While its troubles may have been well documented, when the news finally broke that Woolworths was going into administration – with the closure of its 800+ stores beginning after Christmas 2008 – it still came as a major blow to the licensing industry.
After all, the store was the largest retailer of licensed product in the UK. From toys and clothing, through to home entertainment, publishing and a variety of impulse purchase products, Woolworths stocked it all.
“The biggest concern when Woolworths went bust was really for those licensees who were reliant on their presence in the market as opposed to a more general concern about licensing,” says Rob Corney, MD of Bulldog Licensing. “While it was no surprise that the retailer failed to survive the downturn after years of concerns over their sustainability, their dominance of the licensed sector meant that many suppliers had to keep distributing to them, in some cases without credit insurance.”
Corney wasn’t alone in his fear over the impact on his partners. Paul Bufton, general manager of Warner Bros Consumer Products UK, agrees: “Woolworths was really the only High Street store that catered for the impulse and pocket money purchaser with such a broad range of licensed products. This time last year we didn’t know who, if anyone, would fill Woolworths retail space and if someone did, if they would champion licensed product in the same way that Woolies did so well.”
Notably, Woolworths was possibly the only retailer with such an ability to group product together for cross category promotions. “Nothing has completely replaced Woolworths in that sense,” admits Sandra Vauthier-Cellier, MD of 4Kids Entertainment. “Only really Tesco and Asda come close, but their size and scope make any promotions more difficult to coordinate.”
Indeed, the supermarket duo – as well as Sainsbury’s - have made significant inroads into the licensing business over the past 12 months. But they are not the only retailers that have upped their game, having identified licensed product as a major earner.
“The major retailers have all stepped up to fill the void left by Woolworths and we work very closely with all of them across our brands,” states Neil Ross Russell, MD of BBC Worldwide Children’s & Licensing. “Key players like the leading grocers, Toys R Us, Smyths and Argos are all working more closely than ever with licensors like us, and licensees, to develop exclusives, cross category promotions and DTRs.”
WBCP’s Bufton and 4Kids’ Vauthier-Cellier also highlight Next, Boots, HMV, Bhs and Wilkinsons, while the latter also says: “Online retailers such as Amazon, Argos, Tesco.com and Play.com have definitely increased rapidly in their popularity and have become favourite retail destinations.”
“In my own direct experience, I think Mothercare have worked very hard to foster and develop strong links with licensing,” offers Ian Downes, MD of Start Licensing. “We have successfully licensed Bang on the Door to them for a multi-territory apparel licence and, so far, it has been a smooth process. I think they were already on the ball but the demise of Woolworths has probably galvanised them to develop more licensing activity.
“I think we saw a more positive approach from retailers at Brand Licensing Europe, which I think is a sign of the increased value retailers place on licensing,” Downes continues. “We have had good sales on apparel for the Honey Monster and The Beano in retailers such as Matalan, Top Shop and River Island which may be in part due to displacement of Woolworths business. Also, we launched Big & Small plush at The Entertainer and I think store groups like them have taken advantage of the gap that Woolworths closure has created on a town by town basis.”
It seems that licensors and licensees now have more avenues than ever on the High Street. But this isn’t the only positive to come out of Woolworths’ failure.
“Woolworths’ decline has made everyone in the industry focus on the level of service we are offering retailers,” points out BBCW’s Ross Russell. “There is a shift towards really getting under the skin of retailers’ objectives and examining ways that we can help create in-store theatre, to drive footfall and impact sales.”
While it is likely we haven’t yet seen the full impact of the closure – quarter one next year could see some suppliers feeling a negative impact, for example – it is widely believed that the licensing industry has coped well with the loss of Woolworths. “It’s been great to see our Woolworths contacts moving forward and bringing their invaluable expertise to new roles within the industry,” says WBCP’s Bufton. “Our business has accepted the unfortunate loss of Woolworths and have focused on bridging the gap with new retail partnerships which look incredibly promising.”
Bulldog’s Corney concurs: “Although Woolworths was the biggest stockist of licensed product, the resilience of licensed lines against a backdrop of economic uncertainty means that the demand for them is no weaker than it was prior to their demise. With a greater focus on licensed lines right across retail, the future is looking strong for the industry.”