Cautious Optimism

Holiday retail results paint a mixed picture for licensing in Europe.

Two things categorize early February in Europe: trade shows dedicated to products rather than properties and reviewing the retail results from the sector's most important season. The UK, being a nation of shoppers, takes these results as an indication of general health and well-being. The news that the UK's Tesco and other supermarkets did very well is no surprise. The news that Woolworths did poorly also is unsurprising but far more serious—it is still the No. 1 retailer of licensed products in the UK, and the repercussions will be felt throughout the supply chain. Woolworths has announced it may close hundreds of its stores over the next three years and is demanding its suppliers take on yet more of the financial strain. Add French Carrefour's disappointing results, and it could feel like a grim start to the year.

However, there are some positive trends for licensing. Upmarket stores (Selfridges, for example) have done very well, and it is the premium ranges and luxury goods that have boosted the supermarkets' results. UK chain Marks & Spencer dared to utter the word, "recovery," after another consecutive hike in sales, this time attributed to its fashion lines.

What does all this mean for licensing in Europe? That there are still opportunities if you carve them out carefully and work shoulder to shoulder with your retailer. Spatting over Woolworths' new financial demands, however brazen, is fruitless, but learning how Marks & Spencer uses licensing to establish its own points of difference in childrenswear can reap benefits.

Additional trends and lessons are emerging from the aisles of exhibition halls. Big company names boosted the Toy Fairs (LEGO for the second year in London and Nintendo in Nuremberg, for example), but it is the gift fairs that are really burgeoning, and buyers are looking further afield for differentiation. Niche fairs such as Top Drawer (London, January) are scoured for the newest, smallest, and most innovative suppliers, while an increasing number of buyers travel further afield to shows such as Maison & Objet (Paris, January) for new inspiration. For property holders, these are rich picking grounds for adding new categories, distribution, and headline-grabbing products.

Across the whole of Europe, there is optimism for the Spider-Man-scale film releases of 2007, but aside from the blockbusters, rights owners and licensees will tailor their efforts to specific regions and audiences. In the last month, for example, footwear licensee Leomil described plans to target the German-speaking markets, and HIT is orchestrating a major push into the Benelux territories.

The TV business must continue to battle with falling revenues and, in the UK, regulator Ofcom has proposed banning the advertising of "unhealthy" foodstuffs during children's programs, with the use of licensed characters specifically banned. The TV business in the UK fears the lack of this revenue will result in fewer quality programs being made, and licensors will need to look elsewhere to replace this healthy stream of income.

Elsewhere, though, there is optimism. And, in general, things look economically rosy. But the watchword for the European licensing business is that the retail market remains acutely competitive. As one industry insider reveals, "We're all running harder to stay in the same place."

AddThis

Articles You Might Like

There are no articles classified under this Main Category.