The value of many large companies’ stock over the last year has gone down quicker than a Lib Dem MP at a Chippendales concert. There is a growing realisation in Britain that continued sales of Barcelona 1992 Olympics merchandise on Las Ramblas is less the enduring appeal of a global mega-brand and more down to overstocks.
The High Street is dropping names faster than a scheduler re-running a slate of 1980s kids’ TV programmes; and as we move into one of the key trade show seasons, even the heavens have dumped on our prevailing spirit with a travel-chaos-inducing blanket of snow.
For most people in British licensing, there was only really one story which dominated the headlines in 2012… whilst gold rained around everything to do with British sport, many brands were left to fight for the remaining non-Olympics shelf space at retail and property owners resorted to amateur proctology to find the hitherto-ignored hard-to-reach value of their brands.
And it wasn’t just the Olympic sports events that challenged the attention of the industry – the Royal Wedding and the Jubilee proved a boon to sales of unofficial merchandise, much of it bearing the trademark spelling mistakes, misappropriated photography and all the durability of a Dreamliner aircraft rather than to a cohesive and thoughtful programme of product which could have developed a genuine legacy for the country.
Even the Olympic torch relay seemed sadly lacking in participants from the licensing industry, but then rumours abound that the organisers felt it would be unbecoming to witness Radda taking a bet to extinguish one on his tongue.
But, as any rower will tell you, whilst you cannot move forwards without looking back, a few hard strokes can show some clearer waters ahead.
Although it might feel as though the only likelihood of a rosy glow across the UK High Street would carry with it cries of ‘insurance job’, the first month of this year really has brought with it few surprises.
HMV have discovered that you can’t maintain over 200 brick and mortar stores in competition with the download market; Comet stores crashed to earth having found that high ticket discretionary purchasers are harder to find in an economic downturn; and Jessops discovered that the free, high quality camera included on an iPhone does not act as a sampling exercise for the casual market to buy into unnecessarily highly specced photography equipment.
In many ways, the bad news stories currently coming out of UK retail are more a re-alignment than any fundamental lack of foundation in good business principles. Yes, aside from the casualties named above, some companies are finding that elastic, unmanaged growth can lead to a sudden and sharp contraction… but has that ever been otherwise?
There are certainly question marks at retail over the uniformity of supply channels when it comes to taxation, etc, but the principle remains that if you leave cash on the table and fail to supply a notably different product or service, someone will challenge you on price.
2013 is a year of great opportunities for the licensing industry. As the downturn provides a focus on core activity, those companies that have managed sensible growth through core underlying business principles will continue to thrive.
But, a ‘focus on core activity’ does not mean a retrenchment to a handful of brands offering the same type of products and brands as the competition, which is the mistake that many companies have made from right across the industry spectrum.
This is the time to question what is the point of difference that companies in this sector can provide – the real value of licensing is not in supplying vast quantities of similar-looking products derived from the same property stable – yes, there should always be an opportunity for range depth in brands which are the current market leaders, but licensing is a trend-led industry and the market needs to provide an opportunity for fresh brands to thrive and to become the new market leaders.
It is this constant refresh which is the industry’s real USP, the ability to appeal to significant and pre-determined market sectors, driving footfall and revenue at retail and removing some of the tendency to compete only on price. No other sector can provide an opportunity to maintain value through the provision of product to an existing base of fans, where the purchase decision is made through product offering and design ahead of price.
Therein lies the opportunity through 2013 and beyond. As the economy continues to struggle, there is a growing realisation that an entrepreneurial spirit is vital across all sectors of the licensing industry. The ability to spot an emerging trend, proper portfolio planning to drive value through all consumer demographics and a decision to carry a wide enough selection of licensed brands to provide a call-to-action to consumers who will be searching out that point of difference on shelf.
So whilst people with bad hair fixate themselves over whether boys should wear pink or girls should play with Action Man, the real business decisions are based around the provision of a wide enough selection of brands to attract the biggest possible consumer base.
Whilst 2013 will not provide a return to the heady days of two per cent economic growth, adherence to the core principles that underpin the licensing industry can certainly help to steady many a rocking boat and make the future look a lot more rosy.
About the author
Rob Corney is MD of Bulldog Licensing. Visit Bulldog Licensing’s website here or call 020 8325 5455 for more information.