All aisles in Kmart’s children’s clothing department will lead to Sesame Street next year. The mass-retailer has just announced a major licensing agreement with the Children’s Television Workshop (CTW), and will use the popular program as the anchor brand in its children’s apparel division starting in July.

Under the multiyear contract, Kmart Corporation will have exclusive rights to manufacture, distribute and sell Sesame Street infant, toddler and children’s clothing. The deal includes all of the characters from the program except Kermit the Frog, whose licensing rights belong to Jim Henson Productions.

According to Baxter Urist, CTW’s senior vice president of products, international, the partnership couldn’t be a better fit. ‘We approached Kmart with the concept and before we could state what our idea was, they finished the sentence.’

Part of Kmart’s appeal, Urist says, is its ability to reach a mass-market with quality merchandise. CTW also envisioned Kmart using Sesame Street as a dominant brand, the same way it promotes the Martha Stewart line of bedding and bath products in its housewares section.

Similarly, Kmart wanted to cash in on the integrity of the CTW brand to reach new moms. ‘There are over 50 million graduates of the Sesame Street program in the U.S. alone,’ says Steve Ross, senior vice president and general merchandise manager of apparel at Kmart. ‘And those people are moms and dads now. If there’s a core value for Sesame Street, it’s trust.’

The line will include coordinates, separates, outerwear, sleepwear and layette, but Urist believes the relationship could be easily expanded into toys or other merchandise. ‘The breadth of the line is tremendous,’ he says. ‘It could take any number of directions.’ Floor merchandising and signage are still in early planning stages, but, says Ross, ‘when you walk into infant and toddler apparel, you’ll see a dominant display of Sesame Street merchandise.’

A team from CTW and Kmart, pooling clothing and brand expertise, will oversee a step-by-step process to approve and implement the apparel line, explains Ross. Their efforts will encompass everything from merchandising and distribution to a pricing structure. Major advertising and media support are also planned for the launch. ‘We’re going to be aggressively promoting this,’ Ross says, noting that this partnership will not interfere with Kmart’s relationships with other children’s line suppliers.

This retail partnership isn’t a first for CTW, which has an ongoing relationship with J.C. Penney Co. But Urist notes that this deal with Kmart is more extensive than any pre-existing retailer joint venture. ‘We believe that strategically it made more sense to divide the business between mass and upscale department stores,’ says Urist.

Of course, the retail scene isn’t the only place the CTW brand is in demand. Other CTW partnerships include: an agreement with CBS made in October to co-produce at least three half-hour series for Saturday morning programming, with a commitment to air at least one of those series in the fall of ’97; the CTW/Cartoon Network co-production Big Bag, which debuted in June; educational programming, sponsored by Columbia TriStar Television Distribution, which airs on PBS; a multimedia deal with Philips Media to produce nine CD-ROMs; and a deal recently inked by CTW and Columbia Pictures to merchandise and distribute Sesame Street films and home videos. CTW currently produces the My Sesame Street Home Video line, which is distributed through Random House.

‘We’re about reaching and teaching children and their parents,’ says Emily Swenson, executive vice president and chief operating officer for CTW. ‘One of the reasons that Kmart and other retailers are so enthusiastic about working with Children’s Television Workshop is because it has a long history and tradition. It’s one of the few brands that has a durability and love. In the world of retail where so much is unknown, Sesame Street is a pretty good bet.’