A License to Sell
Tap into brand loyalty and creative concepts with licensed products.
“It’s all about the brand,” says Dale Rotar, creative director at Emerson Street Clothing Co. And when it comes to licensed products, that’s the truth.
In 2011, retail sales of licensed merchandise topped $150 billion, almost a 3 percent increase from 2010, according to The Licensing Letter, a trade publication. In North America, the share of the pie was more than $93 billion, a 5.2 percent increase over the previous year.
Licensing, defined by Entrepreneur as “a business arrangement in which one company gives another company permission to manufacture its product for a specified payment,” is clearly big business — and only growing, if 2011’s numbers are any indication.
Making the connection
To help facilitate business relationships in the industry, trade show SURTEX connects artists, agents, and licensors with manufacturers and product developers. It’s held every spring at the Jacob J. Javits Convention Center in New York City (this year, it’ll be from May 19 to 21) and coincides with the National Stationery Show, which is next door. Over the years, the show has grown to have 300 exhibitors and about 6,000 attendees annually.
“SURTEX is where original art starts and where manufacturers across all different product categories come to find the latest art that they feel will take their products to a sellable end result,” says Penny Sikalis, vice president of GLM (which produces the show) and SURTEX show manager.
Those who attend are forming the connections for the licensed products of tomorrow. “For the artist, it is a means for them to take their creativity, artwork, and passion and have it put on product,” Sikalis says. “Manufacturers looking to find art come to SURTEX because they know they’re going to see the largest collection of talented designers from around the world under one roof.”
How does this all impact retailers? Licensed merchandise is often a safer bet than other picks, which means it’s worth taking a look at to stock in your store. “Product that is licensed typically has some form of a track record,” Sikalis says. “Retailers should feel a certain sense of security and confidence that a licensed product will sell through.”
Sikalis says that retailers are welcome to come and walk the show floor to get a sneak peek at trends that will be on products to come. “The artists that are presenting their artwork typically have a real pulse on what is trending ahead, so they also provide trend direction to these companies, including retailers,” she adds.
Telling a story
One company that benefited from SURTEX’s proximity to the National Stationery Show is Iota, a purveyor of stationery and gifting essentials. While exhibiting at the stationery show, some SURTEX attendees were wandering by, saw Iota’s design aesthetic, and approached them about taking their stationery patterns and applying them to other products. “That’s kind of how the magic happened; we were not seeking it out at the time,” says Jennifer Slaughter, senior marketing manager at Iota.
Now, the eye-catching patterns appear on everything from Alicia Klein leather wallets to Robert Kaufman cotton fabrics to tabletop items from Paperproducts Design. “Our designs are very much a riot of color and pattern,” Slaughter says. “They’re very distinctive and unlike anything in the market — that helped us be successful fairly quickly.” Because the patterns are tiled, they’re easy to use on a variety of surfaces.
With licensed merchandise, if you find an artist or brand that resonates in your store, consider stocking a number of their items across different product categories. “What retailers can benefit from in licensed product is telling an interesting story on the shelf,” Slaughter says. “With cross-merchandising for Iota product, you can walk right up and see the story. The displays capture a lot of attention with all the color in one place.”
How the process works
Every licensing relationship is different. In some cases, an artist or brand will reach out to a manufacturer whose products they like; in others, it works the other way around. There are also licensing agencies that serve as connectors between the two parties. Contracts vary as far as exclusivity goes, but you’re unlikely to see the same art on products that compete head to head in the same region.
Licensing benefits brands big and small. Larger brands can increase their reach and capitalize on having their name, logo, or design on a wider range of items, while for the independent artist, it offers a chance for his or her artwork to be seen far and wide, created by a sophisticated manufacturing process that a solo artist couldn’t replicate. Such is the case for Joanna Alberti, creator of philoSophie’s, a line of stationery and custom products.
“Licensed products give opportunities to artists to showcase their work that otherwise would not have that opportunity to be on a gift product or be in a national market,” she says. “As a small business, I work with bigger manufacturers so I can make products that are quality and at a price point that people can buy.”
Alberti also owns a retail store in Spencerport, NY, where she tests out her designs and shows her work on items such as cards, mugs, tote bags, and iPhone cases. She currently licenses to Leanin’ Tree and Recycled Paper Greetings, and is testing a candle line with another manufacturer.
On the manufacturing side, it allows companies to add to the product mix they already produce. “Our licensing partners do an unbelievable job in supplying us with their latest and greatest works,” says Sandra Pryor, new products manager for Manual, which offers licensed items in all the products they make domestically, including throws, wall décor, pillows, and tabletop. “We collaborate with our customers and sales team, as well as keep abreast of trends, to then determine what art we select.”
The challenge for a manufacturer sometimes lies in taking that brand or design and seamlessly adding it to a new product. “One of the things we’re really good at is understanding the artist’s brand or vision and being able to translate it into our product,” says Betsy Ferg, VP of product development and creative at C.R. Gibson. “That’s a sign of successful licensee, when you can understand an artist’s look or brand so well that it looks like it’s all coming from the same place. Then you’re really honoring that brand.”
Sometimes licensed items can become synonymous with a company, too. When people think of burton + BURTON, they’re likely to think of the pieces from Carla Grogan, whose line of inspirational products has a distinctive aesthetic.
While burton + BURTON creates most of their products with in-house artists, they do a little bit of outside licensing as well. “Typically we’ll go out and find an artist if we’re looking for a particular look or style, but we have had artists approach us and work with us,” says Steve Rose, marketing and communications coordinator for the wholesale supplier. “It gives us an opportunity to access artists that are outside the style of our in-house artists.”
A built-in audience
Some of the best partnerships bring a brand into the retail world for the first time, or into an area it’s never been in before. Take the case of I Can Has Cheezburger?, a wildly popular blog of funny animal photos with clever captions, which The Madison Park Group has partnered with to create greeting cards, magnets, travel mugs, sticky notes, coasters, air fresheners, and more. After Cheezburger fans vote for their favorite photo/verse combinations online, some of the most popular find their way to the various items for sale.
“If you’re able to have a product in your store that people will automatically recognize, that’s better than any marketing or advertising you can really do,” says Katherine Dikeakos, marketing manager at The Madison Park Group. “There’s that built-in recognition.”
The Madison Park Group has nine partner companies under its umbrella, and all vary enough that they don’t compete with each other. “When we consider bringing on a new license, we find that it’s important to look at each individually and not have a ‘this is exactly what we’ll do,'” Dikeakos says. While they decided to make Cheezburger its own line, other times they roll in products with their Madison Park Greetings line. That’s the case with SnorgTees, an apparel company whose graphics now appear on the company’s cards. “With the Snorg line, they have great brand recognition and a built-in audience; we thought the best way to start would be to incorporate them into the Madison Park Greetings line, our house line,” Dikeakos says. “It provided something we didn’t already have.”
In both cases, they’re building on a brand that already has plenty of loyal followers. With Cheezburger, “you’ve got automatic credibility and recognition if you’re at a store and you see a brand that you check out online every day,” Dikeakos says.
One major component of the licensed products industry is sports items (sports and collegiate licensing is a $27.1 billion business worldwide, according to The Licensing Letter), as dedicated fans will often clamor for anything of quality with their team’s logo emblazoned on it.
Emerson Street Clothing Co. has harnessed this loyalty, adding collegiate logos to their apparel, which includes nightshirts, dresses, tees, tunics, hoodies, tanks, and more. “For a small company like us to bring on college licenses, all of a sudden you have the power of the brand,” says Rotar.
Even gift stores that haven’t traditionally sold apparel have done well with the line. One card shop in Alabama sold nearly 200 pullover hoodies at $59 a piece, and reorders have built. “We’re selling to gift stores, and we may be the first time they’ve carried any kind of apparel,” Rotar says. “The excitement on buyers’ faces when they start selling product has been fun.”
The company has tested plus sizes and plans to offer a full line of plus-size collegiate clothing in 2013. They’re also working on getting the NFL license to replicate what they’ve done for college with the football teams.
Enthusiasm for the home team (or any team) goes well beyond college loyalties. One of the most popular items in Bergino Baseball Clubhouse, a shop in New York’s Greenwich Village devoted to all things baseball, is a line of vintage-style T-shirts with major league logos on them. They’re displayed on a vintage baseball-pitching machine, with the arm becoming a display rack.
“We get people from all over the world looking for unique gifts, and one way to do that was to have licensed product,” says Jay Goldberg, owner of Bergino Baseball Clubhouse. “A lot of it is run-of-the-mill, so our challenge was to find licensed product that was unique, that you could not find everywhere.”
A benefit of carrying such products? As Goldberg says, they have “all the goodwill that comes with that brand.” And that’s a powerful marketing tool that can translate directly into sales.
Work that carries instant appeal married to products manufactured by established gift wholesalers – this marriage is a gift made in heaven for gift retailers.
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