I had the pleasure of speaking with Rick Darling, president of LF USA, following his terrific keynote presentation at the International Licensing Expo. LF USA is a subsidiary of Hong Kong-headquartered Li & Fung Limited, the multinational consumer goods export and logistics group.
Darling oversees LF USA’s rapidly expanding business in the U.S., where its portfolio of owned and licensed brands includes top entertainment companies, celebrity brands and fashion labels. As a key partner to the world’s major department stores and mass retailers, LF USA views retail from a unique vantage point and I was delighted to gain Rick's perspective on the challenges that lie ahead for our clients across the retail spectrum.
In part two of the interview (Part One can be accessed here), we discussed licensing best practices and keys to retail differentiation and expansion strategies. The following are highlights from our conversation:
Carol Spieckerman: Rationalization is, of course, a big term in retail, in terms of products, brands, and even suppliers. Licensors are also, as you mentioned, carrying out their own form of rationalization, by either cutting back on their licensee bases or eliminating them altogether and doing more direct-to-retail programs. Is there anything that your fellow licensees can or should be doing to stay in the game and hedge against this, or is it just inevitable?
Rick Darling: I’m going to be pretty blunt. There is some inevitability as licensors begin to rationalize their expense structure and their profit models. It’s very, very expensive to operate a brand in the traditional licensing model with multiple licensees in each product category, in each country, in each region of the world. Licensors are finding themselves with thousands and thousands of licensees rolling up to a number and if they have 30% fewer licensees, they still get to the same number.
Read the rest of the interview in Carol's column on the LIMA website.
Want to explore what these and other retail dynamics mean to your retail positioning? Contact me directly at email@example.com