Can licensing safeguard against retail downsizing?

Discussion
Photo: Getty Images
Jun 07, 2017
Carol Spieckerman

Through a special arrangement, what follows is a summary of an article from The Licensing Book, a monthly publication focusing on licensing properties and brands.

The ongoing shuttering of brick-and-mortar locations will challenge brand marketers, not only because online won’t make up for the reductions in store count in the short term, but because stores act as brand billboards.

Every store closure can nibble away at brand awareness, particularly since brick and mortar scale also increases awareness of retailers’ e-commerce operations. As retailers’ physical presence shrinks, digital relationships can dwindle. Fewer stores also ding retailers’ convenience propositions such as click-and-collect programs. When retailers curtail convenience, it makes it more difficult for consumers to buy the brands they carry.

As daunting as it may seem for retailers and brand marketers to counteract these dynamics, the licensing community does have a few tricks up its sleeve. In fact, licensing can present a unique hedge against downsizing in three ways.

  • Portfolio:With Amazon.com opportunistically attacking specific categories, retailers with narrow-and-deep assortment strategies have never been more vulnerable. The same holds true for brand marketing companies whose fortunes are tied to narrow niches. The portfolio structure inherent with licensing allows both licensors and licensees to explore awareness-driving brand and category extensions with relative ease across multiple channels, retail tiers and geographies.
  • Price:It’s no secret that price transparency is an everyday retail reality nowadays. Some retailers have found that they have little wiggle room, as sliding too far either “down market” or “upscale” can compromise their brand positioning. Through licensing, companies that take a deliberate and diverse approach to portfolio-building and can participate in “good,” “better,” and “best” value propositions across multiple retail tiers. More good news comes in the form of branding itself. With all things being transparent at the price level, branding is often the only differentiator and price driver.
  • Partnership:Humbled by digital disruption, retailers have come to see the advantages of alliance building. Yet the licensing business has been predicated on partnership from its beginnings. Retailers’ shift in sensibility favors licensing’s partnership-building pros, particularly those who are adept at crafting multi-stakeholder propositions that flex to direct-to-retail, wholesale, owned retail, digital, and store experience opportunities.

DISCUSSION QUESTIONS: Does the flexibility inherent in brand licensing offer a hedge against retail downsizing? How would you rate the upside and downside of licensing deals for brands and for retailers?

Braintrust
"Any creative ideas that give retailers more options rather than merely closing stores is good for consideration."
"I don’t believe that licensing would be a general solution for brick and mortar retailers. It may be right in specific verticals..."
"While it may be a financial hedge for some, the brand gives up much of the control around customer touch points..."

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5 Comments on "Can licensing safeguard against retail downsizing?"

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Charles Dimov
BrainTrust

Any creative ideas that give retailers more options rather than merely closing stores are good for consideration. I always advocate doing a pilot, and running test trials. There may be combinations of partnering and licensing that make sense on paper, but don’t translate in the consumer’s mind. Vice versa is also true. Test, test, test … and don’t be afraid to make mistakes — they will happen. What is important it to learn fast from them, and don’t repeat them!

Nir Manor
BrainTrust

Retailers should primarily embrace new technologies and transform to omnichannel and digital operations to safeguard against downsizing.

I don’t believe that licensing would be a general solution for brick and mortar retailers. It may be right in specific verticals, but it is one brand related tactic among others that retailers may use.

Sterling Hawkins
BrainTrust

Licensing is a fundamentally different business from being in retail. While it may be a financial hedge for some, the brand gives up much of the control around customer touch points and direct relationships. I’m in 100% agreement here that retailers should primarily look to transform their unified channel experience while only pursuing licensing deals in situations or verticals that make sense beyond that.

Craig Sundstrom
Guest
A little confused as to exactly what is being advocated here; certainly manufacturers like Levis, Nike, and Apple, that operate their own stores can sell merchandise thru other stores as well. Some retailers, e.g. Macy’s and Sears have (strong) house brands that could be offered the same way. But most retailers sell a varied collection of brands made by someone else; their own brand identity comes from service, pricing, selection, etc. (all the things Carol mentioned), so I’m confused how that would be maintained if the name were licensed to someone else who might operate in a completely different way.… Read more »
Carol Spieckerman
BrainTrust

Thanks all for the comments so far. The originally published title (since updated by RetailWire), positioned the article as touting licensing as a solution for retailers. The intention (as reflected in the now-revised title) is to explore and delineate the benefits of strategic licensing for licensors, licensees, agencies and others who already participate in that world, and those who might consider it, particularly as retailers shrink their store fleets. Whether consumers realize it or not, licensing is already pervasive in retail and brand marketing.

wpDiscuz
Braintrust
"Any creative ideas that give retailers more options rather than merely closing stores is good for consideration."
"I don’t believe that licensing would be a general solution for brick and mortar retailers. It may be right in specific verticals..."
"While it may be a financial hedge for some, the brand gives up much of the control around customer touch points..."

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