SUPERMARKETS CONTINUE TO CASH IN ON THE PAKEMON CRAZE

JOEL ELSON / Additional reporting: DAN ALAIMO

The pocket monsters are cash register angels.

As demand continues to surge for Pokemon products, retailers are scrambling to fill display racks with the licensed products, especially the hot-selling trading cards -- but also stationery, key chains and plush.

"Pokemon trading cards are so hot, you can't keep them in stock," said John Prengaman, general-merchandise category manager, Associated Wholesalers, York, Pa. "The craze is for any item with Pokemon on it, and you can sell just about all you can get."

Don Polsi, vice president and general-merchandise marketing manager for Imperial Distributors, Auburn, Mass., described Pokemon as "the best license in the last few years. Demand is across the board, no matter what the product is."

Retailers told SN that Pokemon licensed-product sales have been building for the past year. Further, they expect Pokemon to have more staying power than other recent licensed phenomena, such as "Star Wars." That will give retail buyers more confidence to stock the products deeper and wider, industry observers said.

The Pokemon phenomenon, which originated in Japan in 1996 with a Nintendo video game, is extremely popular in the United States right now, and includes Nintendo video games, an animated television show, an upcoming movie and a multitude of licensed products.

The trading cards are so hot that Hasbro, Pawtucket, R.I., this month bought the company that makes them, Wizards of the Coast, Renton, Wash., for $325 million. Pokemon means 'pocket monsters,' and the license is owned by Nintendo.

With movement still going at a brisk pace and not expected to let up soon, food stores are setting up Pokemon displays on endcaps, at the front end and at checkstands, nonfood executives told SN.

At Associated, Pokemon items have been in the warehouse for two months. But the way sales have percolated, the wholesaler has started taking steps to expand its inventory.

Associated plans to widen the mix with Pokemon bean bags, stationery and key chains, among other items. Prices range from $1.29 for Pokemon portfolios up to $5.99 for a deck of Pokemon playing cards. Pokemon products, with margins in the 30% range, appeal to ages 5 to 12.

Pokemon products "cross all demographic lines," Prengaman pointed out. The items are selling very well at stores that jumped on the products, he added.

Associated retailers now display foil-wrapped flat blister packs of 11 Pokemon trading cards for $4.99 near checkstand racks.

In a move to drive multiple sales, Associated will encourage retailers to display all related Pokemon candy and novelty items together on a front endcap or at a checkout-area display.

At Imperial, Polsi envisions that sales of Pokemon products could still be strong through the first half of 2000 and is increasing Imperial's Pokemon offerings beyond the few items, like stickers and playing cards, it now carries. However, Polsi will not bring in any Pokemon product over $10. He has ordered plush, key chains, key rings and other Pokemon products that will retail between 99 cents and $4.99. Imperial had vendor meetings set up this month to bring its program to 16 to 18 items.

But obtaining Pokemon trading cards, which Polsi said are driving the sales the most, "is very difficult. Suppliers are shipping whatever they can."

The nonfood distributor is also developing a Pokemon order guide for retailers, to help them keep Pokemon product displays fully stocked.

Pokemon may be "the latest craze for kids and what's driving demand," but Polsi offered a cautious warning.

"You have to be careful how deeply you get into licensed products. We were lucky enough not to do a whole lot of 'Star Wars' stuff, which had a very quick death," Polsi said.

Cub Foods Georgia Division, Lithia Springs, Ga., will feature assorted Pokemon articles in its fourth-quarter seasonal promotions, said Ray Wallace, director of nonfood. "It's a kids' craze that's really caught on. We try and get our hands anything Pokemon. Trading cards between $2 and $3 and key chains around $4 just fly out of stores," said the retailer.

"I'm trying to buy in enough merchandise, but it sells out quickly," Wallace said.