TOY INDUSTRY EYES EXPANSION IN SUPERMARKETS 2004-03-01 (1)

LIZA CASABONA

NEW YORK -- Toy marketers are exploring niche and alternative channel options in response to the toy store woes of the last year, said industry observers at the American International Toy Fair here. Supermarkets could be one of those options.

"To a great extent, the toy industry is trying to figure out how to get more out of the supermarket industry. They see it as an underdeveloped marketplace," said Martin Brochstein in an interview following the show. Brochstein is editorial director for EPM Communications, New York, a publisher of newsletters that include "The Licensing Letter."

Brochstein said there are limits to that potential as supermarkets are primarily in the business of selling food. Yet in spite of those limits, supermarkets and toy retailers are teaming up. He pointed to the Toys "R" Us/Albertsons pairing as a good model for the future. Stop & Shop also has Toys "R" Us departments.

Nontraditional channels such as supermarkets offer toy manufacturers the chance to maximize niche opportunities, said Christina Charasse, senior account manager, NPD Funworld, a division of the NPD Group, Port Washington, N.Y., in a presentation at the show. Charasse said the toy industry tends to focus on the big channels of mass merchandisers and toy stores, but it's the smaller, less conventional channels that are showing growth potential.

Key trends seen at this year's Toy Fair included licenses and retro products, observers noted.

Both Brochstein and Charasse touched on the potential of licensed properties for retailers. Licensed properties could be an attractive impulse option for supermarkets because they are identifiable items that are often found at a lower price point. The properties are recognized on the shelf, but are not considered a big purchase, Brochstein said. This could appeal to supermarkets, he said.

"Big retailers would rather chase the licensing business than get out in front of new things," Brochstein said in a presentation on consumer trends at the show. The trend is partially reflective of industry consolidation into larger businesses where mistakes are costlier.

Entertainment stalwarts like the Care Bears and Teenage Mutant Ninja Turtles were hot at this year's show.