Kids licensing bounces back from an Olympics eclipse Down Under

Despite a few lingering remnants like the occasional Olympics superstore and some leftover Sydney 2000 pins, it's safe to say that the Aussie Games merchandise fervor that dominated the market Down Under for the past few months has pretty much subsided....
December 1, 2000

Despite a few lingering remnants like the occasional Olympics superstore and some leftover Sydney 2000 pins, it’s safe to say that the Aussie Games merchandise fervor that dominated the market Down Under for the past few months has pretty much subsided. And like retailers all over Australia, the ABC and its 120-outlet network of ABC Shops and Centres took a big hit. ‘Obviously, there was a big swing down in general retail sales,’ says Grahame Grassby, head of consumer publishing for ABC Enterprises. ‘Overall, the ABC’s retail outlets traded 30% down against the same period last year, with the Sydney stores suffering the most.’

As if that wasn’t enough of a hurdle to clear, a couple of other negative economic factors came into play this year in Australia, serving to sharpen the downward pressure on sales in the kids biz. July 1, 2000 saw the implementation of a 10% goods and services tax that upped the price of previously untaxed categories like clothing and books, as well as services that are crucial to retail outlet owners like electricity, gas and heat. Although the Aussie government offset the GST by tax cuts, Grassby says most consumers are likely to forget the short-term break and curtail their spending in response to the inevitable price hikes caused by the new tax.

The Australian dollar also took a nosedive in the latter half of 2000, depreciating by about 30% in relation to both the U.S. dollar and the British pound. ‘Because most Australian retailers import most of their finished goods-especially toys and apparel-this dollar drop has started to increase prices, which is leading to a further fall-off in retail sales,’ explains Grassby. ‘So while the Australian economy is very strong in the children’s entertainment sector, everyone is struggling to meet last year’s figures because of this strange lining up of a number of unique external factors.’

The concentrated timing of the Australian kids industry’s business cycle also poses a bit of a challenge. ‘In the Southern Hemisphere, the toy industry is totally reliant on November, December and January for survival because school holidays and Christmas coincide. Australian kids don’t have a summer break like North American children,’ explains Grassby. ‘This makes the whole toy industry in Australia a lot more high-risk because we have to rack up the bulk of our annual sales in a much shorter window. Most toy stores or gift stores trade unprofitably for nine months of the year and then hang it on the line for year’s end.’

Despite having so many cards stacked against it, the ABC is heading into the all-important Christmas holiday season with a good degree of confidence. The reason? The pubcaster’s strong television penetration into the kids consumer market in Australia allows it to promote its portfolio of more than 40 children’s properties to nearly its entire target demo. Roughly 90% of preschoolers in Australia tune in to the channel at least once a week, earning the pubcaster a whopping 60% marketshare of kids up to age four (Nine Network’s the next highest with 17%) and 52% in the five to 12 age range (Channel Seven ranks second with 18%).

The ABC is also planning to add to that already impressive reach in July 2001 when it launches a 24-hour free-to-air digital channel for kids. Financed by a one-off US$21-million subsidy from the Australian government, the channel will feature educational and children’s programming, with some ABC shows crossing over to pull double duty.

Given the incredible amount of TV exposure the ABC can put behind its properties-coupled with the fact that ABC Enterprises has both an expansive consumer publishing infrastructure that covers key kid categories like video, music, live events and books and a strong relationship with Melbourne-based licensing agent Gaffney International Licensing-it really has become the launchpad of choice for franchises in Australia. And no property showcases the pubcaster’s ability to build a brand better than Bananas in Pyjamas, an ABC-produced preschool show that has risen to icon status since it first hit the airwaves Down Under eight years ago.

At the ABC Retail Conference last month, the pubcaster outlined its 2001 plans for the veteran property, starting off with 80 new five-minute episodes being produced for debut next September. Gearing up for the property’s 10th birthday in 2002, ABC Films is also working on a Bananas feature concept.

On the licensed merch front, the property is evolving in terms of brand design and product packaging next year, with the new-and-improved Bananas featuring a chubbier physique, rosy cheeks and a more up-to-date 3-D composition. ABC Books recently signed a publishing deal with Dorling Kindersley in the U.K., and the first seven Bananas books rolled out there last month. Two new video titles and one DVD, distributed by Roadshow Entertainment, are also skedded for release next year.

Building on food licensing activities that started in 1999 with Bananas branded milk and yogurt from Melbourne-based foodco Paul’s and Chiquita bananas, the ABC, Gaffney and Paul’s rolled out a new line of lunchbox-sized tetra packs of flavored milk from Paul’s last month, and is looking into doing mini raisin packs for sometime next year.

With all this activity, Bananas in Pyjamas hardly seems to need a profile boost, but that’s what it got in October when the Olympics committee commissioned the ABC to build a Bananas float for the closing ceremony of the Sydney 2000 Games. To keep Bananas top-of-mind after the Games, the ABC coordinated a ‘Bananas Fly Qantas’ cross-promotion with Australia’s largest airline. Running until the end of December, the promo spotlights the Bananas in Qantas’ in-flight kids activity kits.

In terms of new properties that seem poised for Bananas-like growth, the ABC is producing a music and TV clip for MIP-TV based on a preschool book property by Australian kids author Jeanette Rowe called YoYo. So far, ABC Books has published two lift-the-flap books in Australia-YoYo Goes to the Beach and YoYo Goes to the Park-with plans to release two more called YoYo Goes to Playgroup and YoYo Goes Shopping in 2001. Slightly reminiscent of Maisy, the print property stars a simply drawn, smiling yellow dog set against vibrantly colored painted backgrounds. The ABC is also negotiating a TV co-production deal for a whimsical toddler book series called Baby Animals, illustrated by Kiwi artist Ann Skelly. Six books will be out by the end of 2001, and six plush based on the books’ characters are already out at retail in Australia.

Given the no-stone-left-unturned policy pursued with relentless vigor by the dynamic duo (Grassby and Fred Gaffney), it’s unsurprising that the Olympic sales setback was challenged and turned into a victory. To expand its retail network, the ABC recently glommed onto a retail opportunity with mass market chain Kmart that opened up with the closure of the Sydney Games. In partnership with Gaffney International, the ABC has commandeered an in-store space previously occupied by Olympics product for the launch of the first ABC for Kids concept area last month. The shop-in-shop is in test phase for the holiday season, and its performance will make or break the ABC’s plan to roll out 100 more in 2001.

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