Licensing, marketing 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.
Happy New Year! Here’s a look at the major trends in licensing, brand development, retail and merchandising that will influence deal-making and partnerships throughout 2019 and well into the next decade. Last year’s major deals and developments will define the future of retail and licensing. Consider the following:
Shift to online sales
While holiday sales were strong as predicted by various sources, one key takeaway is the continued rise in online sales. In fact, beginning with pre-Thanksgiving promotions, the period could easily be called “cyber week.” This trend will continue to change the strategy and approach many retailers will implement in the future. And licensors and brands must change their marketing and promotional approach as well because it’s no longer simply relying on an endcap to drive product sales.
Proliferation of private label brands
With dozens of new private label brands being introduced by the mega retailers including Amazon, Costco, Target and Walmart, the ‘shelf-space’ for other global brands and licensed brands, is declining. However, licensed brands—especially those tied to celebrities, influencers, entertainment and sports—have become key traffic builders for traditional retailers.
The Amazon factor
For the past several years, it seems that regardless of the topic, Amazon was always a part of the analysis. Whether it was the retailer’s competitive battle with Walmart and other mega brick and mortar retailers, or its Prime membership benefits, or its commitment to free shipping, Amazon has created formidable challenges to traditional retailers. But this past year, Amazon has made even more significant moves that will impact retail for the next decade and beyond, including the acquisition of Whole Foods, the development of Amazon Go, commitment to private label, toys, and pharmacy, development of new content, and global expansion.
The legalization of marijuana (now in 10 states and Canada) has spawned the rapid expansion of licensed products across several product categories while creating the potential for new products in health, wellness, food and beverages. And it has established a new type of retail store that will become one of the new tenants in strip centers and malls. For example, in Denver and Seattle, Diego Pellicer operates high-end stores that look like a typical food or beverage mall concept.
The new health care store
The CVS Health and Aetna merger, along with Walgreens and Humana working together to expand senior clinics among other possible initiatives, plus the Amazon’s interest in the pharmacy business, indicate how healthcare initiatives are strongly influencing the strategic future of drug store/pharmacy retailers. The drug store continues to evolve as the overall profitability of front-end categories declines and becomes less important to the overall performance as numerous healthcare initiatives continue to be the focus. While seasonal merchandising, along with niche categories such as kids’ vitamins and toothbrushes, continue to provide opportunities for licensed brands, the overall front-end product mix offers fewer licensed brands and more private label. These health care clinics and other spin-off type health care “stores” may offer licensing opportunities, but they certainly are among the new tenants of strip centers and malls.
Artificial Intelligence is real
Finally, after years of compiling information, retailers are becoming proactive in using data for inventory, marketing, consumer intelligence. The most compelling example is in Nike’s new stores in Los Angeles, New York and Shanghai, which all opened last year. Through its Nike app, shoppers can check-out on their phones and request merchandise to try on, while Nike can monitor what products are selling and offer shoppers personalized recommendations and discounts. The ability for major licensors to target specific customers/fans in certain environments can certainly become a realistic strategy that will help drive merchandise sales.
While there are several examples, the one that captures the essence of the concept is the NBA Experience that is scheduled to open this summer at Disney Springs. Developed by Walt Disney Imagineering and the NBA, this concept will feature various activities of professional basketball from a combine challenge to draft day to a team locker room, plus exclusive NBA-themed merchandise designed by Disney. Hasbro has also announced plans for entertainment centers.
While so much has been written about esports, the sector will continue to expand in 2019 and is on its way to becoming a billion-dollar industry. Activision Blizzard’s Overwatch League continues to expand and has yet to achieve its full potential, so 2019 will be a critical year in its development.
Major brands will continue to open temporary stores as was recently exemplified by such diverse names as Facebook (stores in Macy’s), Wayfair, Bailey’s, Build-a-Bear, Buzzfeed and Kellogg. These are great opportunities to create brand awareness, communicate a brand story, and sell licensed merchandise.
The “new” mall
With the demise of Sears and other traditional anchors closing stores, the malls, strip centers and community centers are in need of new tenants. Consider the possibility of a mall with a few “regular” retailers, plus Dave & Buster’s, LA Fitness, City MD, PM Pediatrics, a Hasbro family entertainment center, Amazon Go, a local craft beer brewery and space for two or three seasonal pop-up stores.
The mega mall of the future
After 16 years of construction, litigation and changes, one of the largest malls in the world will debut in March. With 4.5 million sq. ft., American Dream, from Triple Five, will feature an indoor ski slope, a skating rink, a DreamWorks-themed water park, a Nickelodeon Universe theme park, plus numerous restaurants. The company stated it is expecting 30 to 40 million visitors a year. A similar destination mall is being developed in Miami.
The TRU hangover
While consumers are still lamenting the loss of the venerable specialty toy store and retailers are still trying to figure out the competitive landscape, the TRU hangover will continue. As various retailers expanded toy assortments, marketing and promotions, there was no clear winner in the space and the fragmented marketplace will continue again this year.
The popularity of getting a regular monthly merchandise package continues to grow, not only among major retailers—from Amazon’s Prime Wardrobe to Target’s Cat & Jack—but also with smaller concepts such as Stitch Fix or Loot Crate.
Following various record accomplishments to numerous sequels over the past several years, the superhero genre remains strong and is likely to have its best year ever in 2019. Following the recent debut of Aquaman and Bumblebee, the 2019 slate includes Captain Marvel, Avengers: Endgame, X-Men: Dark Phoenix, Men in Black: International, and Spider-Man: Far From Home. In addition, video game titles will also add to the lineup of licensed movies, including The Lego Movie 2 and Detective Pikachu.
The Walt Disney Company has numerous initiatives throughout 2019 that will not only dominate at the box office and its theme parks, but also in brand licensing as several of its major franchises will be back on the big screen. In addition to the Marvel movies, Disney franchises that will hit theatres and retail with strong merchandising plans include Dumbo, Aladdin, The Lion King, Toy Story 4, Frozen 2, and Star Wars: Episode XI.
These 15 factors, and there are more, not only show the numerous “disruptions” in retail, licensing and merchandising, but also provide a preview of what will drive business in 2019 and through the next decade.