What Every Retailer Should Know About Licensing

As independent retailers know, recognizable name brands like Disney and Coca-Cola remain popular with consumers and often command a higher price than generic goods. But did you know that the branded products in your store are often the result of licensing deals? By staying connected to the licensing industry’s latest trends, you can ensure that your store is filled with the latest products and brands that consumers are looking for.

What is Licensing?

The technical definition of licensing is “the process by which a brand or property owner extends a trademark or character out of its principle environment and onto products of a completely different nature.”

For example, Nickelodeon, the brand owner of SpongeBob SquarePants, would sign a deal with a clock manufacturer to develop clocks that depict SpongeBob. Nickelodeon has taken SpongeBob out of its principle environment of a television show, and moved his image onto a product of a completely different nature.

Licensing is a win-win for brands and retailers. Brands consider licensing a significant marketing tool and revenue driver while retailers benefit through increased product sales and differentiation.

Understanding Licensing Jargon

At first glance, the licensing industry seems to speak a different language, but once you learn a few key terms, it starts to make sense.

The Angry Birds t-shirt that is currently being sold in your store began as a licensing agreement between a licensor and licensee. The licensor is the brand owner, in this case Rovio owns the Angry Birds brand, and has extended their app game brand through a product partnership with an apparel manufacturer.

The apparel manufacturer (licensee) has arranged the production, distribution and go-to-market strategy for the T shirts. As part of the go-to-market effort, the licensee will sell their branded t-shirt or product to retailers like you.

Another way a licensed product can end up in your store is through a direct-to-retail (DTR) deal. As a retailer, you could develop an agreement directly with the licensor (brand owner), and pay a royalty somewhere between 3 to 25 percent for the brand. You then become the licensee and will source and produce the approved products to fill your shelves.

Giving You a Choice

At the end of the day, your customers are unaware of licensing… they will just buy the products they like from the brands they trust.

If you are interested in selling licensed products, you have a few options. You have the option to reach out and do a direct-to-retail deal or proactively seek out the licensees that produce the products your customers are asking for. By staying on top of licensing trends, you stay ahead of what customers will be looking for the next 12-18 months.

Learn More 

To learn more, visit www.licensingexpo.com. Leading up to Licensing Expo 2014, taking place June 17 to 19 in Las Vegas, we’ll be telling you more about licensing – how to find a winning property and what trends will be hot in 2014 and beyond. Licensing Expo is the meeting place for retailers, licensees and manufacturers to network with licensors and hear brand strategy directly from the brand owners themselves. Visit www.licensingexpo.com/registertoday to register now!

Contributed by Jessica Blue, Vice President of Licensing Expo.