Newmarketbuilders Licensing Love Triangle Roundup

My last blog posting on licensing and rationalization pulled 70 (and counting) comments, spread out among Twitter, emails (many from clients), public comments on the blog, and on Retail Wire (where the article was featured on Tuesday).  As the original blog called out, sometimes licensing is a love triangle, other times not so much, and the comments I received from all three “sides” certainly bear that out!  Here’s my roundup (with supporting excerpts):

Side One:  The Retailers

Brace yourselves . . . retailers are giving big love to their direct branding partners who they see as having “the same agenda.” Retail brand managers commented that the direct model is more "straightforward and flexible."  Brand brokers also allow retailers to put their own stamp on the brands that they provide rather than taking a “my way or the highway” approach.

One major retailer revealed wee crushes on a couple of licensors that he called “innovative,” “open,” “collaborative,” and "great sources for trends."

Slaps were given to those who think that their brand is “more important than it is,” who “don’t get retail AT ALL,” or those who go after too many line extensions and then “expect me to go along.”

Lauds landed on licensees who “respect my calendar” and “don’t make excuses.”

Retailers showed the hand to licensees that “waste my time,” “don’t understand my business,” “don’t do their homework,” and “expect me to train their people.” Several stated that licensors are sticking with underperforming licensees for too long.

Side Two:  The Licensors

Three major licensors revealed that they are in active pursuit of direct-to-retailer deals with one commenting, “. . . my licensees aren’t going to be thrilled about that.” 

Many have sneaking suspicions that the relationships between some of their licensees and retailers aren’t as positive as they’re portraying while others, feel that their licensees are limiting their access to retailers. 

Some expressed fear that replacing a licensee will “kill the business” so they are "staying with what (they) know."

Side Three:  The Licensees

Licensees shared their ongoing struggles to get licensors to understand and integrate a retailer’s POV into the positioning of their properties.  Licensees see themselves as being “closer” to the customer (retailer) and in the trenches while licensors are in an “ivory tower.”

They also expressed concern over Unrealistic expectations for growth on the part of licensors, especially in light of rationalization.  

Licensees also shared surprising frustration with the performance of other licensees.  One echoed many sentiments when he stated, “when (they) have poor quality, late shipments, etc., it brings down the entire program and we also end up looking bad.” 

Sideline:  The Pundits

As always, great comments from my fellow Retail Wire panelists. 

James Tenser of VSN Strategies called out that retailer-exclusive licensing deals might be “the best hedge against rationalization” since they require a commitment from the retailer.  He noted that “mediocrity is the enemy” and that licensors have to closely manage their licensees in order to ensure product standards and proper representation to the retailer. 

Richard Seesel of Retailing In Focus reiterated the advantages of retailer-direct licensing, saying that it makes sense for retailers to “lock up distribution rights” then execute their own product development and sourcing.  He noted that doing so cuts out one side of the triangle entirely.

Bill Emerson of Emerson Advisors said that licensors’ first challenge is to have licensees that produce a high quality product, represents the value proposition of the brand and one that sells well within the licensor’s chosen channel. 

Leave it to Doc Banks of Forensic Marketing to offer up a hilarious, cautionary tale-from-the-past in which an inexperienced licensor’s stubborn denial of retail reality gobbled up valuable speed-to-market time and in the process “killed" one of his most valuable licenses.

Joel Warady of the Joel Warady Group evoked a great metaphor in which the brand (licensor) is like a “beautiful mansion rented out to a family (a licensee).” Therefore, the property owner ought to check in once in a while to ensure that everything is in order and being properly maintained. 

I liked his close so much that I’m going to use it as mine:  “It is in the best interest of the licensee to maintain the home so they have a great place in which to live, and the better they maintain the home, the longer they can remain tenants. The minute the property owners take their eye off the ball, and become less engaged is when the property starts to devalue.”

What a tragic ending to the fairy tale that would be!