A License To Sell

The first image that comes to mind when most people think of licensing is sports or entertainment, but there's more to it than that. Licensing has become a powerful, contemporary form of marketing and brand extension. Licensing is actually the leasing of a legally protected entity, be it a name, logo, saying, character, or combination of elements. In short, licensing is a marketing tool crafted to gain visibility and creditability and generate sales from a well-known name.

The success of licensed product in your store relies on determining which products fit into the upscale market and your customers' profiles. While some licensing concepts align perfectly with the specialty market, others should be left to the masses.



Choosing a Name

Specialty retailers have a wealth of licensed product to choose from, including character-based tabletop and foods for kids, celebrity chef-branded kitchenware and foods, artist and designer label products, as well as well-known culinary brands extending beyond their original realm.

In 2001, more than $5.6 billion in royalty income was generated from licensed products, according to a study by the International Licensing Industry Merchandisers' Association (LIMA) in conjunction with the Yale School of Management and the Harvard Business School. Art licensing alone — such as Rosenthal's use of Andy Warhol — generated $147 million.

The licensing study found that the strongest licensing categories continue to be entertainment/character (44.3% share of the market), trademarks/brands (17.2%), and finally, fashion (16.2%).

Licensed products are a very specialized segment of the specialty market. While some licensed products experience tremendous surges as fads that give the licensed product industry a sudden boost, others show a steady rise in popularity that allows them to become an important part of a company's overall business and marketing program. Industry experts credit this latter scenario for the success of licensed products in the food and beverage arena. Brand-building initiatives and product extension plans have both licensors and licensees seeking long-term commitments.

"When you do licensing, you like to have a strong property, not some new flash in the pan," said Paul Nardone, CEO of Annie's Homegrown.

Annie's inked a licensing deal with PBS' Arthur: The World's Most Famous Aardvark before introducing its new Arthur-shaped macaroni & cheese at the Natural Products Expo East this past October.

"The whole concept works because it's someone else's brand equity working to help drive your sales. We were looking for a good fit to incorporate licensing into our strategy. Since children respond very well to characters, we looked at that category for a license. But what was really important was to position ourselves with the right product," Nardone said. "Arthur stands for responsible values and responsible programming. That influenced us a great deal. If it wasn't a good fit, we would not have done it."

After his three-year-old son Casey responded well to the image of Bernie (Annie's brand image) and Arthur together, Nardone knew the three-year licensing deal would be a success.

"That was my expensive focus group," he joked. "I brought home visuals of Arthur and Bernie the Bunny together and Casey responded to that immediately. He got it. The result is a licensing deal that both parties are really happy with. We help distribute their Arthur image to keep their brand fresh in the marketplace and we, in turn, will benefit from their brand."



Licensed Artists

Licensing the work of artists from Andy Warhol to Christopher Radko is big business in the home décor world. From rugs to furniture to wallpaper to the dining room table, art licenses are a revenue-producing business for both the artist and the manufacturer. At store level, these products provide retailers with a loyal source of buyers who are interested in collecting complete lines of a particular artist.

Panamai Manadee, owner of Boston-based tabletop store Bliss, believes licensed collections help extend the fashion world into the world of tabletop. Designs from the Italian surrealist Peiro Fornasetti sell well at the Boston store, particularly the artist's 'Julia' plates.

"We have the Warhol Flower pieces and the mugs with his face on them. We also do Calvin Klein tabletop and Ralph Lauren flatware," she stated.

Susan Sargent by Art Impressions received the 2002 Art License of the Year. Sargent's Lexington Home Brands whole-home line debuted at the April 2002 market in High Point, N.C. Present Tense Home Artistry debuted hand-painted works of art for the home and table based on Sargent's designs at the Fall Tabletop Market in October. The vibrant colors and designs of "River Fish," "Paisley," and "Linen Dot" are part of the new collection of tableware, serving pieces, and decorative accessories.

Philippe Trudeau, Trudeau USA's vice president, explained that the plethora of licensing deals the company holds worldwide reach a variety of markets from mass to independents. The lines also cross the consumer spectrum with licenses that target children and others with a more grown-up appeal.

Trudeau works with both Pfaltzgraff and Tracey Porter in extending their designs to other categories. In January, they'll introduce a new line of handled trivets in Pfaltzgraff's Summer Breeze and Naturewood patterns. New melamine drinkware, dinnerware, and patio items will be introduced so that Tracey Porter may harness the success of three of her existing dinnerware patterns — Perfume, Sweet Briar Rose, and Summer Orchard.

"There's a trend in taking successful dinnerware patterns and bringing them to the casual, unbreakable dinnerware," Trudeau explained. "Tracey Porter is also becoming really well known and people are looking to expand their collections. It's exactly where we want to be, which is the department store, the specialty store, and the independent."

Nancy Taylor, manager of the Plaid Giraffe in Wichita, Kan., said most of their licensed product is limited to art licensing. Christopher Radko is one of their successful lines, as is MacKenzie-Childs.

"Zrike is finding some success with Christopher Radko's designs," said Tony DeMasi, executive director of the National Tabletop & Gift Association. "Usually, the licensing program with housewares-type dinnerware is an endorsement from a chef. The exception would be Michael Graves and Martha Stewart, but then they're exceptions to every rule. So, too, is Thomas Kinkade."

In Illinois, Linda Ballard, a partner in the Urbana-based Art Mart Food & Toys gift-gourmet store, said Marimekko's designer line of screened fabrics is a great product to merchandise.

She explained, "They use those designs on handbags, linens, tins, mugs, and more. We direct import everything from their facility in Helsinki."

Robert Laub, president of Harold Import, continues to develop art licenses for a wide variety of product within Harold Import and House of Prill. Both companies carry the works of well-known artists Guy Buffet and Erika Oller.

"Between the two companies, we have a variety of categories. Every image doesn't work in every different category. There has to be some legitimacy to a license. You can't just stick a name on something and expect the consumer to buy it. Consumers know what's truly a good product," Laub explained.

Laub's involvement in licensed products happened by chance, a result of Harold Imports' presence in the industry. The first two artists' lines — Oller and Buffet — appeared to be a good match for both the company and its customers. As the success of both lines grew, Laub extended the category. In January, Oller will introduce her signature "fat ladies" to wine tasting.

"The thing about Erika's art is that she can really have her ladies doing anything. It's not limited. It's really funny. Our new introduction has the ladies tasting wine in January. There's a lot of comments about the wine being full bodied and of course, the ladies…." Laub continued. "It's really hard to select art because it's really competitive and there's so much good art out there."

Laub plans to continue working with artists, but not in expanding licensed products to other types of licensing, such as entertainment or celebrity.

"Kids' entertainment isn't necessarily dead center for our market and the entertainment licenses tend to be costly and require a high level of commitment," Laub explained. "Entertainment licenses are really for companies who plan to access more of a mass distribution base to make the volume to justify doing the license and we don't necessarily go after that type of market."

Laub made the decision to become involved and grow his company's art-licensing business because it's a natural fit for the specialty gourmet market.

"Retailers have a history with the category of product we carry and they have a history with licensed art," he explained. "Like anything else they carry, it's got to be great quality with a good price point; then on top of that, it's got to be the right art."

A new line set to debut in January comes from Will Rafuse — an artist whose style is similar to that of Guy Buffet but who incorporates bolder, vibrant colors and has spawned a young, hip following.

Wine Things Unlimited works with a cache of artists, as well as holds licenses to entertaining stars the likes of Betty Boop.

"We follow market trends and look for unique new concepts to introduce into the marketplace," president David Lieberstein said.

Lieberstein went on to explain that the key for retailers merchandising and selling these items is to create a story.

"If retailers feature licensed products of a particular artist from a variety of vendors in a table display — Julia Junkins, for example, licenses glassware with Wine Things Unlimited, table linens with Western Linens, ceramics with Julia Junkins Studios, wine charms with That Wine is Mine, coasters with House of Prill, and paper napkins with Pacific Merchants, the consumers will be more excited about their purchases. Retailers may also feature a promo write-up on the artist ... many vendors have these available for the various artists they license."

DeMasi agrees that licensing is a hit-or-miss option for the tabletop industry, and the gourmet industry overall. The license should not only fit the product, but also be well suited for the manufacturer, the distribution channel, and the target consumer.

"The hits tend to come from low-priced, usually melamine, dinnerware for kids. Disney, Sesame Street, Barbie, and such have been selling well for years and will continue to do so," DeMasi explained. "In children's better dinnerware, licensing has found success only in Beatrix Potter's designs available through Royal Doulton."

DeMasi is skeptical of fine china patterns displaying a designer's or artist's name.

"In fine china, I can't think of one licensing agreement that has been a complete success — no matter what manufacturers say. When it comes to fine china, the public at large doesn't seem to care who designed the piece — appearance and price are what matters — unless the table is set with the dishes upside down so everyone can see that so-and-so designed it. If you have the money and taste to buy and use fine china, you don't need a validation from anyone to make you feel that you made the right decision," he said.



Entertainment License

Bob The Builder is a really popular guy. Don't know him? Well, chances are if you're not familiar with the name, you lost out on your share of the best new product license of 2002. This animated construction worker has won the hearts of both children and licensing dealmakers who have extended his name by splashing it on everything from toys to children's tabletop.

Ray Alexander, housewares buyer for Ojai, Calif.-based Rains Department Store, said he doesn't carry much licensed product targeted to adults. Rather, his most successful lines are created from movie or television character licenses aimed at the childern's market.

"Spiderman was big. I did a little bit with the Harry Potter stuff," Alexander explained. "Mainly, the product that does best is tied to children's television or movie releases. I do much better with licensed products for children than anything else I've come across."

"Drink cups sell especially well," Alexander said. "The key to sales is keeping them at the kids' viewing level. When they see them, they sell. They're great products for your lower shelves where you can't sell anything else."

Ballard agrees, "Our licensing merchandise is sort of limited, but we do a box of Harry Potter 'Bertie Botts Every Flavor' jelly beans from Jelly Belly. The flavors include some rather gross choices, but the kids — and also adults — love them."

The largest target consumer group for Trudeau's licensed products is children aged two to eight years old. The most successful lines aimed at those groups in recent years include Spiderman and Hello Kitty.

"Hello Kitty has been a real winner. Spiderman and Hello Kitty are two licenses that have been around a long time. What's old is new again," Trudeau explained. "They both have gotten great reviews. When you have a license like Spiderman that is so well promoted, its success is like a wave. The movie got children interested and the parents already recognize the character. Hello Kitty, well that's just a phenomenon you can't explain."

Trudeau said the most important elements of a licensed product are its broad appeal, company support, and integrity. Hello Kitty, for example, is a "clean" brand kept out of discount stores and marketed only to higher-end mass markets and independents.

Trudeau agrees that in the children's market, fun drinkware sells the best. Sculpted canteen drinkware and styles with sculpted tops that bring the characters to life sell the best. Gift sets also sell well, but the bottom line is the license itself. If you don't have an appealing image, it doesn't matter how good your product is.

Licensed children's products do not need to be limited to your store's housewares aisles. Through clever identification with a favorite character or classic property, a basic cereal product can become a favorite kid's food. Nowhere is this more evident than with Post Cereals' Pebbles brand, which, at 31 years, is one of the longest-lasting branded food products in the history of licensed merchandising.

The current new-color trend in the food market (for ketchup, spreads, and other products) has opened the door for one of the country's most recognizable names in color to succeed with co-branding. Binney & Smith's Crayola brand is all about color, creativity, and fun, which lead seamlessly into the baking product category for such extensions as cupcakes, decorations, cookie bouquets, and holiday baking kits. Bob the Builder and Yoplait Yumsters teamed up for a national promotion this past quarter in which they featured Bob on Yumsters' Yogurt products.

Licensed children's products are no longer relegated to plastic sippy cups or traditional lunch boxes. Today's products have a sophisticated, yet whimsical edge that extends brands to teens and collectors. Well-known entertainment licenses — such as Barbie and Garfield — have been translated into porcelain tea sets and other gift ideas. They are products that allow specialty retailers to complement ordinary inventory.



License to Cook

While celebrity chefs' and home entertainment gurus' popularity definitely supports the gourmet marketplace, the jury is still out on licensed product in the specialty market. Lines like Martha Stewart may sell at mass — before the summer, Stewart's products were one of the few bright spots in bankrupt Kmart's portfolio, generating $1.5 billion in revenue, but some retailers say other celebrity-endorsed lines don't open consumers' wallets in their stores. While culinary stars may translate into more business for culinary products, they don't necessarily translate into celebrity-branded sales.

Terry Monroe, partner in Stillwater, Okla.-based Murphy's Department Store, explained, "We have considered Emeril cookware and Emeril knives, but we have just not chosen those particular items. Possibly it is because we are in Oklahoma, but our experience in the past with licensed things — we used to have a lot of collectible-related product — is that unless they are substantially better than other product, they do not sell well. If there are actual product differences, we will consider the items as we would with any other line."

Monroe continued, "Oklahoma is not probably as brand conscious or name conscious as some areas. We know that people do watch cooking shows and do seek out the things demonstrated on the shows (we receive requests for parchment paper when a chef uses that in a show, for instance), but the licensed name itself on something not demonstrated does not appear to make much difference."

Still, specialty retailers in larger markets are able to translate these branded products on their kitchenware shelves into higher sales, so don't rule them out. Hard goods with the stamp of approval from well-known celebrity chefs can provide a strong complement to existing stock.

Nowhere is this more apparent than in the business' specialty food side. Celebrity chef-recommended products do well at specialty. In fact, they seem to speak to the specialty store consumer. Many retailers said they keep track of new introductions from Emeril Lagasse, Wolfgang Puck, Ming Tsai, and others.

"We have always done Chef Paul Prudhomme's seasonings and they remain our overall best-seller in that category," Ballard said. "We also do Emeril Seasonings and Dressings. Frankly, anything with Emeril's name attached is very popular. The Food Network is undoubtedly a real selling tool for these."

Ballard said a trademark/brand license well received by her customers is Dean & DeLuca — just one more example that name recognition equals larger ringups at the register.

So the next time you're admiring the work of a designer you really enjoy or witnessing a child's excitement over a new movie character, stop to consider how these images will translate into a licensed product. Then pull out your Roladex or your Internet surfboard and investigate what products are available in the categories you carry. Better yet, check out the licensed products you already carry and discover where those brands extend to, and you may discover a new way to introduce another category to your shelves and help your customers complete their designer collections.