Supermarket NONFOODS Business: More fun in store

Toys have outgrown the toy section. With so many brands to choose from--not to mention the variety within each brand--general merchandise buyers are often hard put to determine just what might be best to squeeze into the limited space that's available for toys. But by thinking outside the traditional toy department, they're discovering opportunities everywhere.

Suppliers are responding to help grocers explore those opportunities, developing toys and fun products that have lower price points, small footprints, high margins, and high impulse sales. They're also coming up with merchandising displays that allow grocers flexibility in the placement of these items throughout the store, allowing for some unique cross-promotional opportunities with other departments.

"We're seeing three styles of grocers that sell toys emerging," says Zapf Creation's v.p. of sales Jeff Goldstein. "There are those grocers with year-round toy departments, those who flex up seasonally at holiday time with toys in seasonal aisles, and those who use different merchandising vehicles--such as clip strips, power panels, and floor shippers--because they don't have the dedicated space for toys. All three methods are effective, depending on how the toys are merchandised."

Perhaps one of the greatest boons to supermarket toy sales is the advent of time-starved customers, particularly parents, who use the supermarket as a one-stop shop for all their needs, whether those needs are food, health and beauty aids, or general merchandise. "Convenience is very important, especially for moms," says Allen, Texas-based Hit Entertainment's s.v.p. of sales, Debbie Ries. "If they can pick up some of the kids' items while grocery shopping, all the better."

What retailers like even more than this are the kids, brought shopping by moms, who pick out toys themselves and are often reluctant to put them back on the shelves. "A lot of times you have what's called the 'nag factor,'" Ries says. "The child chooses the toy, and the parent lets them have it because it'll keep them quiet during the entire shopping trip."

To accommodate both types of consumers, toy manufacturers have developed a variety of packaging and merchandising styles to increase impulsivity. United We Grow (UWG), a Mississauga, Ont.-based value-oriented manufacturer that develops products ranging from food to general merchandise to household goods, has created some nontraditional products that can be sold as toys as well as for other purposes.

Chalk, paint, and string

One of these items, Kid's Spray Chalk, is a nontoxic chalk that washes off with water and can be sprayed onto all types of nonporous surfaces. The Spray Chalk is packaged in four colors, using a design created by the children of UWG's president, Howard Usher. His children also had a hand in designing the packaging for UWG's Face Paint Markers and Fling String party streamers. These products are available in colorful merchandisers such as floor displays, power wings, and counter displays--each aimed at driving impulse sales throughout the store. "We try to offer products to the grocer that he won't find in nearby stores, because differentiation is a key to success in the category," Usher says.

Usher points out that his products have the additional characteristics of being affordable and multipurpose--two qualities that add to the impulse value. "The chalk, for example, can be used for holiday decorations, such as spraying Christmas trees or windows," he says. "We even have had local sports teams buy it for 100-yard dash markers. It can be displayed in the toy aisle, as an in-and-out in the seasonal aisle, or at the point of sale."

Even more important is the fact that UWG's toy products are consumable. "Not only are the margins good on these products, since we create them as well as market them, but they eventually run out, and that's another sale, another trip into the store," Usher observes.

While Zapf Creation's dolls aren't consumable, they are being developed with the grocery retailer in mind, with smaller price points and a variety of merchandising displays for flexible merchandising throughout the store.

Zapf has defined several "hot spots" for grocers to better leverage dolls and toys throughout the store. "For example, the children's cough and cold aisle is a great area," Goldstein says. "People stand and wait there, and spend time with their children in that location. Grandparents also impulsively buy something for their grandchildren while they're waiting in the pharmacy."

Other areas Zapf recommends for high-impulse toy sales are the cereal aisle, the cookie and cracker aisle, and even the single-serve and "lunchables" areas, where parents often pick up items for their children's lunchboxes.

Van Nuys, Calif.-based Munchkin, Inc. is looking to move its impulse toys into the baby care aisle, since, after all, that's where the mothers are. "The baby care aisle is usually anywhere from 18 to 24 feet long," says Andy Osete, director of marketing. "The amount of space dedicated to toys is very small compared to baby HBA, but the margin is much greater. What we look to help the retailer do is to get the mom in the aisle with the diapers and wipes, and then she buys a high-margin toy on impulse."

Munchkin produces innovative toys that are interactive, educational, or teething-related. Some are branded with Nickelodeon brands such as SpongeBob Squarepants.

Toys are also finding a place in the greeting card aisle--not as a complement to greeting cards, as they are traditionally, but as greeting cards themselves. Greeting cards and plush toys are often bought together for occasions such as Valentine's Day, birthdays, and hospital stays. Rancho Dominguez, Calif.-based Bestever, Inc., known for its plush creations, has recently married the giving of greeting cards with its latest line of Party Animals plush. Each eight-inch stand-up plush animal comes with a sound chip and greeting card in hand to share a special message with its recipient.

"The Party Animals are designed to serve as both a card and a gift," says Bestever product development manager Elaine Wolf-Baker. "They're a perfect impulse item for a special occasion."

Of course, licensed properties offer extremely strong cross-promotional opportunities for toys, especially when the brand is an animated train, dinosaur, or construction worker that has television shows, videos, food, blankets, disposable tableware, shirts, pajamas, notebooks, pens, and lunchboxes designed around the property. These are the just the types of brands Hit Entertainment has created with its Barney, Thomas and Friends, Bob the Builder, Wiggles, and Rubbadubbers properties.

"When kids fall in love with one of these properties, they want to emulate it," Hit's Ries explains. "They watch the videos, they play with the toys, they wear the clothes--all of which makes for unique cross-promoting opportunities throughout the store."

Hit Entertainment's most recent show, "Rubbadubbers," is a preschool animated series that follows an imaginary group of bath toys on various adventures. The show had a very successful launch in September 2003 and quickly became the fourth-highest-rated preschool program on cable television.

Throughout 2004 Hit and its licensing partners will roll out the brand to mass retailers, including tiered product introductions throughout the spring, summer, and fall from lead Rubbadubbers toy licensee Hasbro. "We like to have the toys out there about six months after the show," Ries says. "This way the show finds its audience, and they're looking for the toys at the time when they come out."

In addition, each video sold by Hit Entertainment contains a catalog of other licensed products for that brand, including toys.

Blast from the past

Burbank, Calif.-based DIC Entertainment, Inc. has seen a resurgence of interest in retro properties--those that were popular in the past but have been out of the market for some time. These properties, such as Strawberry Shortcake, My Little Pony, and Teenage Mutant Ninja Turtles, often bring back good memories of when the parents were children themselves. "There's a certain nostalgia involved when a young parent sees one of those brands," says DIC's v.p. of domestic licensing, Cindy Davis. "Many times they grew up with these brands and would like their children to experience them, as well."

Naturally, Strawberry Shortcake has changed a bit with the times. "We've given her a more modern look, with jeans and a shirt instead of the dress and bonnet," Davis says. "This way today's children relate to the brand as a 'best friend.'"

DIC also uses video to build the brand, as well as public service announcements and a planned mall tour, in which the Strawberry Shortcake character will make an appearance at 100 locations across the country.

The character will additionally show up in the snack aisle in grocery stores, where she'll be branded on various snacks and candy products, and in the cereal aisle, where select General Mills cereals will include a Strawberry Shortcake DVD this summer. There will also be four new videos and 16 books released this year. "Having the extra exposure throughout the store helps to generate excitement around the brand, and this results in more sales overall among all the licensed products," Davis says.
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