Whistling a happy melody in kids' music; the tempo rises as marketing strategies tune in children, parents

Discount Store News, April 1, 1996 by Pete Hisey

NATIONWIDE DSN REPORT - It hasn't reached the level of children's video, but kids' music, now the beneficiary of the marketing muscle of entertainment giants like Disney, Sony and Time Warner, is on a growth track in the mass market.

Until recently, most kids, music was basically generic, with a few "ghettoized" performers (such as Raffi and Tom Chapin) providing most of the hits. But with the release in recent years of massive hits like "The Lion King" (which went to the top of the charts not once, but twice in a 12-month period and spawned a hit follow-up, "Rhythm of the Pridelands"), the game has changed.

"Most kids' products, whether TV shows, movies or videos, have strong musical elements," noted Wendy Moss, senior vp, marketing, Sony Wonder. "But that side of the business has never been addressed."

In the kids' market, Pocahontas, Bugs Bunny and Big Bird are true stars as popular as The Beatles or Elton John are to their parents.

Rhino Records, which has a thriving kids, business, is addressing the best of both worlds with "Bugs and Friends Sing The Beatles," which offers the amusing spectacle of Bugs Bunny, Daffy and Sylvester mangling the best of The Beatles. Other titles include "Animaniacs" soundtracks (the first sold 200,000 copies), a salute to the novelty songs of the '60s group The Monkees and a series based on the new animated version of "Dumb and Dumber," featuring artists like Todd Rundgren, The Red Hot Chili Peppers and Robyn Hitchcock performing some of their quirkier songs.

Among kids' music's many advantages to retailers, noted Rhino's vp Keith Altomare, are high-impulse purchases and strong margins. "Parents aren't comparison-shopping for kids' music," he said. "If they see something that will appeal to their children, they buy it." And since most products are offered at midline prices, with wholesale cost of considerably less than $8, even selling them at $11.99 will earn a retailer margins in the 50% range.

Both Altomare and Moss pointed to a missed opportunity on the part of mass retailers. "The mix of cassettes is usually too high," Altomare noted. "Kids have CD players now."

"Most of our growth is in CDs," added Moss, noting that compact discs now make up about 30% of sales. "As kids' music grows up, you're going to see more CD-type artists like Kenny Loggins."

That's particularly true, she noted, because almost all kids, music is purchased by parents. "You're selling to the parents. Its very hard to market to kids because you're competing with candy and toys, and parents are sold on compact discs," she added.

In the good old days when kids' music consisted mainly of nursery rhymes set to simplistic musical backing, parents tended to buy the cheapest version available, which meant cassette, generally. But as the musical values have increased, and particularly since titles acceptable to both kids and parents have come on the market, parents tend to go for the superior sonic capabilities and durability of the CD.

Disney Music vp, sales Barry Haft noted that while CD sales are rising (and now account for half of sales on hit releases like the "Pocahontas" soundtrack), the real switchover won't occur until the electronics industry comes up with a tough, durable and cheap CD equivalent to a $20 Fisher-Price cassette player.

"In the pure kids' market, our sales are 80% to 90% cassette," he said. "But when we get to products that parents want to listen to, the percentage of CDs goes up considerably. But if we ever see a cheap CD boombox, that will kill cassettes instantly."

Of course, in the higher velocity businesses, like read-alongs and sing-alongs, consumers have had no choice: They've only been available on cassette. This year, Disney will test CD versions of "The Hunchback of Notre Dame" read-alongs and sing-alongs. "We're going to keep the price close to the cassette version and find out if there really is a market" for CD versions, Haft said.

All three of the major suppliers of kids' music (Disney, Sony and Rhino) are attempting to grow the category with various strategies and with varying results. Rhino, for instance, has introduced a listening post for children, sized for younger kids who can choose any selection by using a touchscreen.

Sony, working with mass retailers like Wal-Mart, is attempting to tie its kids' video, audio and read-alongs together in a Sesame Street-themed department, and is also stretching into event marketing. For instance, Moss said, a Rugrats Passover promotion was a major success. The label is also sponsoring mall shows to drum ap interest.

Disney, emulating its success in the sell-through video market, is trying to convince retailers to produce a themed kids' audio department signed by Disney and featuring products from all major suppliers. The company has already been successful with its 4-ft. dedicated areas in most national mass merchant chains, and is trying to move that approach into other channels of distribution.

A recent test at Best Buy has been so successful that the CE chain is looking at a rollout. The 8-ft. Disney section, fully planogrammed and serviced by a third-party firm and located in a high-traffic power aisle, has exceeded Disney's projections.