Theater chains open curtains to merchandise

t's hard to imagine a setting more ideal for selling licensed merchandise than the lobby of a movie theater. With the larger-than-life images still flashing before their collective mind's eye, so goes the thinking, consumers are never more inclined to make...
September 1, 1998

t’s hard to imagine a setting more ideal for selling licensed merchandise than the lobby of a movie theater. With the larger-than-life images still flashing before their collective mind’s eye, so goes the thinking, consumers are never more inclined to make an impulse purchase of a stuffed animal or a key chain than the moment they walk out of a darkened theater, where they’ve spent the last two hours soaking up the latest event pic.

At least that’s the scenario Equity Toys is hoping will play out when it introduces its fully-loaded POP displays for the film Babe: Pig in the City this November.

‘It [will] allow the moviegoer immediate access to extend and relive and reestablish a play pattern developed through the movie,’ says Larry Castro, director of national sales at Equity Toys.

The Babe Merchandiser, as Castro refers to it, is a display that theater owners can place near their concession stands and adjust to suit their specifications. Each Merchandiser holds up to 144 pieces of product, and comes with five SKUs-the Babe Classic Plush, Singing Plush, Beanbag Plush, figural straws and keychains. Price points for the product range from US$2.99 to US$9.99.

Half of the merchandise will be exclusive, although Castro plans to place the same Babe Merchandisers in 6,000 grocery stores shortly after he launches them in the theaters.

His immediate goal is to sell the Merchandisers to at least 500 theaters. So far, he has been targeting four theater chains-Loews Cineplex Entertainment, Pacific Theaters, Mans Chinese Theaters and Metropolitan Theaters

‘We’re really concentrating our efforts on progressive theater chains that enjoy marketing products to kids,’ says Castro.

But Castro isn’t relying on the theater owners’ love of marketing to sell the Babe Merchandisers. As an incentive, Equity will offer co-op funds to the chains that choose to carry a minimum number of the fully-stocked Babe displays. The theater owners can use the co-op funds, he says, to help subsidize the cost of getting a clerk to guard the merchandise for the first few weeks of the film’s release, when it is at the height of its popularity.

This sweetening of the pot comes on top of the fact that theater owners are already selling the merchandise on consignment with attractive markups of 45 to 50%.

Those perks aside, Equity is buoyed by the sales success it has enjoyed with the Godzilla program, its first foray into using the theater lobby as an alternative distribution route to move its merchandise, which it launched in 90 Loews theaters last May. For that program, Castro says, theater owners reported selling a solid 80 to 90% of the Godzilla-themed keychains and beanbag clip-ons they had stocked. The displays Equity has designed for Babe, Castro notes, will present a product offering on a much larger scale than has ever been seen before in theaters.

‘Because we’re the first,’ says Castro, ‘we’re basically on a learning curve. But if we do it right, it could prove to be a nice opportunity for those of us who want to venture into [licensed merchandise] theater sales.’

Although theater owners rely on box office receipts and concessions sales as their main sources of revenue, unsuccessful experiments at retailing in the past have discouraged most from embracing the idea of selling licensed merchandise as way of boosting their overall profit pictures.

Mark Pascucci, VP of advertising and promotion at the newly created megatheater chain, Loews-Cineplex Entertainment, which boasts 460 locations scattered across the U.S. and Canada, points to the lack of a comprehensive merchandising game plan as the reason why theater owners aren’t carrying licensed merchandise.

‘We’ve all tried selling CDs of a soundtrack and movie-related books and posters, but they’re not always based on the films that we’re showing. I think that’s the key-figuring out how to get the merchandise into the theater, when the movie is first released.’

Finding the real estate is another concern. Because theater owners depend on concessions sales, they’re reluctant to give up the counter space to stock products that may or may not move. A self-contained display that can be positioned near the concession counter, Pascucci says, could allay these fears, sentiments that Castro et al. took into consideration when designing the Merchandiser.

For the traditional retailer who’s likely to view the theater-lobby-cum-toy-store as just the latest in a recent spate of new distribution routes threatening to cut into his business, Equity has extended the following cross-promotional peace offering. With each purchase of Babe product from the Merchandiser, consumers will receive a coupon valued at US$3 that they can then cash in at any Toys `R’ Us store when they buy a Real Live Babe toy, another Equity creation.

‘We’re really not slighting our traditional retail channels of distribution,’ says Castro. ‘We’re taking the moviegoers and trying to drive them directly, in this case [to] Toys `R’ Us, to further capture the experience across all Babe merchandise, not just Equity toys.’

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