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It proved to be the best of both worlds for Wal-Mart Stores when the retailer partnered with Disney Consumer Products to open 750 Hannah Montana Shops in Wal-Mart stores earlier this year, prior to the theatrical release of a related concert movie. The Bentonville, Ark., discounter got an opportunity to nationally promote itself through tie-ins to the release, and it got to merchandise a unique assortment

It proved to be the best of both worlds for Wal-Mart Stores when the retailer partnered with Disney Consumer Products to open 750 Hannah Montana Shops in Wal-Mart stores earlier this year, prior to the theatrical release of a related concert movie.

The Bentonville, Ark., discounter got an opportunity to nationally promote itself through tie-ins to the release, and it got to merchandise a unique assortment of 140 Hannah Montana products. Besides being able to co-promote what is said to be a billion-dollar franchise for Disney, Wal-Mart rode on the wave of what most industry insiders and retailers believe is the year's biggest entertainment franchise. Such special licensing arrangements with big retailers are becoming more the norm these days as chains with national and regional reach find ways to distinguish themselves with licensed entertainment-character properties that have built-in demand and equity.

Here are other examples of recent co-partnering initiatives and exclusive arrangements with retailers:

  • Safeway licensed the iconic Looney Tunes characters from Warner Bros. Consumer Products for an Eating Right Kids line that will eventually be marketed nationally through Safeway's Better Living Brands Alliance. This follows Kroger's Disney's Magic Selections healthy foods line, launched in 2006.

  • Target began exclusively selling “Camp Rock” products that coincided with the release last month of a Disney Channel Original Movie that features teen idols the Jonas Brothers.

  • Kmart partnered with Universal Pictures, Marvel Entertainment and Burger King on the release last month of “The Incredible Hulk,” with Kmart merchandising Hulk wear in boutiques in its stores.

Because large retailers are getting so much clout, the licensors want to get more than their fair share of that clout. So it behooves them to create initiatives with the retailer,” explained Nancy Zwiers, chief executive officer of Long Beach, Calif.-based Funosophy, a marketing consulting firm for the toy industry.

Between Hannah Montana and Disney Channel's “High School Musical,” retail sales for the two franchises are expected to soar from $400 million to $2.7 billion by the end of fiscal year 2008, according to Disney. Globally, Disney's total licensed-merchandise sales are expected to grow from $27 billion in 2007 to $30 billion by the end of this year.

In an informal survey of a dozen supermarket buyers attending the recent GM Marketing Conference of the Global Market Development Center, Colorado Springs, they overwhelmingly said Hannah Montana is the hottest property this year, and most said they will be investing in it for back-to-school and fourth quarter. Disney's release next spring of “Hannah Montana: The Movie” will ensure that momentum for the property continues.

“Hannah Montana is probably close to being a phenomenon. It is going to be there for a while,” said Larry Ishii, general manager, GM/HBC sales, Unified Grocers, Los Angeles. However, he added that there are some products in the Hannah Montana offering that don't quite fit in with food stores.

Dewayne Rabon, vice president, GM/HBC, Winn-Dixie Stores, Jacksonville, Fla., said Hannah Montana is very hot. He said he believes “High School Musical” comes in a close second for hottest entertainment property this year.

“[Hannah Montana] is huge. It is the big property right now, and it doesn't seem to be cooling off,” said Al Jones, senior vice president, procurement and merchandising, Imperial Distributors, Auburn, Mass., speaking of the teen schoolgirl-turned-pop-singer character.

According to Irv Zakheim, president and chief executive officer of Zak Designs, a licensor of kids' dinnerware in Spokane, Wash., “Hannah Montana has a style that girls love, and they really want to be Hannah. Anything that helps them to emulate her style and fashion image will fly off the shelves!” He noted the support for the franchise that Disney is putting behind the property in TV, music, movies and more. “Typically, when a license has that kind of support, it has a longer-than-average shelf life. I fully expect Hannah to be around for quite a while still,” he said.

Another licensor of Hannah Montana, Brothers International Food, a food and beverage manufacturer in Batavia, N.Y., stated that by licensing hot-selling Disney characters like Hannah Montana, as well as “Mickey Mouse Clubhouse,” on its packages of fruit crisps, it gives the company an opportunity to be immediately relevant to a younger audience.

That younger demographic, kids ages 3 to 11, currently represents 12% of the U.S. population, at 36 million. According to a newly released study from Packaged Facts, “Market Trend: Licensed Kids' Personal Care Products Market,” based on the most recent Census Bureau data, estimates are that the 3-to-11 population group will increase at an annual rate of about 1% to top the 37 million mark in 2011 and approach the 38 million mark by 2012.

The tween group that Hannah Montana is targeted to usually skews slightly older at 8 to 12 years. However, the merchandise appeals to kids as young as 4 to 5, said Zwiers, because kids aspire upward. She warns that it is important to keep demand coming from older kids, because if too many 4-year-olds begin wearing Hannah Montana merchandise, it suddenly loses its “cool” aspect.

But Hannah Montana will not be found on some supermarket shelves this year. The character doesn't appeal to the many Hispanics who shop Minyard Food Stores, Coppell, Texas.

“Our customers are pretty ethnic. For them, Hannah Montana doesn't make a whole lot of sense,” said Mike Bevel, director, general merchandise, for Minyard. However, merchandising Dora & Diego (Nickelodeon) does make sense. “Dora, we sell like crazy. Our licensed products are mainly children's, not too much teenagers',” he added.

While Hannah Montana licensed products are gender-specific to girls, boys are expected to gravitate to Batman with the summer release of “The Dark Knight,” and to Star Wars with the animated movie “The Clone Wars,” both from Warner Bros. Meanwhile, DreamWorks and Paramount are set to release a sequel to the popular “Transformers” next year.

“Superheroes lend to core play patterns for boys. The glamour — whether princess for little girls or pop star for older girls — lends itself for key play patterns for girls,” Zwiers explained.

She noted a pitfall for the supermarket sector in selling kids' entertainment merchandise. “Supermarket brands are more interested in gender-neutral vs. gender-specific properties,” she said. This is in part because of the food distribution channel's efficiency. The thought process goes like this: Why not market one license that captures 20 million kids, rather than two gender-specific licenses that capture 10 million boys and 10 million girls?

“The key trend going forward is education of companies that sell primarily into the food and drug channels on the power of gender-specific licenses. They pack a bigger punch, with more emotional resonance. Kids like Scooby Doo, but boys love Batman. It's got a deeper emotional connection,” she said.

Blair McCaw, president of Constellation Management Group, a brand development manager with offices in Chicago and South Norwalk, Conn., warned retailers about the shorter life-cycle of entertainment properties. “Once the novelty value of entertainment property fades that can influence repeat purchases,” he said.

He advised retailers to think about the brand and what it means to consumers and what those brands say about the store.

“What value does Warner Bros. characters bring to a mom's confidence in buying food products for her children? It tends to be the entertainment and play value,” McCaw said. “What if there was a brand that reflected more than the ephemeral entertainment value and said something about this great quality product?”

As much as Disney will try to keep demand for Hannah Montana going, there is the age factor. Miley Cyrus, who plays the schoolgirl-turned-pop-star character, just turned 15. “By 2011 we might see some fall-off,” said Zwiers. Cyrus will then turn 18 and enter early adulthood.