The Torrid Truth about Licensing's Love Triangle!

Rationalization at retail.  I won't stop writing about it until our clients stop asking about it!  Disruptive, disconcerting . . . and I’m finding that it's also disconnected for many licensors.  Don’t get me wrong—licensors are just as aware of rationalization as licensees are and they are appropriately freaked out about it . . . but sometimes for the wrong reasons. 

 Direct-to-retail licensing is on the rise as brand brokers like Iconix and even sourcing powerhouse Li & Fung pursue direct deals with major retailers such as Walmart, Target, and Kmart.  However, the traditional model, a brand owner/licensor granting the rights to a supplier/licensee to market products to retailers under a brand, is still prevalent.  We call this the licensing triangle, and one thing’s for sure, it isn’t always a love triangle!  As challenging as it can be to keep the fires burning between suppliers and retailers, licensing is inherently a riskier proposition . . . particularly when rationalization comes calling. 

Here’s where licensors can miss the connection:  Most licensors tell us that they are worried about BRAND rationalization.  They see retailers eliminating national brands in favor of private labels and know that it is heading their way.  However, they should be just as worried about SUPPLIER rationalization because retailers are also looking for any excuse to reduce their supplier base . . .  and the suppliers on the chopping block may be your licensees.

In my experience; however, licensors often leave the licensee out of the equation when they lose ground with a retailer; instead they blame the retailer: “They just don’t get our brand.”  “I knew that marketing guy was trouble.”  Retailers, on the other hand, tell us that licensees can be a licensor’s weakest link and when that is the case, you have to know that retailers place responsibility squarely on the licensor.  Bottom line: There are some terrific licensees out there; ones that provide expertise and retail access that would otherwise prove elusive; however, your brand at retail is only as strong as your weakest licensee.   

So, at a time of rampant rationalization, private label proliferation and retailer AS brand, it’s time for licensors to reignite the flame by getting reengaged with your retailers and your licensees as never before. 

Here are a few tips on how to keep retailers from getting the wandering eye:

1. Constantly assess, not only on your own portfolio of brands, but also on those of your licensees.  If their brand portfolios aren’t important to the retailers that drive your business, your brand may not be enough to make up for it.
2. Accompany your licensees to significant meetings with retailers.  Some licensees discourage licensor presence, portraying their retail relationships as fragile and tenuous.  In my experience, that alone can be a trouble sign.  On the other hand, many licensees tell us that they welcome licensor presence and they don't feel as though they are getting enough support.  When your brand is on the table, and on the line, you owe it to yourself to be present. 
3. Increase the frequency and intensity of licensing summits and collaborative sessions.  In order to have a compelling retail proposition, you and your partners must be in complete alignment, not just with your brand messaging, but also with your retail partners' brand visions.  Your licensees will need to have more than a style book in order to make that happen.
4. Be more than a brand-centric cheerleader (or dictator) for your licensees; be a resource.  Licensees tell us that they are hungry for information, tools and tactics and our post-presentation Q&A sessions certainly bear that out -- Q&A has been running as long or longer than our presentations at licensor summits lately.  Many of our clients are getting ahead of the curve by cutting back on big brand launch events in favor of more focused and retail-relevant programming that makes their teams, and those of their brand partners, smarter.

Licensees are more than middlemen, they are a marketing arm for your brands. Choose wisely, support vigorously and tend to the triangle!

Want the latest insights on where branding is going?  Want to see it all in action?  Join Carol Spieckerman and Lisa Carver at the Licensing International Expo as we present the latest retailer-centric branding trends.  Then hop on board for our beyond-the-strip, post-presentation retail safari!  More details to follow.