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Kids furniture manufacturers bet on licensing to boost 2003 sales

While the US$4-billion children's and infant furniture category is thriving, successfully applying licenses to it is proving to be a tricky proposition for manufacturers. Between 1999 and 2001, category sales rose 12% (nearly doubling the industry's overall growth for the same period, according to kids home furnishings industry pub Kids Today), but licensing has not been a key sales contributor. In fact, revenues from entertainment character-branded furniture and home furnishing sales dipped 4% in 2001, according to The Licensing Letter.
November 22, 2002

While the US$4-billion children’s and infant furniture category is thriving, successfully applying licenses to it is proving to be a tricky proposition for manufacturers. Between 1999 and 2001, category sales rose 12% (nearly doubling the industry’s overall growth for the same period, according to kids home furnishings industry pub Kids Today), but licensing has not been a key sales contributor. In fact, revenues from entertainment character-branded furniture and home furnishing sales dipped 4% in 2001, according to The Licensing Letter.

‘Ultimately, we found that furniture wrapped around a single character motif wasn’t something parents or kids wanted to live with for a long time,’ says Vasso Unks, marketing director at Princeton, New Jersey-based furniture company P.J. Kids, which produced 10 licensed furniture lines (including Bob the Builder and Harry Potter) last year, but today produces just one for Barbie.

Unks says the biggest hurdle is mass-market retailers, who have lost patience stocking the slow-moving product because of the shelf space it eats up. But that doesn’t mean manufacturers are throwing down their work tools when it comes to licensing.

Notwithstanding P.J. Kids’ experience, moving into 2003, Joe Shamie, president of New York-based Delta Enterprise – which signed a master furniture license with Nickelodeon to create a variety of furniture based on its key properties, including Dora the Explorer and SpongeBob SquarePants – believes the marketplace will respond favorably to its products because they offer a new twist on the category.

‘The difference is that each line was created organically and is reflective of the individual property,’ says Hal Snik, VP of Nick’s consumer products, who negotiated the Delta deal. To wit: Delta’s chairs for SpongeBob are shaped like shells, while the base for the tables resemble Gary the Snail, a character from the show. Delta is working on special planograms for retailers that will make it easier for stores to stock the product, which is slated for release this spring. And the company is also sprucing up the packaging with large full-color photos of the furniture that will clearly display the items, sparing retailers from having to assemble them.

Despite a tough retail market, there are some positive licensing stories emerging. After bottoming out in 2000, licensed inflatable furniture is showing signs of a comeback. From January to November, New York-based Kidz Kraze posted a 500% sales increase for its inflatable chairs, says president Mark Freedman. Most of the sales momentum is coming from its SpongeBob chairs, which have been enjoying brisk returns since they were introduced last April. The company is also producing licensed activity tables and chairs for Nick’s Dora the Explorer and WB’s The Powerpuff Girls and Scooby-Doo, and it launched a sleepover-friendly line of inflatable beds that come in a backpack in October.

Also breathing life into licensed furniture are JNH Australia’s foam flip-open sofas. Launched in 1993 in Australia, where they became home furnishing mainstays, the lightweight sofas average sales of between 120,000 and 150,000 units annually in a country with a population of just 18.5 million, says JNH’s managing director Nir Pizomy.

‘It’s the equivalent of what the security blanket was to kids in the ’70s,’ says Pizomy, adding that 90% of the sofas are tied to preschool licenses like Winnie the Pooh. In March, Toronto, Canada-based Spin Master Toys acquired the rights to the item and is producing it for the U.S. and Canadian markets under various preschool licenses, including Caillou and Dora the Explorer. SM’s VP of licensing Adam Beder says the company is using the couches to springboard into home furnishings and plans to expand into nightlights, wall décor and carpets next year.

Launched exclusively at Toys ‘R’ Us this fall, Spin Master’s sofas will hit North American mass and specialty accounts in the spring. Though the item was SM’s number-one SKU in terms of dollar sales at TRU Canada in October, Beder acknowledges that the sofas, which eat up a lot of floor space, still have to prove themselves. ‘It’s not an easy item to break the door down with,’ he says, ‘but once retailers see the sell-through – and it’s happening already – they’ll [be inclined] to take a bigger position on it.’

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