Can licensing safeguard against retail downsizing?
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.
- Rethink the Shrink: Three Ways Licensing Safeguards Against Retail’s Right-Sizing – The Licensing Book
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?