Kids' books spin new synergies

Drug Store News, Sept 23, 1996 by Allene Symons

Children's books are re-inventing themselves on home video, CD-ROM and the Internet. Further evidence of hot action in children's books are recent deals and licenses involving Hallmark and American Greetings.

This could be a watershed year for sales of kids' books and their spinoffs in drug chains. Item: Goosebumps, the No. 1 best-selling scary kids' paperback series (from Scholastic), is spawning licenses aplenty.

Goosebumps (think of a modem Nancy Drew Dr Hardy Boys) is also a hot license in back-to-school supplies this fall. Visibility like this - Scholastic is shipping 1.25 million books per month to retailers - is a real head turner. This type of success has caught the attention of a wide variety of suppliers, and re-awakened their interest in spinning product off of classic book titles.

Item: The two largest greeting card companies are getting involved in kids, books. Hallmark recently announced a $25 million purchase of common stock in Golden Books, the largest publisher of children's books in North America. Golden also publishes interactive electronic books and games.

American Greetings will launch a new educational book series called Learning Horizons this fall (more details soon to come). AG also recently announced a deal with California-based Enteraktion Inc. to create and produce a series of interactive storybooks and other products based on popular AG characters.

What's behind this surge in juvenile book-related activity from places like Cleveland and Kansas City?

It appears to be sparked by several trends.

One: a rush for brand-name content for the growing home video, electronic and interactive segment targeted to children. Hallmark is big in licensing already, and American Greetings has properties like its Strawberry Shortcake, Holly Hobby, Birthday Bear and others.

Both Hallmark (which also has a home video subsidiary) and American Greetings are getting involved in the Internet through greeting cards.

No small advantage is the micro marketing savvy of these greeting card companies. Importantly, both are store direct serviced, so the distribution piece for books and electronic products is we positioned to fall into place.

That leads to two - distribution: In a recent shakeup, caused in part by the demands of large retailers for changes in basic service practices and a lack of uniform service standards, the national network of independent distributors (IDs) of magazines and paperbacks consolidated drastically, from 180 down to 95 companies in a single year.

It appears that alternate distribution channels (like Hallmark and AG) could be emerging, even as those remaining 95 publication distributors reconfigure into a new national network.

Three: Drug chains have reason to anticipate action in kids' books, thanks to the explosion of book superstores led by competing giants Barnes & Noble and Borders. Like the attrition of independent stationery stores in recent years, which resulted in growth in stationery-related sales for drug chains, independent bookstores are falling by the wayside when faced with these discount giants. Beside offering discount prices, book superstores have replicated the ambiance of the independents, like coffee bars and author readings.

But like Wal-Mart or Office Max, these book superstores don't offer neighborhood convenience for most busy shoppers - and for the busy mom who wants her child to read.

These trends in kids, books read like future convenience business for drug chains - both in books and books in new electronic jackets. That is, if the success of Goosebumps and the entry of Hallmark and American Greetings into this market are any indication.