It looks like France’s US$5-billion-plus licensing market may just be coming into its own. In the last decade, licensing activity in France has grown steadily to make it the second-largest European market behind the U.K. And unlike its historic rival across the Channel, France’s retail landscape has yet to become quite as overcrowded and competitive, and there’s something of a baby boomlet occurring right now. (France’s birthrate is higher than most of its Euro counterparts.) Not to say that launching a new kids property is a cakewalk, but there is a sense among licensors and agents working in the region that the market is growing.
It was certainly a good year for the key kid category of licensed toys. Year-end sales data from industry researcher The NPD Group shows 2005 toy sales increased by 6.2% to rack up US$2.3-billion in revenues. Moreover, bolstered by the likes of Dora the Explorer and the Star Wars franchise, sales of licensed toys shot up 18.2% and now account for 23.4% of the entire market – that figure stood at 20% three years ago.
The mix of hot licenses and a relatively healthy specialty toy retail market seems to be driving the up tick. Make no mistake – France’s retail scene is as sophisticated as any in the world and the country is home to the world’s second-largest retailer, Carrefour. In fact, sales at its some 3,500 French outlets (including 216 super-sized hypermarkets) generated US$46 billion in revenues, while the number-two mass merchant Auchan (with 120 hypermarkets and 287 supermarkets) raked in US$18.6 billion. And both are major players in licensed goods.
Unlike the States, where Wal-Mart and Target have taken over toy sales and specialty store numbers continue to dwindle, the ranks of dedicated toy retailers in France are swelling. NPD estimates show more than 400 outlets have popped up on the scene in the last five years, and sales growth at specialty outstripped that of hypermarket competitors in 2005. The specialists chalked up an 8.2% increase in value of sold goods versus the 5% garnered by their gargantuan competitors. Laurent Taieb, director of consumer products in France for Nickelodeon & Viacom Consumer Products Europe, notes the growing specialty chains including The Ludendo Group (La Grand Récré, StarJouet) and King Jouet now have the clout to ask for exclusive, dedicated product from licencees. In other words, he says, these retailers are helping to boost the market for merch by continually adding new products that aren’t available at mass retail.
Jean-Phillipe Randisi, VP and MD of Nickelodeon & Viacom Consumer Products Europe, believes consumers may be getting frustrated by the product offering available at mass retailers. ‘The low-price points at the hypermarkets aren’t something consumers are buying into any more,’ he says. ‘They’re less convinced that they’re getting quality.’
Stores such as La Grande Récré are actively mounting retailtainment-type events, supporting licenses with corner merch and POP displays. And most importantly, notes Nelvana’s European VP of licensing & marketing Marie-Laure Marchand, these stores sell year-round. ‘It makes a big difference for us,’ she says. ‘Hypermarkets are only in the game at Christmas time.’
That said, the likes of Auchan and Carrefour are hardly sitting idly by when it comes to licensed kids product. Carrefour has two people dedicated to handling licensing, while Auchan has one exec heading up the category. And with these larger retailers, putting a property on shelf has to be made as easy as possible. Sandra Vauchier-Cellier, senior VP of international licensing at 4Kids Entertainment, says licensors and their licensees pretty much have to present a shelf-ready package with product and planned promos in tow to the prospective retailer.
Nick’s Taieb, for one, has noticed that even the big boys are opening up more to licenses. Competition is tight and regulations that prohibit retailers from advertising on TV make getting the word out more difficult. (In this respect, store catalogues have become the most important advertising vehicle. Auchan’s alone has a 15-million copy print run and landing the cover or a dedicated page is quite a coup for any property.) So, he says, the retailers are looking to inject more life into their store environments.
Timed with French broadcaster TF1′s tentpole programming stunt this past April, Dora the Explorer hit the road visiting Auchan outlets across the country. ‘Retailers want to get their stores animated,’ Taieb says. ‘They want to tell people they’re coming in for a shopping experience and not just to get the best price.’
As for what kinds of kids licenses are getting play on shelf right now, a look at NPD’s top-10 list from 2005 contains a number of international heavy-hitters (see chart below). In fact, the sole property that originated in France is talent-search sensation Star Academy, whose merch has been making waves in the territory’s stores since 2003.
And TV remains an important driver. There’s been an influx of cable and satellite channels in the last five years, but as Marina Narishkin, MD at CPLG France, explains the country’s two million cable-enabled households don’t deliver a big enough audience to sustain a licensing program. On the other hand, the small cabsat viewer numbers mean less audience fragmentation and, therefore, landing a slot on major terrestrials such as TF1 and Canal Plus can help a property achieve significant impact – as witnessed by Dora-mania sweeping through the French preschool set.
Like most Western markets, the key kids categories remain toys, publishing, video games and apparel. Royalty rates are on par as well, running between 8% and 12% for major categories and from 2% to 5% for food & beverage, and promo categories.
French parents, it should be noted, are also very design oriented, making it possible to find success with non-TV driven licenses, too. Narishkin says CPLG is positioning Strawberry Shortcake as a toy and design proposition. While she says the property has only achieved about 20% of its potential in the country, Strawberry’s wholesome persona and softly hued products have propelled it into the top 10 list of kids licenses.
Similarly, Marchand says classic French character Babar is known for his style as much as his media incarnations. And Nelvana has embarked on a year-long celebration of the famous elephant’s 75th birthday, mounting several large-scale promos in the process. For example, at month’s end a deal with the Ministry of Ecology will see 500,000 guidebooks featuring Babar teaching kids about conservation and recycling distributed to families via highway toll booths and national parks. Additionally, 17-million national postal stamps released this year will sport the pachyderm’s mug.