Licensors need to rise to retail challenge

Shrinking shelf space, stocking ?no risk? lines and short-term thinking at retail level all need tackling in 2008 says industry.
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Strengthening ties with retail and getting them to take a long-term view of brands is one of the major challenges facing the licensing community next year, according to industry execs.

Convincing retailers to commit to fresh, untested brands and finding new routes to market have also been identified by a panel of well-known execs in the licensing industry canvassed by Licensing.biz.

“We need to make sure that we are delivering on product that retailers want to carry,” stated Gustavo Antonioni, head of UK licensing at Marvel Entertainment. “We need to deliver a retail statement, not an item business. We can do this by working on product ranges that not only entertain, but embrace the brand values and essence of the character, while at the same time provide good value.”

Janet Woodward, head of licensing at Coolabi, believes that if there is a fall in consumer spending the first thing retailers will do is grind down suppliers’ prices, making life even tougher for the licensees. “With many retailers working on over 65 per cent margins and on a sale-or-return basis, the risks involved in taking the big or short-term licences are becoming seriously inhibitive,” she said.

“Retailers want to stock increasing amounts of licensed products because of their selling power and consumer draw, so the licensing industry needs to put in extra effort and provide programmes which enable the licensees to make a profit.”

The consolidation of the retail environment globally is also cause for concern. “This has left less shelf space for retail in general to take risks on smaller programmes/licences that may eventually become hits,” pointed out Mark Northwood, VP of merchandise licensing at Nelvana Enterprises. “Decreased space and an increased number of stores means greater volume for those few properties that make it on the shelves, but leaves little room left for retailers to experiment with licences that may become the next big brand.”

Simon Kay, business development director at AT New Media, believes that no one has been willing to have a go at something different for a while. “Take a chance or two and have a go at something new and not the same usual ‘easy rides’,” he said. “Trial things online with the ability to offer in-store if they work. Get in there on Facebook and the viral growth curve that goes hand in hand with it.”

MD of Metrostar, Claire Potter, agrees that we need to sniff out new routes to market. “Many retailers prefer not to invest in licences or licensed product because it tends to decrease margins, so their focus is generally on own label or in-house brands,” she explained.

“This limits the growth in licensed product and limits consumer choice. Not that I blame retailers for adopting this approach – but brand owners and licensees need to find different routes to market for all but the highest profile branded product. The internet must offer a great opportunity here.”

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