins.

"I'd say it's a trend that's going to be around for a while," said Frank Puleo, director of nonfood at Genuardi Super Markets, Norristown, Pa.

Indeed, any new character that seems to have struck the fancy of consumers is finding its way into the baby aisle.

Tony Federico, vice president of nonfoods at Ingles Markets, Black Mountain, N.C., said he is refiguring the set of his baby section to accommodate the newest royal cat, Disney's "The Lion King."

"We're putting in a 4-foot section in the baby aisle with 'The Lion King' products," Federico explained. "We'll have the plates, cups, silverware and things like that. I'm putting it in 100 stores."

Robert Hudgens, general merchandise buyer at Discount Distributors, Springdale, Ark., which procures general merchandise products for Harp's Food Stores, said he, too, is seeing "more and more" licensed baby products. "Kids and parents are influenced to buy products with the characters they like on them," Hudgens said.

And while toddlers may not be able to properly pronounce Barney's name, and parents may roll their eyes at his schmaltziness, neither group is above reaching out for his products.

"The young toddlers can recognize the character and they think it's the neatest thing; they want to bring a celebrity home," said Genuardi's Puleo. "Baby reaches out and says, 'Ooh, ooh!' and mom buys it. Moms are really impressed with the licensed products. The baby doesn't even have to be with her. They say, 'Oh, my daughter or son would love this.' "

Indeed, it's the parents' interest that gets retailers excited about the products.

"What I understand from the trade is that people buy what they grew up with," said Copps' Jansch. "They buy what they recognize. And baby boomers grew up with the Looney Tunes. That's why I think you're seeing a resurgence of this type of product. Parents are still pretty nostalgic about those characters, even though the kids may not watch them."

"The kids that actually use the bottles, for instance, aren't even old enough to know anything about the characters or logos," pointed out Jons Markets' Lovelace. "I think they're made more for the parents, just to have a flashy bottle. The other bottles are cheaper, but they don't mind paying more."

Arnault of McKesson said, "In my opinion, mothers that buy them want the best for their children and babies. It's almost as if price doesn't matter. Kids don't know Crayola. And there's a bottle out there that has the Kool-Aid logo; babies don't know these logos. But the mothers like them."

Of course, that doesn't mean Diet Pepsi baby bottles and Donald Duck bibs are the rage everywhere. The market for plain, less expensive accessories is still there, said some buyers.

For one thing, smaller stores don't typically have the room in the baby products aisle to handle an ever-expanding set of licensed products.

What's more, trendiness isn't everything. Associated Grocers of Maine, Gardiner, Maine, which serves 400-plus smaller mom-and-pop units, doesn't carry that many licensed products because consumers who shop its members' stores aren't into the fancier items, according to Mary Heald, a buyer with the company.

"We have Kool-Aid tumblers and a few things like that," she said, "but I try to stay away from them. Because if I stock the products and they die, I'm stuck.

"Most of them are fairly small stores, and they don't even have a big baby section, so we have to put in the basics. I don't really have the clientele that would warrant putting in a lot of licensed products," said Heald.

Still, others are confident the trend will continue in their stores.

"One area where they're coming out with cute things is in the bath category," said McKesson's Arnault. "Johnson had the Winnie-the-Pooh products, and now a lot of manufacturers are coming out with their own licensed items. Mothers love that."

Fleming's Terry is looking for an onslaught of "Snow White" items to hit the baby aisle in the near future.

On the other hand, retailers warned against getting too caught up with short-lived characters, and said it is better to rely on bankable, long-standing characters from sources such as Disney or Sesame Street. They mentioned the faded "Teenage Mutant Ninja Turtles" trend as evidence.

"You have to be right there when those products are at the height of their popularity in order to take advantage of their profit potential," said one retailer.