Licensing and retail expert/opinion leader Tony Lisanti, provides insight and perspective for the top headlines of the week. “Licensing and Merchandising Report” is a must read for top execs who want objective, straightforward and authoritative analysis.

VR, Walmart’s Annual and the Next Billion Dollar Brand

With Licensing Expo 2018 seemingly a distant memory (even though it’s only been two weeks), the inherent trends in licensing, which I have identified several times in my columns, reverberated in between the headlines this past week. These key trends include the ongoing closures of brick and mortar stores, the popularity of virtual reality, sports licensing brand partnerships, the opportunities in total home licensing, the next billion-dollar brand, plus highlights from the annual meeting of the world’s largest and most important retailer as it makes strategic moves to compete with Amazon, grab Toys R Us market share, and expand ecommerce globally.

‘And Then There Were….’

The latest in the long list of retail store closures, totaling as many as 4,000 this year, is the venerable Lord & Taylor, a division of Hudson’s Bay Company. In another retail real estate transaction, L&T will close its fifth Avenue landmark location, after 104 years, selling it to WeWork. Hudson Bay reported it will also close an additional 10 Lord & Taylor stores, leaving the department store retailer eventually with 38 locations. In a move to invigorate its business, Lord & Taylor recently partnered with Wal-Mart for an online destination store, but it’s too early yet to determine whether this uncommon partnership will pan out. Company release stated the sentiment which we have all heard before from other sources: “This reduced store network will allow new leadership to re-think the model and better position Lord & Taylor for future success.”

The Perpetual Turnaround Club

Several years ago, I placed TRU in what I called the Perpetual Turnaround Club and frankly the TRU turnaround unofficially began in 2000. Yes, that’s 18 years ago, when former FAO Schwartz chairman and CEO John Eyler took over as president. Today, this unflattering club includes several other retailers including the aforementioned Lord & Taylor, Macy’s, Sears, Kmart, and JCPenney. It’s just simply a combination of factors such as a revolving door of execs, store closings, brand and merchandising shifts, new formats, mounting debt, etc. TRU hung on for 18 years before it succumbed, and one can argue it’s just a matter of time for other venerable retailers. First, this is not to say that these retailers aren’t doing some innovative things or posting big revenue numbers. This is simply another reminder to all licensors to shift focus, develop alternative retail channels and, of course, ecommerce opportunities.

Virtual Realty Goes Mainstream

In a licensing deal between NBCUniversal and The Virtual Reality Company (VRC) and Dave & Buster’s restaurant and entertainment chain, the launch of Jurassic World VR Expedition, will debut June 14 at 114 Dave & Buster’s locations. This multiplayer experience, which will tie in with the theatrical release of Jurassic World: Fallen Kingdom, on June 22, will give fans a chance to roam alongside dinosaurs. This is a clever move by Dave & Buster’s and all that are involved as VR gains a huge mainstream exposure and NBCU creates a viable and exciting brand extension. The restaurant chain also reported that three additional VR experiences are already in production.

Color me Smart and Savvy!

In another unique brand partnership, Crayola and retailer ASOS have joined forces for an exclusive line of 58 eyeshadows, blushes, mascaras, in 95 shades. This is all about connecting with customers! Crayola already has two other partnerships with Clinique and Sally Hansen. I remember discussing this initiative with Crayola’s head of brand development and global licensing Warren Schoor more than a year ago and who would ever have thought such a brand extension would have been possible and so effective. Kudos to Warren and Crayola brand team. 

The Next Billion Dollar Brand

While the opportunities in total home licensing continue to grow, the next bigtime home brand is not licensed but a private brand. Target is launching “Made by Design” on June 23 with 750 SKUs with everything from cookware, dinnerware, glassware and spatulas to bath towels and storage. It’s the retailers fourth home brand following Project 62, Opalhouse and Hearth & Hand with Magnolia in conjunction with HGTV’s Chip and Joanna Gaines. According to the Minneapolis StarTribune, a Target spokesperson “expects Made by Design to be a billion-dollar brand.”

“Made By Design is the ultimate expression of our DNA—a commitment to the democratization of impeccable design,” says Mark Tritton, executive vice president and chief merchandising officer, Target. “This line is filled with beautiful, purposeful pieces that our guests can count on for superior quality, style and value season after season. It’s the perfect foundational brand to complement our assortment, which now features more distinct aesthetics than ever to help every guest make their house a home that truly reflects their unique personalities and preferences.”

Target has now unveiled more than a dozen brands over the last year and more are being developed. The retailer’s private brand push should remind licensing execs of the potential opportunities in home and other categories for licensed products as well as the need to create compelling licensed collections.

The NFL Rookie Players: Play and Promote

The NFL rookie class got to the field for the first time recently with their new teams respectively and several players have signed their first endorsement deals as well.

  • Arizona Cardinals rookie quarterback Josh Rosen signed a multi-year deal with Adidas
  • Seattle Seahawks rookie linebacker Shaquem Griffinsigned a deal with Nike
  • New York Giants rookie running back Saquon Barkley signed a sponsorship deal with Nike and Panini.

The endorsement deals will continue to be announced. Many NFL rookies will be emerging stars so take a closer look at potential opportunities and connect with NFLPA, the National Football League Players Association. Last month, NFLPA held its annual Rookie Premiere for about 40 players providing them with their first organized business conference and showcase. You can be sure that several rookie players will top the charts of best-selling merchandise come this football season.

Walmart’s Annual Celebration

To say that ecommerce is of paramount importance to Walmart these days would be an understatement. And it came across clearly in the retailer’s annual meeting. Considering the following:

  • Flipkart Group; Walmart will acquire 77% interest in India’s largest online retailer for about $16 billion. It’s an obvious move–and Walmart’s largest acquisition investment to date– to compete globally with Amazon.
  • Partnership with Lord & Taylor. This flagship store offers Walmart the opportunity to attract higher income consumers and establish a stronger reputation as a destination for premium brands. Conversely, it offers Lord & Taylor the potential to expand its audience and attract Walmart customers who want to trade up.
  • Jetblack: This membership online shopping service, targeted to high-end consumers, is being tested in Manhattan and has potential to be a competitive alternative to other similar services.

“We bore a lot of fruit last year, didn’t we? We grew revenue by more than $15 billion to become a half-a-trillion dollar business! We were the first company in history to achieve that milestone,” said Walmart President and CEO Doug McMillon. “The common thread in this story is that we’re positioning ourselves for sustained growth, while at the same time we’re finding new ways to serve customers today.”

Best Deal of the Week

Major League Baseball, along with Seidler Equity Partners, acquired 131-year-old Rawlings Sporting Goods Co. from Newell Brands for $395 million. Rawlings produces the official ball and helmets for MLB.

Best Quote of the Week

Newly appointed CEO of Hudson’s Bay Company: Helena Foulkes, “We are also taking action to reposition Lord & Taylor for improved results and increased profitability. With a new leader dedicated to evolving our experience and merchandise assortment to best meet customer expectations and shopping preferences, we will take advantage of having a smaller footprint to rethink the model and focus on our digital opportunities. The Lord & Taylor flagship on Walmart.com, which launched last week, is a great example of this and represents how we are thinking about the entire business.”

In the Field: (Weekly Spotlight of Licensed Products at Retail)

Target’s Magnolia Hearth & Home by Chip and Joanna Gaines makes a powerful in-store statement featuring a plethora of home products. However, it was in a rather odd location and what appeared to be a purposely disorganized presentation. It was located to the side of entrance opposite the grocery side of the store. Perhaps it would have had a more dramatic impact if it were place in the higher traffic, main home area. Products ranged from cabinet hardware to a variety of baskets, utensils, glassware, accessories, etc. all laid out on tables and fixtures in this sectioned area of about 300 sq. ft. with no rhyme or reason or organization.

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