UNKNOTTING TIE-INS

DAN ALAIMO

For many retailers, cross merchandising sell-through videos with related products in the stores is an uphill battle.

There are territorial issues over precious in-store real estate, difficulties getting information and materials from suppliers, and the ever-present constraints of time and space.

Is it worth it? "Definitely," said Randy Weddington, video specialist at Harps Food Stores, Springdale, Ark. "I think the rewards are there and, in the instances that we've had some cooperation, it seemed to pay off nicely," he said.

"Cross merchandising is the most effective way to get incremental sales," said Bob Melcher, general merchandise director of the Waldbaum's division of A&P, Montvale, N.J. "It is very eye-catching, but it has to make sense to the customer. Advertising is essential, but the results are very good when this is done," he said.

Although pulling all the pieces together is a challenge, retailers and suppliers agree that the active cross merchandising of video with related products, whether they be packaged goods, licensed items or other videos, is a way to add incremental sales, drive traffic and build higher profits on notoriously low-margin sell-through event titles. Meanwhile, it's a marketing opportunity that supermarkets are uniquely positioned to take advantage of. "Cross promotions with other supermarket products allow the retailer to provide added value for the consumers while increasing the size and level of excitement surrounding a video release," said Mike Aufricht, vice president for retail marketing, supermarkets and drug stores at Buena Vista Home Video, Burbank, Calif. Some chains have seen video sales increase 370% and more when displaying Disney videos and tie-in products together, he said.

"Retailers that took the cross promotion and did everything right in terms of joint displays and joint ads have seen an incremental lift of 370%, with a total lift from the cross promotion well over 400%," he said.

Retailers saw numbers like these and higher with "Toy Story" late last year, noted Max Goldberg, vice president of promotions at Buena Vista. "Some experienced a 1,000% lift in sales," he said. That title had one of the biggest cross-promotional programs of any to date, with six tie-in partners -- five of which made products sold in supermarkets.

One example of a retailer that went all out was Pathmark, Woodbridge, N.J., said Goldberg. "We brought our partners together in the 'manager's special' section of the store, had special offers available on the partner products and highlighted the rebate," he said. Kroger, Publix, Vons and Stop & Shop also did good jobs with "Toy Story" cross merchandising, said Bob Fallon, director of consumer promotions and marketing communications for Ocean Spray, Lakeville, Mass. Although, with Kroger, execution of the cross merchandising "was not consistent across all the Kroger Marketing Areas," he said. With the five promotional partners, " 'Toy Story' was almost impossible to escape at the supermarket level. Everywhere you walked in the store, you were hit by 'Toy Story,' " Fallon said.

"For retailers, joint promotions like this encourage larger shopping baskets and a bigger ring at retail by the customer," said Gary Paladin, director of marketing at the U.S. Consumer Products division of Oral B, Belmont, Calif.

K-VA-T Food Stores, Grundy, Va., used a display contest to spur store-level interest in cross merchandising the various products involved in the "Toy Story" campaign, said Brenda Vanover, video coordinator. "We had four winners and it went really well," she said.

The displays were located in the front of the stores, right outside the video departments on the main sales floor, said Vanover. The additional excitement generated by the displays helped boost the sale of videos.

"We cross merchandise any chance we get. We are starting to do more of it, depending on the products and how easy it is to get with the vendors on the grocery side," she said. Harps also went all out for "Toy Story," noted Weddington. The success of such programs depends heavily on the interest and involvement of field representatives of all the partner companies. "For example, General Mills has been great to work with in terms of point-of-purchase materials and ad support. The General Mills POP was every bit as effective as Disney's. It helped us build very attractive displays chainwide," he said.

Harps sell-through revenues are up 38% over the last year, in part due to cross merchandising, he said. But more can be done. "I still think there is great potential there that is largely untapped. There just needs to be better coordination and interest by some one in upper management," he said.

With another strong slate of cross-promotional opportunities -- such as Caffeine-Free Coca-Cola with "Sleeping Beauty" -- "we think there is going to be some good cross merchandising in the coming fourth quarter," said Buena Vista's Aufricht. "We believe in it. We know that it works. And we know there are a lot of retailers that do cross merchandise. It's a way for the retailers to differentiate their stores from the mass merchants," he said. "Even if the retailer goes all out, which might mean two weeks in terms of how long you really get compliance, that gives the store a unique opportunity," said Andrew Kairey, executive vice president at Universal Studios Home Video, Universal City, Calif. "It adds to the identity of the store and it gives them a different way to compete.

When you create promotions like that and they become multifaceted, the employees view it as a fun opportunity. Not only does it change the normality of the day for the employee, but also for the customer," he said.

Some retailers have struggled to actively cross merchandise videos and related products, but "cross promotions are still extremely important in reaching the supermarket channel," said Kairey.

"When you start thinking about the demographic that buys your videocassette, it is predominantly mothers with children under 11. That exactly matches who is going to the supermarket," he said.

"Although you can't always get the products merchandised side-by-side in shippers, or even get the video displayed down the cookie aisle or someplace else, you do get multiple impressions in that channel, and that truly benefits the product. So it is a breadth-of-advertising approach," said Kairey.

Cross merchandising on the sales floor of supermarkets "is where it all comes together," said Jeffrey Yapp, president of worldwide for Twentieth Century Fox Home Entertainment, Beverly Hills, Calif. "Many times our cross-promotional partners are primarily distributed through supermarkets. Where is there a better environment to put it all together? That clearly helps leverage presentation," he said.

Yapp, who once worked for General Foods, said "I always wanted to put things together, but it was very, very difficult to do." The key is convincing retailers that the purchasing incentive is strong enough to create a two-item sale. "So the challenge for most cross-promotional offers is to make it such a strong proposition that the retailer has an opportunity to believe it is actually going to grow his business. Otherwise it's not worth the hassle to move the cereal and the video to the front of the store, because the incentive is not strong enough," he said.

"The good news is that titles drive traffic. If you are in the grocery business, there are very few products sold in the store that have the kind of awareness and expectation that a film does," said Yapp.

Video cross merchandising is a effective way to make grocery shopping more exciting, noted Buena Vista's Aufricht. "A video promotion really helps bring entertainment to retail, and cross promoting videos with other products just increases the magnitude of that entertainment promotion. I think that is important for supermarkets these days," he said.