BrainTrust Query: The Torrid Truth about Licensing's Love Triangle
Through a special arrangement, presented here for discussion is a summary of a current article from Newmarketbuilders' Blog.
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 their 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 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 your own
portfolio of brands, but also 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. 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. Your licensees will need to have more than a stylebook in order to tell a story of alignment between your brands and retailers' brand visions.
4. Be more than a brand-centric cheerleader (or dictator) for your licensees; be a partner to them by providing retail-relevant resources and insights.
After all, licensees are more than middlemen; they are a marketing arm for your brands.
Discussion Questions: How has ongoing rationalization affected licensing? Is the traditional model less attractive than in the past? What further steps can licensors take to support their brands in the current climate?