Brand licensing offers incredible above and below the line benefits, yet not all retailers have cottoned on.

Most retailers are familiar with licensed/consumer products even if they’re not au fait with the terms. Jurassic Park childrenswear in M&S, Stranger Things hoodies in Primark, Love Island cosmetics in Boots, Pringles at H&M, Country Living sofas at DFS, LEGO Star Wars, Liverpool Football Club birthday cards – even ‘in story’ lines like Harry Potter Butterbeer, are all great examples of successful consumer products.

During 2021, the value of the global licensing industry was reported to have surpassed $300 billion for the first time by trade association Licensing International in its annual Global Survey released this July. It’s actually worth $315 billion - a rise of over 7.75% since (and despite) the pandemic.

Year in, year out, sales of licensed products remain robust and consistently outperform general retail sales. As highlighted above, some retailers are licensing trailblazers. In the UK these include Primark, M&S and the big grocers among others, who have ‘got’ licensing for years and collaborate with brands to produce creative – and respectful – consumer products. 

Yet many retailers are still getting to grips with the idea of licensing and the potential benefits of manufacturing/stocking branded product, or even becoming a licensed brand in their own right (think Ted Baker fragrance).

What is licensing and why bother with it?

Put simply, retailers or manufacturers can ‘rent’ a brand – normally within a certain product category and/or territory – for the purpose of creating consumer products. This is licensing.

Why do they do this? Because branded products are proven to drive footfall instore, traffic online, sales and revenue, increased margins, profit and customer loyalty. They offer retailers differentiation, exclusivity, a broader range offering and the opportunity to reach and acquire new customers or convert existing customers into new product areas.

How do they do this?

Because licensed products offer customers an emotional connection. It’s all about feeling that emotional pull from a brand you love and relate to. The most obvious place to find this is in the kids’ space – the connection pre-schoolers have with the likes of Peppa Pig, Paw Patrol, Paddington Bear, Peter Rabbit or Bluey is unbreakable.

But licensing works equally well across all ages and it’s particularly brilliant at tapping into the nostalgia Zeitgeist, which is key for retailers aiming at the adult market. As we grow up and become parents, care givers or just big kids, we crave the things that made our childhood special, and we enjoy passing that thrill on to a new generation (as well as just enjoying the feeling of being young again). There’s even a study that shows interaction with nostalgic stimuli can decrease mild physical pain and a recent article on Bloomberg highlights how and why adults are spending so much money on kids toys for themselves.

Trends within licensing

Licensing International’s Global Survey also pinpoints annual trends within the sector, which is incredibly useful for retail.

While entertainment and character is still the largest category, there has been diversification across the entire space. For example, thanks to the pandemic, when few new movies were being made, we saw a shift in interest to classic properties and it’ll be interesting to see what happens there now that movie releases are back on track.

There was also a huge growth in celebrity brands, with many retailers looking to social media as a source of inspiration for licensed product. There’s been a big change in the luxury sector, too, with high-end brands collaborating with mass market (Adidas x Gucci) as well as being more open to licensing characters.

Iceberg have done it for a long time, but now we’re seeing the likes of Peanuts x Lacoste and Ellesse, GoGuy and Teletubbies, which actually started as an April Fools’ Day prank in 2021 and is now a fully-fledged, Pride-celebrating streetwear collection.

This is a great example of how collabs and brand extensions are embracing diversity in a creative but respectful way. It’s unlikely that these collabs are revenue drivers, but they are incredibly important in allowing heritage properties to reinvent themselves, reach a mass audience, and also for PR in an age where values and purpose are increasingly influencing customer behaviour.

Value and purpose are also huge trends in licensing. Consumers’ relationships with brands are changing. They want to interact with brands that truly and authentically reflect them and their values, so  messaging for corporate brands is really important especially among the 18-35 audience, who are very engaged in CSR, ESG and DEI.

Top tips to avoid tripping up  

  • Remember some brands resonate everywhere – Star Wars,  Stranger Things, for example – but they are few and far between. Even though a property doesn’t resonate in every territory, it doesn’t mean it’s not a strong property.
  • Retailers need to experiment more online, and ecommerce and increased quality of print of demand is helping make this happen.
  • Always remember renting a brand comes with huge responsibility, especially those that have huge cult followings.
  • Never, ever, label slap. Products must be authentic, respectful, good quality and well thought out. They should ‘extend’ the power and appeal of the brand, not be simply opportunistic.
  • While licensing can deliver huge opportunities and benefits, it’s not without its risks. Always work with people you can trust and develop a genuine collaborative relationship with, and with brands you believe in and align value-wise to your brand, strategy and customers.

Find out more: 

Brand Licensing Europe runs a free CPD-accredited brand licensing course for retailers and hosts a free ‘Licensing Explained’ handbook. 

Licensing International is offering one year’s free membership to all BRC members, which includes a copy of the Global Survey (valued at $2,000). 

This article was also published in The Retailer, our quarterly online magazine providing thought-leading insights from BRC experts and Associate Members.