License to Brand

Licensed Brands as Valuable Assets for Retailers

First-of-a-kind research shows both the strengths and the untapped potential for Licensed Private Brands to be valuable assets for retailers

 

“Licensed Private Labels Boost Spending, Frequency of Shopping and Good Word of Mouth” is the headline in the recent edition of The Licensing Letter announcing a new piece of research. This quantitative study looks at the marketing and branding power of retail exclusive licensed brands. I applaud The Licensing Letter’s parent company EPM Communications for this innovative piece of research. There’s nothing like it that I know of and it begins to address the most critical topic. Is all the private label/licensed exclusive branding worth it?

 

In this blog I have consistently argued that the ultimate potential for private brands will be reached when the brands become marketing assets for their retailer owners. Exclusive brands provide financial benefits to retailers through higher margins, and merchandising benefits through an enhanced shopping experience, but do they build the retailers’ brands overall? In order for them to provide this next “higher order” benefit, exclusive brands need to become “real” brands – with high awareness, clear links to their exclusive outlets, consistent consumer expectations and trust, and drivers of traffic and loyalty to the retailers.

 

For a complete look at the studies findings, I’d recommend that you visit The Licensing Letter website and even consider purchasing this reasonably priced study.( www.epmcom.com ) Here are a few brief observations about the findings.

 

Only 20% of the respondents could correctly link an exclusive brand with its retailer parent. An equal 20% “guessed wrong” by linking the brand with a retail competitor. And the vast majority, 60% just didn’t now which brand went with which retailer. Therefore, one could easily conclude that these exclusive brands are falling short of their potential. That’s true and there are lots of reasons why. Important ones are the immaturity? of many of the brands and a lack of marketing beyond in-store activities.

 

But I encourage thinkers in this arena to dig a little deeper into the study’s finding. A third of respondents who are aware of the brands indicate that the brands are a “destination” and that they spend more at these stores. And of those that think of the brands as destination brands, nearly two thirds say they shop there more frequently, 52% say they spend more and that they are more likely to recommend the store to there friends. Here’s where the potential is. If retailers can really create destination brands, the power of these exclusives could be massive.

 

The study also points out that there is considerable confusion about several licensed apparel brands. For instance, consumers think that Simply Vera Vera Wang is available not just at Kohl’s but also at more upscale stores like Macy’s. This is the same case with Norma Kamali at Wal-Mart. But wait a minute – that may not be all bad. These brands are certainly intended to create the feeling that they are more upscale and provide special fashionable excitement to the shopping experience. So they are not destination brands – yet! But they could be doing a great job in building consumers feeling about the store and their shopping experience. I believe that over time and with a little marketing the full power of these brands can be established.

 

Finally, I’d like to point out one caveat about the study and one of its findings. That is that this study is based solely upon consumer attitudes and not behavior. This can be a bit risky when dealing with brand issues. In my many years of working with brand research, we have found a negative bias against consumers “admitting” the power that brands hold over them. Their stated attitudes often do not reflect their actual behavior. For instance only 3% of the respondents of this study say that buying brands is important to them. Experienced marketers can see how this clearly understates the power of brands and demonstrates a potential bias in the data.

 

Congratulations to The Licensing Letter and EPM Communications on their study and the insights it provides. I look forward to future studies and refinements. And I hope retailers take advantage of this important data as they think about building their exclusive brands in the future.

 

PLMA Idea Supermarket – an outstanding demonstration of the evolution of Private Brands

This year’s Private Label Manufacturers Association conference (held in Chicago from November 15^th-17^th) included a number of innovations. The best for me was their Idea Supermarket. In simple, no frills, 4 foot displays, it highlights some of the most notable private label brands and programs ranging from Wal-Mart to KaDeWE (Germany).

There were some real stand outs that demonstrated that - at least in terms of packaging and presentation - retailers are finally starting to think beyond the traditional store brand paradigm and are laying the foundation for real brands that could some day have real brand equity. I haven’t been overly complimentary of Kroger’s premium private label efforts to date – they’ve just been too “cookie cutter.” But their new MIRRA skin care and anti-aging brand looks great and may do well competing with the national brands at a great price point. It certainly has the potential to give some of CVS’s proprietary brands a run for their money.

Another unexpected stand out for me was from Price Chopper. Its new line of premium skillet meals under the “Central Market Classics” brand looks fresh, up-to-date and the packaging screamed quality. Will what’s inside deliver? That will be the ultimate test of whether price Chopper is just good looking design or whether they’ve put together the whole “package.”

Some other notables include the “de-lish” brand from Duane Reade – it looked like real quality. And perhaps the best is Via Roma, A&P’s Italian specialty line. A&P and Duane Reade leading the pack? I know! That’s unexpected. Cool!

Outside of food and packaged goods, one has to tip their hat to Staples “M” brand and Office Max’s TuL and Divoca lines. Mike Kitz at Office Max has really put it all together. In contrast to these thoughtful and well executed brands, one display pitted Targets “Home” brand against K-Marts “Essential Home” brand side by side. Oops! They look exactly the same. So what good does that do either store? Generic-sounding brands on generic-looking products that don’t differentiate the two retailers.

Another disappointment for me was 7-Eleven’s “7-select.” Kudo’s to 7-Eleven for seizing the opportunity - but it could have been so much more! I always look for these new brands to elevate the customer’s expectations – at least a bit. They have the potential to create a surprise and make the shopping experience more fun. 7-Select is true to the 7-Eleven brand in its look and feel but it lacks that something extra to make it a real brand.

Look for some of these brands in the stores as you have a chance. It’s also fun to see how POS display can make a brand come alive. Let me know what you think.

Long-Term Licensing Trends

 

 

 

 

 

 

 

In my role as Retail Brand Licensing columnist for The Licensing Journal, I write about the intersection of retailers and licensing. It’s a landscape that’s continually evolving and it’s an exciting one to be a part of.

 

The September issue of The Licensing Journal included my latest column, which focused on trends in the space. The article opened as follows:

 

“A year ago this article likely would have had a different tone. The winds of economic change were blowing. But few were predicting the gale force that would hit us in the fourth quarter. It’s an understatement to say that 2008 was not a good year for the licensing industry. Sales and royalty revenues were down in virtually every category monitored by industry resources and brands were no exception. According to EPM Communication, corporate brands experienced a downturn of 12 percent in the sales of retail licensed products for the year.

 

But historically, licensing metrics have followed short-term economic trends and have bounced back—following general economy and retail trends. So in looking at trends impacting the industry, we can’t ignore the impact of today’s economic reality as well as potentially systemic changes in how people think about the licensing deals that are likely to result. But in looking at the longer term future, there are a few other trends that I believe will impact the business long after we have forgotten CDS’s, bailouts, or an auto industry dominated by 'The Big Three.'

These long-term trends are:

· The role of the retailer

· “Doing good” celebrities as brands

· The web, communications, and the virtual world

· Globalization

· Demographics”

 

I spent the rest of the article delving into these long-term trends in the licensing industry. In a nutshell, “the times they are a-changing.” But retailers don’t need to be caught off-guard.

 

If you’re interested in obtaining the full article, call 1-800-638-8437 or go to www.aspenpublishers.com.

Do consumers find private label candy spooky?

I’ve seen some media coverage recently about the fact that shoppers are cutting Halloween spending to the bone in this frightening economy. From costumes to decorations to candy, people on the prowl for bargains.

 

In fact, a recent article cited these statistics:

“Nearly nine of 10 consumers -- 86 percent -- said they will spend less or the same on Halloween this year, according to a survey by Corporate Research International, a retail consultant.

 

About half (49 percent) said they would spend no more than $50 on costumes, candy and decorations. Only 12 percent of shoppers expect to spend more than $100 and fewer than one in four (22 percent) will buy decorations.”

 

But it turns out the area where they are MOST likely to spend is candy. This same article stated,

“While shoppers are buying more generic and private-label products at the grocery store, they are still opting for name brands when they buy Halloween treats, according to a report by the Nielsen Company.”

 

Unless all of these are brand name promotions and price reductions – which I don’t think is the case – that means that even when cash is scarce, people will STILL turn to brands that they trust.

 

This represents a missed opportunity for retailers, but one that can be remedied. Whether retailers bring well-positioned store brands to market, or they license a brand that can catapult them there, it’s obvious that Halloween can be treats instead of tricks for savvy retailers.

 

What about you? Do you splurge or save when it comes to Halloween?

Exclusive Paul Frank Brand Debuts at Target

Has anybody seen these funky monkey logos around town on shirts, backpacks

and more? I recognized them as designer Paul Frank’s Julius the monkey, and so I was really surprised when I asked someone where they got their shirt. The answer was Target, whom I’ve written about before in this blog as being very smart when it comes to retailer-exclusive product lines. Curious about how high-end designer Paul Frank ended up at Target, I did a little digging.

 Turns out that Mossimo, known these days for his extensive line at Target, took a stake in the company last year. Paul Frank sold his stake and left the company as part of a lawsuit settlement.

 

Anyway, long story short, that’s how Julius - the monkey I’d always associated with having a lot of

cache and selling at high-end boutiques, vintage stores and surf shops - landed at Target. Though they will need to be careful not to flood the market and thereby dilute the brand, it’s a coveted image. Once again, Target’s done a great job of positioning themselves through securing designer lines at affordable prices.

 

Long story short...look for lots of kids and young adults in your area to be sporting t-shirts, sunglasses and other apparel and accessories that feature Julius, the cheeky monkey.

 

What do you think? Will blanketing America with Julius negatively impact the brand? Should they have kept it niche in order to maintain the brand perception?

Retailer Private Label Foods get a Quality Vote from Consumer Reports…

Consumer Reports has just announced a study that showed that a group of private label brands taste as good as or better than their national brand competitors.

 

 

According to Consumer Reports, “Some of the clear winners were Archer Farms Chewy Soft Baked Cookies (Target), Kirkland Signature Organic Medium Salsa (Costco) and Great Value Whipped Topping (Wal-Mart), which outperformed products from Pepperidge Farm, Old El Paso, Betty Crocker and Kraft.”

 

I’m not surprised with the findings. And coming from this well-respected publication, it’s a very worthwhile piece of research. I’ve commented on the steady quality improvements private label manufacturers have made in recent years, which have been driven by retailers’ need to compete head to head with national brand vendors.

 

But to put another perspective on this research one has to realize that when it comes to taste – taste isn’t really all that matters. What I mean is that brand perception has been shown to affect consumer taste buds. Yes, it’s true.

 

Over the years we have been involved in the “reverse” of this research. And time after time it’s been proven that the brand directly impacts taste perceptions. Consumers served the exact same product but with different brand names will perceive different taste profiles and imbue the branded products with more favorable attributes than the exact same product bearing a “lesser” brand. After tasting the EXACT same product, Sunkist orange soda tastes better and “more orangey” than Fanta. Oreo Cookies and Cream Ice Cream is crunchier and richer than Breyer’s. Killian’s Red is smoother on the throat than Bass Ale. And the bubbles in Perrier are more refined than those in Poland Springs.

 

The product has to stack up if retailers are going to continue to grow their private brands. NO question! And this report clearly shows that it’s happening. But the branding has to be right for retailers to ever really win the battle for their customers’ hearts - as well as their minds.

 

It takes time to build brand equity. Consumer attitudes about proprietary brands are improving, but it will take years before they can compete head-to-head – no matter how good the quality in the box.

 

As I’ve said in past blogs, one solution can be for retailers to develop strategically sound, exclusive licensing relationships and co-branded lines that compete with the national brands from day one. This is the way for retailers to acquire brand equity for their private sourced businesses quickly and efficiently. (For instance, check out previous blogs such as Costco signs deal with Iconix to sell Charisma line or Staples maximizes in-store assets to build its brand.)

 

Developing brands the right way requires a clear vision of the retailers’ long term branding goals paired with on-target research and creative abilities.

 

Have your taste buds ever betrayed you because of your trust in a favorite brand? Let me know your thoughts about the benefits and drawback of building versus licensing proprietary brands.

J.C. Penney’s New NYC Store – Solid Store Brands but Not All It Could Have Been

Last weekend I visited the J.C Penney’s grand opening in Herald Square, NYC. After all the fanfare, I must admit that I’m still scratching my head a bit. There are a lot of “good” elements at this new J.C. Penney’s flagship store, no question about it. However, in my mind it lacks the punch it could have from the perspective of building the J.C. Penney’s brand and really maximizing the value of their new store brands.

 

On the good side of the ledger, the store has some nice bells and whistles like the scanner kiosks that allow shoppers to scan the merchandise tickets for sale prices and information. The store was manned with lots of helpful ambassadors to answer questions and direct traffic. Departments and brands were well-delineated and, of course, it had that great clean “new car” feel. Perhaps most importantly for J.C. Penney’s in the short term, the store was packed on a rainy Sunday and people were scooping up the grand opening deals.

 

And J.C. Penney’s store brands looked good. Some stand-outs were Allen B. by Allen Schwartz, Joe by Joseph Abboud, and American Living. And while I personally struggle with some of Cindy Crawford’s licensing choices, the Cindy Crawford Style for the home line looked good.

 

  On the other side of the ledger, the store suffers tremendously from its subterranean location and feel. They did all they could to design away the negatives, but the reality is that the ceilings are low and the store feels tight. The space seemed to limit their ability to effectively promote their impressive store brands. The merchandise looked like solid, mainstream J.C. Penney’s value with some extra fashion excitement, but instead of a presentation that could have wowed, it just fizzled. If this is the “statement store” and the goal is to challenge Macy’s around the corner, they missed the boat in my opinion. J.C. Penney’s has some brands and merchandise that are a marginal step up, but I hope they take it to the next level and build their great brands into assets that can genuinely build brand loyalty. It’s too great an opportunity to miss out on.

Wal-Mart Gets in on Back to School with Retailer Exclusive Consumer Electronics

  Wal-Mart will be selling a Compaq Presario notebook for $298 – down from a similar unit that currently sells for $548! 

 

And Wal-Mart’s home entertainment V.P. calls it a “screaming value”. Wow! I guess so!

Every other retailer in the consumer electronics space had better hold on to their hats and  kick it into high gear. If they don’t, they’ll get left crossing the finishing line in last place…..or more accurately (in today’s world of retail failures), not even being in a position to finish the race when the economy starts to turn around in earnest.

 

Whether it is apparel, housewares, food, toys, sporting goods, school supplies, or HBA, the Wal-Mart model works. A few months before the beginning of our current economic troubles, people were questioning whether the Wal-Mart model was dead…or at least facing some hard times. But no-one can match the Wal-Mart model head-to-head. Their powerful relationship with vendors and their supply chain systems is unequaled. And that statement is coming from someone who has had questions about some of Wal-Mart’s historical tactics when it comes to “associate” relationships and the environment.

 

But the fact remains that when you talk about providing value – at least perceived value – no one does it better. Costco is close, no doubt. But for everyday value, Wal-Mart calls the shots.

 

So what does that mean for everyone? If you’re going to compete, you have to find…and clearly define…your unique retailing niche. And you need to do so with a clearly defined position and products that can’t be found anywhere else. We’ve been talking about it here for a couple of years now, but this latest example drives it home one more time. Retailers MUST start taking their private label strategies to a new level. It’s not enough to simply source products from existing suppliers in an attempt to equal the national brands. Retailers have to compete with the national brands in terms of real innovation – and then link that innovation to their own proprietary brands with long term legs.

 

Why? Because anything less than true brand differentiation is a short-term, fleeting competitive edge. Retailers must compete not just on price or marginal product improvements, but also by building an emotional relationship with their customers. This is where proprietary brands deliver unexpected value to the body and the heart. That’s how to win over today’s savvy consumer.

Costco signs deal with Iconix to sell Charisma line

I was very interested to read this morning about the deal that Costo has struck with Iconix to sell the Charisma line.  The Charisma line is bridal-focused, offering 100% Egyptian cotton fashion bedding, sheets, blankets and towels.

 

Costco has done such an amazing job with the Kirkland brand, really establishing it as standing for “trusted quality and value” - whether it be clothes or diapers.  So the fact that they still see the value of licensing a brand really shows what astute brand strategist the folks at Costco are. The Charisma brand is “additive” to the Kirkland brand – it brings them a set of images that would be hard to build and/or would require greater time and investment than the category deserves or might afford.

 

And the partner they’ve selected is excellent.  If there’s anybody to watch in the licensing industry, it’s Iconix.  They’re well-known for buying brands and sustaining or revitalizing them through licensing, whether it’s Danskin or Ocean Pacific. 

 

Costco understands that licensed brands are not “instead of” private label brands…they can all be a part of a total portfolio.  Here’s a store with a great brand and there’s still room for licensing because it brings with it brand equity that builds the overall Costco shopping experience – while increasing the Costco’s overall share of store brands. Improved profit margins will undoubtedly result.

 

I applaud both Costco and Iconix for an excellent marriage…completed with great bridal sheets and towels!

Outlet Malls Offer Viable Means for Upscale Brands to Reach the Masses

I recently made a field trip (ok, I was shopping too!) to the Woodbury Commons Premium Outlets in upstate New York and had such a great experience.  Despite its substantial size and a few “tourista” buses, it had the feeling of a small, quaint village.  It was laid out with similar brands adjacent to each other.  There was a plethora of upscale brands from Chloe, Chanel and Jimmy Choo to Furla Luggage and David Yurman. It got me to thinking about the fact that it’s always a risk for a prestigious brand to go “down-market” to malls and even retail outlets, but it’s a very savvy strategy if done well.

 

As we’re seeing more and more, women’s shopping habits are changing…she might be wearing Michael Kors shoes bought at Neiman Marcus, a Marc Jacobs dress from Loehmann’s and carrying a Mossimo handbag from Target.  And with that evolution, retailers can make adjustments to the channels they utilize to reach consumers.

 

In fact, I just saw an article this week about the fact that Saks and Nordstrom are headed to outlet mall locations.  Even consumers who typically shop in luxury retail stores are worried about wealth destruction, retirement savings, debt and whether they’re still employed.  But they still want to shop at the Neiman Marcuses of the world – and have the same great customer service experience – all while paying less.  Retail options such as this allow them to do that.

 

In the past, outlet malls were used to clear out overstocked merchandise, clearance items or irregular sizes without hurting full-line stores.  But that’s a thing of the past, with outlet mall stores now also offering merchandise that’s exclusive to their stores.

 

Wal-Mart and Target have been doing this for years, with great success.  Think of Target’s Isaac Mizrahi or Rachel Ashwell product lines, or even Wal-Mart’s Norma Kamali line of clothing.  Kohl’s is another one that does this very well, with powerhouses like Vera Wang, Daisy Fuentes and Avril Lavigne in their retailer-exclusive arsenal.  So in essence, retail players like Saks and Nordstrom are jumping into waters these pioneers have already tested…but this also provides the benefit of having a stronger brand image than what is typically found at discount stores.

 

So now you know what I think – definitely a smart strategy…what do you think?