June 15, 2017

Retailers: What Are They Looking For In Licensed Production?

Retailers as one of the most important and financially involved licensing stakeholders pursue particular interests in licensing deals. What they are primarily looking for in licensed properties is a match between the lowest price, highest quality, and ability to sell quickly. These days retailers are more aware of the opportunities in licensing than they were in the past. Thereby, there are many aspects for brand owners to consider to keep their retail partners maximize the outcomes of close cooperation with them.

Exclusivity

Nevertheless, there are certain advantages for brand owners in having exclusive partnerships with their retailer. Associating with a strong retailer helps licensors land great partnerships with licensees. Also, if exclusivity takes place, the minimum order will typically be lucrative - a reward from the retailer's side in exchange for the licensor’s trust.

Regardless of the likelihood of agreement exclusivity, licensors will seek it in any event. If they can’t get a full private-label exclusivity, they will at least try to secure a small degree regarding the properties they represent. And while licensors often hesitate, they should remember that there isn’t a single type of exclusive collaboration with retailers. Rather, there’s a range of options to chose from.

Products

The first thing that retailers evaluate on the primary stage of collaboration is the licensed commodities. The assessment includes such criteria as the quality of licensed products, its ability to sell, and delivery times.

The importance of lead time explains why many retailers prefer working with strong and reliable manufacturers. At the same time, none of them are willing to deal with weak products, which are illiquid or frequently returned items. With test program being a standard practice in licensing deals, brands only get one chance to demonstrate the selling ability of their licensed properties.

Licensors should bear in mind that retailer’s space is finite. It’s of the brand’s primary concern to validate the potential of licensed products on the shelf. Hence, licensors frequently practice a two-way collaboration with retailers. First, they make sure to refresh the licensed properties to avoid brand saturation. Further, they reinforce the bond with retailers, providing the necessary support for successful promotion and sale of the licensed products in the market.

Marketing and promotion

Naturally, whether or not licensed products succeed in retail largely depends on the actions of the retailer. However, it's also the licensor’s support in marketing and promotional activities that matter for the sales outcome. While retailers are formally responsible for these activities, they expect some supporting efforts from both the brands and their licensees.

Brands aiming for the success of licensing goods in retail don’t neglect regular meetings and discussions with retailers. On these meetings, licensors cover their marketing strategies and plans for merchandising, launch dates and new licensee partnerships. They also timely prepare the necessary guidelines for retailers and consider their launch times and critical lead paths.

A perfect licensor-retailer promotional collaboration should be seen as a marathon rather than a sprint. In the beginning, the partners decide on points of sales, PR campaigns in the retail spaces, and cross-category promotions with multiple licensees and one licensor (if needed). Based on their knowledge of the retailer, licensors design unique call-to-action triggers to direct customers to that retailer. Then, they evaluate the best launch opportunity for the merchandising activities considering the key retail milestones, integrating the CTA triggers into the promotional campaigns.

Many licensors today name retailers their third (and sometimes second) most important partners, and that’s for a reason. In brand licensing, long-lasting relationship with a strong retailer often acts as a success sing for licensors and their properties. Such cooperation bases on communication and trust, which is what smart brand owners should focus on.

part from Direct-to-Retail cases, licensors are typically unwilling to sign exclusive agreements. For them, wider distribution implies greater revenue royalties and recognition of their brand. Importantly, the financial success of this strategy will largely depend on the licensed property and its position in the lifespan.

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