News

Taking a bite out of retail?

In a year described as challenging at best, North American entertainment licensors and their partners are digging even deeper to maintain, if not expand, retail distribution. To be sure, cracking mass-market giants like Walmart continues to be the goal for most, however, many IP owners are redoubling efforts to reach alternative channels.
July 27, 2009

In a year described as challenging at best, North American entertainment licensors and their partners are digging even deeper to maintain, if not expand, retail distribution. To be sure, cracking mass-market giants like Walmart continues to be the goal for most, however, many IP owners are redoubling efforts to reach alternative channels.

As LIMA’s Licensing Industry Survey, released in June, points out, licensors are seeking relationships with smaller, independent retailers ‘whom they view as better able to respond quickly to hot market trends and are more willing to take on new, untested properties and products.’ Along with that, the report contends supermarkets, drug store chains, specialty, online retailers and even the riskier proposition of dollar stores are growing in importance.

For one, industry eyes are trained once again on City of Industry, California-based specialty chain Hot Topic – it’s one of the few retailers in the US market right now that has attributed its success in 2009 directly to a license. Known historically for taking early calculated risks on alternative entertainment, currently the retailer’s 2008 gamble on the merch exclusive for Stephenie Meyer’s bestselling YA vampire series The Twilight Saga and Summit Entertainment’s small-ish budget (US$37 million), big-screen adaptation of the first novel, Twilight, is paying off in spades. Since the film’s November 2008 release, Hot Topic’s 679 stores have been rockin’ and rollin’ over their mall-based competitors – posting same-store sales increases of more than 5% each month – largely because of Twilight-obsessed tweens and teens hungrily snapping up any related apparel, accessories and DVDs.

Summit Entertainment tapped Woodland Hills, Calif.-based Striker Entertainment and Most Management in L.A. to create the first-ever licensing and merchandising program for the studio and the film last year. Mindful of the romantic Goth creative cues from the property, the pair signed NECA to create tees and tote bags exclusively for Hot Topic (the program went on to garner three LIMA International Licensing Excellence Awards, by the way).

Product offering grew from there, and at press time, the chain was rolling out a second wave of merch based on the upcoming sequel New Moon, launching in theaters nationwide in late November. Striker/Most have also been hammering out wider retail distribution deals for this go ’round, signing on Cardinal Games, Trends International, Hallmark, Advanced Graphics, NECCO, JEM Sportswear, Imastar Cosmetics, Mattel and Sulake International, in addition to NECA.

‘Hot Topic is not only keyed into its customer, but goes one step further by using its website to survey them on what they want to see in its stores,’ says Roz Nowicki, EVP of marketing and licensing at New York-based 4Kids Entertainment. ‘We’ve had a retro Teenage Mutant Ninja Turtles program there since last fall and it’s doing very well.’

Hot Topic’s recent success has arguably piqued interest in the viability of specialty to spur big sales. And while it won’t likely ever be a program driver, another alt channel that’s getting attention right now is dollar stores. Not surprisingly, dollar stores are proving to be one of the few retail winners in this economic downturn. (One of the channel’s largest chains in the US, Family Dollar, has some 6,600 stores that generate close to US$7 billion a year and reported a 6.4% spike in Q2 sales.) And while a tricky one for licensed goods, it’s been identified as an outlet to watch.

‘What you’re going to see more of is that the dollar channel is not just off-price, but a major channel in a company’s upfront strategy when creating a brand,’ says Lisa Streff, SVP of domestic consumer products at the Burbank, California office of Cookie Jar Entertainment. ‘We’ve done well with Strawberry Shortcake and have been careful not to give them products that won’t sell elsewhere, but create products designed specifically for them.’

Carole Postal, president of New York-based CopCorp Licensing, admits the challenge with dollar stores lies in the name itself. ‘There’s not a lot of margin and not a lot of room for royalties,’ she admits. But Postal contends product categories such as food, some stationery and cosmetics can be a natural fit for the financial strategy of a dollar store chain, and those retail buyers are becoming more receptive to taking licenses. With Jim Benton’s art-based tween license It’s Happy Bunny, she says the channel was part of the IP’s retail strategy from the get-go. ‘With a careful selection of product categories, it doesn’t diminish the property at all,’ she says.

With files from Lana Castleman

About The Author

Menu

Brand Menu