At the start of every new year, industry leaders jump on their soap boxes and claim “this is the year that really matters for our sector”.
Sure, they’re selling their wares so why wouldn’t they?
But for brand licensing, the heightened anticipation and competitiveness that’s hanging in the air is real. 2018 was an incredible year. Not just for The Point.1888 but for the whole sector. New internationally recognised brands were knocking on the doors of UK brand licensing agencies asking for support. The Met Police included.
But this year is going to be different. My interpretation in simple terms: it’s going to get crazy.
For many players in the retail industry, every day is like fighting an uphill battle against the might of Amazon. As a result, licensing, like all industries will be impacted by retailers closing stores or shutting down.
Fortunately, not all retailers are struggling. Some have built a proposition, brand and product range that Amazon just can’t compete with (yet). These are the ones we need to work with. And to do that, we need to build a deep understanding of their business and work closely with them in partnership.
A potential way of doing this is by looking at co-branding – something I predict will be very popular this year.
The players with the most power this year will be the licensees that can source the widest ranges of products. Given the pressures facing retailers, they’ll be more careful about who they work with and reduce their supplier base so the more that a licensee can offer them, the better.
These licensees can then become even more choosy about who they partner with, enabling them to reduce the risk they face during the process either through guaranteed retail listings or reduced commercial terms.
As a licensor, if you have these options up your sleeve, you’ll be in a stronger position to secure the grade A licensees to your brand. Brand owners really need to look at what they can bring to licensees, what they can offer that is different or what they can do to support licensees.
Sure, it might feel like a lot to give away, but this year brands will need to be braver when signing partnerships. As the market squeezes, securing higher royalty rates will become more difficult so the new target needs to be based on volume of sales or brand awareness/affiliation.
For licensing agents, this year will be about insight and careful consideration. We need to invest more time than ever before in understanding the retail landscape and identifying the best opportunities for all.
We’re all seeking to improve on last year but it will mean working much harder. There are no guarantees in our industry and as supply (brands) continues to grow while demand (retail) continues to shrink, it’s not going to get easier.
It will be a hell of a ride though.