James Tenser

BrainTrust Query: The Torrid Truth about Licensing's Love Triangle

March 9, 2010

FROM RETAILWIRE:
Licensors are just as aware of rationalization as licensees are and they are appropriately freaked out about it ... but sometimes for the wrong reasons. How has ongoing rationalization affected licensing? Is the traditional model less attractive than in the past?      [more...]

The poll question is a tricky one. Retailer-exclusive licensing deals may be just the thing to keep certain products on the shelves--allowing for store-brand-like commitment from the retailer with price and/or margin advantage. If you can only get a certain recognizable brand at Retailer M or T, it might provide some shoppers with an extra reason to visit.

But the classic licensing model probably is at risk from SKU rationalization. In the current era, it's a rare brand indeed that can command a higher price point for equivalent merchandise. And items in the middle--between the category leader and the store brand--are certainly on the bubble in many categories.

So in addressing the challenge for licensees and licensors, the question comes down to, "In which product category?" and maybe even, "For which shopper segments?"

Where a licensed brand is clearly and reliably associated with a superior level of quality, there is ample room for success. Mediocrity is the enemy. For this reason, licensors must keep their thumbs on licensees at all times, to ensure product standards and proper representation to the retailer.