Chains play it safe in licensing game

Drug Store News, August 29, 1994 by James Frederick

Kays added, "One major thing you have to be careful about is being buried in product. The key [with hot new licensed themes] is to go in, sell it fast, make your profit and get out."

The payoff for both retailers and manufacturers in chasing product tie-ins can be a lucrative new source of revenue. The danger is that both sides of the industry can be left holding a very expensive bag.

"A hot license can blow in in January and be dead by October, before the Christmas season even begins," said an experienced toy buyer for a major Southern drug chain. "I remember when Michael Jackson products were one of the hottest things going. We ended up putting half-price on 8,000 pieces we couldn't get rid of."

Empathy from suppliers

Suppliers come to product licensing from a different perspective but with the same goal: to leverage the explosive popularity of entertainment and sports franchises as a way of nourishing core category sales and catching incremental business. And they empathize with chain drug merchants who are leery of flash-in-the-pan product trends.

"The last thing retailers want is to be at the end of a cycle, over the top of the curve, with a lot of product in their stores," said Jim McDowell, brand marketing director for Hallmark's Ambassador Cards division. "The retailers want [licensed themes] that will be around a long time, but the 'Barbies' of the world are few and far between.

"With the media explosion and the micromarketing of TV and entertainment in general, it's made it difficult for properties to survive a long period of time," he said.

For that reason, many chain drug vendors--like their retail counterparts--tend to avoid some of the risk in hot new properties. According to Maynard Newman, product manager for American Greetings, characters like Superman, the Muppets and Rocky and Bullwinkle do well on gift wrap, party goods and cards year-in and year-out.

"In general, we try to go with the evergreen properties rather than trying to beat the odds with some of the trends," added Newman. "That works out to both our benefit and the retailers' benefit in the long run."

Stay tuned for these potential hits

Look for some potential licensed blockbusters among an up-and-coming crop of new TV and movie themes in 1994 and 1995. Included on the watch list:

* "Pagemaster," a live-action/animated motion picture from Turner Pictures, featuring such stars as Macaulay Culkin and Christopher Lloyd and the voices of Whoopi Goldberg, Patrick Stewart and Leonard Nimoy.

* Perennial favorite "Star Trek" could get another major jolt from the release of Paramount Pictures' "Star Trek Generations" in mid-November 1994. Already on board in licensed tie-ins are action figures and other toys, posters, figural mugs, trading cards and collector dolls.

* "The Busy World of Richard Scarry," based on the popular book series for tots, may anchor a slew of drug store products for preschoolers by the time the animated TV series begins reaching a wider audience through Nickelodeon next July.