Retail Strategies Beyond the Top 10

IMC Licensing

September 25, 2009

Every day the list of victims of the faltering economy grows longer.  Circuit City (#32 on National Retail Federation’s, Top 100 Retailers), among the most notable of recent retailers to fall prey to slow sales and tight credit, will certainly not be the last.

Others include Steve and Barry’s, Linens ‘n Things, Domain home Furnishing, Gottschalk’s Department Stores and Carolina Custom Golf to name a few.  At the National Retail Federation’s annual convention in New York, Lee Scott, Wal-Mart’s outgoing chairman said, “We all hope that by next Christmas it certainly isn’t any worse.” This perspective that the retail downturn will last much longer than originally anticipated is now reflected across all media.

A few key retailers uniquely supportive of licensing are demonstrating what it will take to survive in this economic climate. These retailers share one commonality, their innovative use of brands to generate traffic. All are using private label programs, corporate brands and trademarks, and licensed properties to create innovative direct-to-retail exclusives that are generating excitement and demand from consumers.

The Power of Licensing for Department Stores

Department Stores, a particularly hard-hit category, continue to try to discover the secret formula for success. Saks Fifth Avenue shook the foundations of the luxury market with steep mid-November discounts that, according to the Wall Street Journal are, “bankrupting some firms, toppling longstanding agreements on pricing and distribution, and destroying the very air of exclusivity that designers are trying to sell.” As the leaders in this category continue to struggle with dwindling mall traffic, others are finding unique ways to reach consumers.

In May, Macy’s (#13) announced a partnership with FAO Schwarz to bring toys back to Macy’s stores with children’s departments. The company announced that 275 stores would initially receive the new FAO Schwarz store-within-a-store concept. Additional plans were announced for 75 full size FAO Schwarz toy stores, and an additional 200 smaller stores where FAO will sell its private label collection. Macy’s tested the FAO Schwarz concept in Chicago during the past year and has been extremely pleased not only with the added toy business but also the boost to the children’s apparel sales.

JCPenney (#18) has been shoring up its private label brands with new offerings from licensed brands that consumers recognize and trust. Penney is focusing spring advertising campaigns on their exclusive fashion forward clothing lines hoping to attract fashion-hungry shoppers with reasonable prices. In addition to exclusive lines by trendy names such as Kimora Lee Simmons and Nicole Miller, Penney was the exclusive retailer for the debut of the NIKE EB1 Shoe; launched a new baby and gift line, Messages From The Heart, with award-winning author and artist Sandra Magsamen; announced the forthcoming launch of a complete women’s fashion sportswear line called I “Heart” Ronson with recognized designer Charlotte Ronson in Spring 2009; and launched a mid-priced women’s line called Allen B. with Allen B. Swartz, LA-based creator of the high-end ABS line.

Like Penney, Kohl’s (#22) investment in building and marketing its growing private label offering is what truly sets this leading retailer apart from the pack. Known for its exclusive offerings with unique brands like Simply Vera Wang, Elle Contemporary Collection, Abbey Dawn by Avril Lavigne, Daisy Fuentes, Chaps, Food Network, and celebrity chef Bobby Flay, they continue to add to their licensed portfolio.

In sportswear, Kohl’s has built on its early 2006 success licensing the Tony Hawk brand by recently adding FILA Sport and the Hang Ten brand licensed from American Brand Holdings for a Spring 2009 Launch.  Kohl’s also announced in December an expanded multi-year deal with Iconix Brand Group for the Mudd brand in apparel, accessories, jewelry and domestics. The line includes girls’ and juniors’ apparel, intimates, sleepwear, and accessories significantly expanding existing lines. In addition, Kohl’s has an exclusive relationship with Candies, also from Iconix.

Then in January, Kohl’s announced its new license agreement with Liz Claiborne for its Dana Buchman brand, a high end line currently sold at high-end department stores like Nordstrom,Saks Fifth Avenue, Neiman Marcus, and Bloomingdales. If the Spring 2009 launch is successful, Kohl’s leadership promises to extend the line into home, beauty, and fragrance.

The Changing Grocery Retail Landscape

In another category dominated by private label, the grocery retail landscape is being shaped by a number of important health & wellness trends including organics, locally produced foods, as well as by the move to smaller footprint “local” markets led by the UK’s Tesco. Grocery retailers however haven’t embraced the licensing-in strategy that we see in department stores. Instead they have been investing in their store brands with such great success that store brands are no longer perceived as second rate knock-offs and some are even licensed out to other retailers.

Safeway’s (#11) success with the O Organics line highlights Safeway’s strategy to build private label brands that can stand alone. O Organics, now the biggest organic brand in the country, generated $400 million in sales in 2008. Similar to Safeway’s previously launched Eating Right brand, research shows that consumers think the brand is indeed a stand-alone brand which was always the intent. Safeway brought in execs from leading CPG companies like P&G and Nestle to create the look of a national brand and then hired DDB in Chicago to develop print and television advertising to drive awareness. Even more interesting is Safeway’s recent move to “monetize the brands” through partnerships to sell the line in Asia and South America as well as through a partnership with food service giant, Sysco Corp. What started as a line to stave off competition from Whole Foods Markets is now being actively promoted and marketed like licensed brands. About half of the O Organics and Eating Right lines are available to other retailers through Safeway subsidiary, Lucerne Foods, Inc.

The success of private label brands at grocery has been unmatched. According to the Private Label Manufacturer’s Association (PLMA), private label increased by $5.4 billion last year to an all time high of $74.2 billion.

The rapid growth of private label is no surprise to Trader Joe’s (#54), more of a specialty-food store than a chain grocery, which is filled with private label offerings. Owned by Aldi, Trader Joe’s manages to sell twice as much per square foot as other grocery stores with only 2,000 products per store versus 30,000 for the competition. Its all specialty product, all private label formula, as legend has it, was modeled after Stew Leonard, a Connecticut-based specialty grocery.

Aldi, which some predict to be the next WalMart, is the 3rd most respected brand in Germany after Siemens and BMW. The company plans to have 1000 stores in the U.S. by 2010, owning 2% of the grocery market by that time. Because each Aldi store only has 700 Aldi-exclusive products as compared to 150,000 products at a WalMart Super Center, Aldi has extreme control over quality and price. Experts say that Aldi is more efficient than Wal-Mart and estimate sales at $4.8 billion in North America, growing 8% a year since 1998.

Hannaford (not listed in the top 100 retailers) has 165 stores in the northeast and is the largest certified-organic supermarket in the region.  Its Guiding Stars nutrition labeling program is a patent-pending credit and debit system for evaluating foods and grading them with one, two, or three stars for good, better, and best for you foods.  The program has demonstrated the demand for better awareness of healthy food options with many starred foods outpacing the selection of non-starred foods as much as 4 to 1. Hannaford is increasing its efforts to make the program widely available by launching a subsidiary, Guiding Stars Licensing Company, incorporated in 2008, to market the Guiding Stars program to other grocery retailers, food manufacturers, restaurants, convenience stores, hospitals, and schools.  Even relatively small retailers can use the program to differentiate their brand from the competition based on health awareness.

Conclusion

While the headlines for department store and grocery retailers have been bleak, innovative retailers are successfully connecting with customers to meet their needs in a very challenging environment. The future will provide yet more fascinating examples of retailers getting back to basics, exciting consumers with their unique private label products, and adding value to the relationship through innovative shopper-centric programs to differentiate from the competition.

If you are interested in learning how a product licensing agency can help your brand, schedule an intro call with our team.

IMC Licensing Logo Mark

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    Often times we describe a licensing partnership much like a marriage. The Licensee and Licensor meet, are engaged by signing…

    IMC Licensing

    June 27, 2013

  • Purina Tidy Cats® and Glade™ Tough Odor Solutions: A perfect match

    The partnership between Purina Tidy Cats and Glade Tough Odor Solutions has developed a scented cat litter which has customers…

    IMC Licensing

    June 20, 2013

  • Integrating New Products with Licensed Properties

    Demands on new product development have greatly increased over the last decade with increased need for speed to market, lowering…

    IMC Licensing

    June 17, 2013

  • The Humanization Of Our Pets: Key Survey Findings

    The cliche is that pets look like their owners- but will they use the same products? The theory at IMC…

    IMC Licensing

    June 10, 2013

  • What Do Pet Owners Want Next?

    The pet industry is one of our favorites, and not just because most of us at IMC have pets of…

    Stephen Reily

    June 5, 2013

  • Sharing the Love of Brands with Your Pet!

    Pet owners are passionate about their furry little friends and they spend over $50 billion annually to prove it.  They…

    IMC Licensing

    April 4, 2013

  • What Makes Martha Stewart Such a Bad Partner?

    I’ve read lots of articles about Martha Stewart’s recent bout of litigation, but none of them addresses why someone would…

    Stephen Reily

    March 21, 2013

  • 2013 Housewares Show: Forging New Partnerships

    The 2013 International Home and Housewares Show in Chicago is the largest housewares-only fair in the world with 60,000 home goods professionals…

    IMC Licensing

    March 14, 2013

  • A Tale of Two Cracker Barrels

    When I saw that Cracker Barrel, the southern-fried restaurant chain, had recently licensed its brand to John Morrell Group, a…

    Stephen Reily

    February 6, 2013

  • Why Does Licensing Love the Holidays?

    In the licensing world, most royalty payments are made on a quarterly basis. Any licensing professional can immediately tell you…

    IMC Licensing

    December 20, 2012

  • The Slow Death of Commission-Only Deals

    Truly successful brand extensions are the result of pairing leading consumer brands with products that enhance the brand’s reputation and…

    IMC Licensing

    November 26, 2012

  • The Benefits of Brand Licensing: Quickly Explained

    As advertising is faced with a rapidly changing environment, brand owners and brand managers are looking for smart and new…

    IMC Licensing

    November 1, 2012

  • Reinforcing Your Brand Through Licensing

    Some licensed products are very much like the brand’s core product itself. They may be used the same way (like…

    IMC Licensing

    October 15, 2012

  • A Primer on Licensing

    Wherever industry regulars gather, they’re sure to discuss the world’s largest licensor; the world’s citizenry buys more than $23 billion…

    Stephen Reily

    July 27, 2012

  • Working With Licensing Agents and Consultants

    Brand licensing agencies and consultants can play a central role in the development of an effective licensing program. Whether your…

    IMC Licensing

    November 22, 2010

  • Why Use a Brand Licensing Agency?

    Even if your company has an in-house licensing director or staff, there are several reasons to hire a brand licensing…

    IMC Licensing

    May 10, 2010

  • National Brands, Private Label and Licensing

    During a panel discussion about product innovation at the 2009 Grocery Manufacturers Association’s Merchandising, Sales and Marketing Conference, one participant…

    IMC Licensing

    April 15, 2010

  • Brand Licensing 101

    As a brand and product licensing agency that develops and manages licensing programs for our clients’ trademarks and brands, we…

    IMC Licensing

    November 8, 2009

  • Retail Strategies Beyond the Top 10

    Every day the list of victims of the faltering economy grows longer.  Circuit City (#32 on National Retail Federation’s, Top…

    IMC Licensing

    September 25, 2009

  • Beyond Royalty Revenue: Measuring ROI from Licensing

    In recent surveys senior marketing professionals say that accountability for marketing services is more important than ever, and that they…

    Stephen Reily

    September 16, 2009

  • Trends in Inbound Licensing

    In the licensing industry, attention is typically focused on strategies to license a brand “out,” extending a brand into new…

    IMC Licensing

    August 19, 2008

  • The Brand Licensing Professional – Not One Size Fits All

    I cannot count the number of times I have heard companies talk about whether they should hire a “licensing professional”…

    Stephen Reily

    February 19, 2008

  • Licensing Agency Compensation: The Inside Story

    One of the needless mysteries of the licensing industry is the topic of agency compensation.  Although talented professionals neither gain…

    Stephen Reily

    February 19, 2007

  • Food for Thought (on Food and Beverage Licensing)

    Food and beverage licensing is everywhere. A quick trip to the supermarket will produce Nesquik chocolate milk, Oreo ice cream, and…

    IMC Licensing

    August 28, 2006

  • The Bankruptcy Clause in a Licensing Agreement: Comforting but Useless

    An experienced reader of license agreements would know exactly where to find what I call the “bankruptcy clause” (about three…

    Stephen Reily

    March 1, 2003

  • When Trademark Licensing looks like Franchising: Avoiding Legal Risk

    If anyone doubted that trademark licensing has become an essential part of brand management, the recent Annual Meeting of the International…

    Stephen Reily

    September 8, 2002

  • The Risks a Licensor Poses to a Licensee: How Can They Be Limited?

    Most form license agreements assume that licensees pose greater threats to licensors than the other way around.  Aside from the…

    Stephen Reily

    August 8, 2002

  • Licensing to Preserve Trademark Ownership

    As all IP counsel know, registration of a trademark depends on that trademark’s use.  A trademark cannot be reserved indefinitely…

    Stephen Reily

    July 9, 2002

  • Trademarks Around the Edges

    Many years ago, companies that made a branded consumer product thought they did only one thing: make that product.  Their…

    Stephen Reily

    March 9, 2002

  • Watch What the Licensor Does, Not What it Says

    Hiring the best trademark counsel – and getting them to draft the best possible license agreement – will not alone…

    Stephen Reily

    March 9, 2002

  • How Accountants Will Change the Face of Trademark Licensing

    As the licensing industry frets about whether the biggest event of the year will be the performance of Harry Potter…

    Stephen Reily

    November 9, 2001

  • License Agreements: Partnerships Worth Getting Right

    Whenever you see a licensor and licensee in litigation with each other you should assume that something has gone wrong…

    Stephen Reily

    September 9, 2001

  • How Many People Does it take to Screw in a Trademark Licensing Agreement

    Because so many brand owners fail to appreciate how important licensing can be for their brand, many of those who…

    Stephen Reily

    August 9, 2001

  • Developing Branded Consumer Products like Consumer Products

    Last month I described how companies find themselves distributing or authorizing branded products that either weaken the protection of their…

    Stephen Reily

    July 14, 2001

  • Why Most Companies Have Too Many Licensors

    If you looked to a corporation’s internal licensing department for evidence of trademark usage and enforcement, as well as development…

    Stephen Reily

    May 20, 2001

  • Licensing Corporate Brands and Trademarks: Knowing What it Should Cost

    As someone who runs a licensing agency for the owners of brands and trademarks, I can be expected to argue…

    Stephen Reily

    February 19, 2001

Services

Licensing is a relationship not merely between brands, but among people. At IMC, we build and nurture both of those relationships while delivering top-notch customer care that treats — and protects — your brand as if it were our own.

About Us

We’re committed to fostering dynamic brand alliances. Often those alliances are born from one brand’s need and another’s ability to meet that need. The IMC team are experts at recognizing and creating those opportunities, but our real expertise is people. Standing side by side, as consultants, partners, peers, and as friends, we’re driven by a singular purpose: creating a smart idea.