Retailers turning to licensing specialists

The hit-and-miss days of retailers guessing which licensed properties will prove successful may be numbered as they focus on acquiring better ways to understand how licensed products can best be exploited in the retail environment....
February 1, 1997

The hit-and-miss days of retailers guessing which licensed properties will prove successful may be numbered as they focus on acquiring better ways to understand how licensed products can best be exploited in the retail environment.

The hiring of Michael Tabakin as director of trend merchandising at Toys ‘R’ Us (see story below) is seen by some industry experts as a sign that retailers are taking a more proactive approach in their dealings with studios and entertainment companies.

‘For whatever reason, stores don’t have a feel of how to buy into licenses,’ says licensing consultant Bob Lorberbaum. ‘They just don’t understand that certain licenses don’t sell as well as others.’

This is particularly important in a year like 1997, when a swath of new big-budget films, from Batman and Jurassic Park sequels, to new animated features including Hercules and Anastasia, get set to clash for limited consumer dollars.

‘There has to be a way of measuring which ones you want to take a position with,’ says Tabakin. ‘You have to give a prioritized opportunity to certain properties that make better sense, or are more kid-friendly, than some other properties.’

To date, according to Lorberbaum, only Target and Toys ‘R’ Us have executives who have been brought in to research potential licenses and to coordinate programs internally. He believes it is just a matter of time before other retailers create similar positions.

The presence of entertainment-related licensed product has grown exponentially over the last decade as studios and producers have sought the means to create the brand extension and awareness that can add to a property’s revenue stream. The result is a great deal of clutter in the retail environment, which often leads to disappointing sales. In theory, having an in-house expert who can determine how best to exploit licensed properties at retail benefits stores, studios and manufacturers.

In the past, according to Lorberbaum, retailers have purchased licensed product based on their own opinions, as opposed to research on the show. Generally, studios make dazzling presentations to retailers and flout starry-eyed facts, such as how many millions of dollars are involved in the promotion of the property. What the studios fail to tell the retailers is how and where those promotion dollars are being used, and whether the entertainment is any good. Nor do most retailers take the time to read scripts or to ask the right questions about the property’s demographics, release date or what time it airs on TV.

‘How can you make a decision so far in advance that you can’t even read the script or have any idea of how it is going to come out?’ muses Lorberbaum. ‘There are so many things that retailers don’t understand nor do they have time to because they are merchants. Yet here you have millions of dollars of merchandise coming in based on their feelings about it.’

Lorberbaum believes retailers need an executive who has the licensing expertise to determine what areas of licensing are best for their stores. ‘Retailers want to be involved in licensing, but they don’t know how to get into it,’ he says. ‘By bringing in people involved in licensing on a daily basis, they’ll have better communication with the licensing industry.’

The benefits to retailers are twofold. Internally, such an executive will be able to assist buyers to make decisions on whether a particular license works across the board or only in specific categories. Additionally, he or she can determine the type of promotional support that needs to go behind the license, such as an in-store boutique.

Secondly, the retailer will have an individual who can research potential hot properties and suggest that the company support certain licenses and steer away from others. That involves not only direct communication with the originator of the license, but also an examination of which manufacturer is supporting the license.

‘[Toys 'R' Us] is expecting from my studio background that I will be able to ferret through a lot of the information, take a look at all the properties out there and offer a reason why we should position ourselves in a particular way,’ says Tabakin, who comes from Turner Home Entertainment.

‘Stores want to be the first with stuff,’ adds Lorberbaum. ‘The only way to do that is to be on a level with anyone who deals with licensing on a full-time basis. If it d’es its job right, the retailer could be one of the first into the license.’

With all of the new shows and movies coming out in 1997, making uninformed guesses as to what is going to be hot or relying solely on studio salespeople will guarantee as many misses as hits. ‘If you get professional people in there, you have a better chance of being successful than being wrong,’ says Lorberbaum. ‘And that’s what licensing is all about.’

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