A first take on Holiday 2019; MGA makes bid for Mattel; a look at the world’s most valuable brands; a few key takeaways from Walmart’s annual shareholders meeting; plus, other top brand, licensing and retail news.

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 for retailers, licensors and brands.

Holiday 2019: Deja Vu

With Licensing Week and Gaming Week now over, the summer holiday season kicking into high gear, and the July 4th celebration approaching, the retail, licensing and merchandising sector is in a lull of sorts. This comes in anticipation of Amazon’s Prime Day, which is reportedly July 15, followed quickly by the important Back-to-School season, along with the trade war and tariffs threat that hangs over the retail industry.

And then, wham, Holiday 2019. Many of the recent deals coming out of Las Vegas and Los Angeles from Mattel and Sanrio’s partnership to Microsoft’s new Xbox will not have an impact on the second half of the year, while the script for holiday may have already been written.

Once again, this Holiday season rings with concern about the loss of TRU, the potential impact of the new TRU, the battle for toy sales that lured in many unlikely retailers, and the concern about where licensors will be able to generate sales of licensed products. The buzz that major licensors and retailers will be able to generate in the post BTS and pre-Holiday season will have a decided impact on the fourth quarter performance.

Last year, holiday merchandising was akin to a top list of licensed brands and it’s likely that this year will be defined by the phrase coined by the late and famous New York Yankees catcher Yogi Berra: “déjà vu all over again.” In addition, the major retailer—and their commitment to licensed products and their top wish lists, which historically have produced huge consumer interest and sales—will drive the fourth quarter.

The entertainment sector will once again dominate thanks not only to a robust slate of theatrical films and popular kids’ properties, but also to some aggressive retail and licensor marketing initiatives. Consider Disney’s major initiative, called Triple Force Friday on October 4, is a major merchandise event that will focus on Star Wars: The Rise of Skywalker as well as the series The Mandalorian and the video game Star Wars Jedi: Fallen Order.

It could be called the start of the annual holiday sales and promotions and a prelude to Black Friday. And if you like to look ahead to 2020, it could be an Xbox holiday!

MGA Makes Bid for Mattel

While both MGA and Mattel made several major announcements during Licensing Week, perhaps the biggest headline was the house of Bratz’s bid to acquire the house of Barbie. And along with the bid came several comments from MGA CEO Isaac Larian that further intensified the relationship between the two companies and raised issues of concern about Mattel and its performance.

Mattel is in the midst of a major turnaround effort and transition from traditional toy company to a bona fide entertainment company. Mattel has already signed agreements to produce six movies based on its core brands that will not hit theatres until 2020 and beyond.

Meanwhile, MGA has experienced strong performance and popularity for its brands that also include L.O.L. Surprise brand which won a Licensing International award for best animated entertainment brand.

First, the offer was immediately rejected by Mattel. According to various reports, MGA did not include a specific price. Based on its current stock price of around $11.66 per share, the company is valued at between $3.5 billion and $4 billion.

Secondly, Larian’s comments need little explanation. Consider the following:

  • Larian told CNBC that Mattel will be bankrupt “shortly, within a year or so.”
  • “They have nobody from the toy business on that board except one guy who ran a company called Top Toys in Denmark, and Top Toys went into complete liquidation,” Larian said.

Amazon Takes Title as World’s Most Valuable Brand

Driven by its continued growth and success, Amazon has taken the No. 1 spot as the world’s most valuable brand, according to the 2019 BrandZ Top 100 Most Valuable Global Brands ranking released by WPP and Kantar.

According to WPP, “Amazon’s smart acquisitions, that have led to new revenue streams, excellent customer service provision and its ability to stay ahead of its competitors by offering a diverse eco-system of products and services, have allowed Amazon to continuously accelerate its brand value growth.”

Amazon posted an increase in brand value of 52% over last year to $315.5 billion moving past Apple, at No.2 with a brand value of $309.5 billion and Google at No.3 with a brand value of $309 billion.

David Roth, CEO of The Store WPP EMEA and Asia and Chairman of BrandZ, says: “The growth in value of this year’s top 100 brands to an all-time high proves the power of investing in brands to deliver superior shareholder value. Behind this headline growth figure lies the success coming from a new phenomenon of ecosystem brand building. We’re seeing a move from individual product and service brands to a new era of highly-disruptive ecosystems. Brands need to understand the value this type of model can create and should embrace its approach to be successful in the future.”

Technology companies have led BrandZ’s Top 100 ever since its first global brand value ranking in 2006, when Microsoft took the top spot. Facebook remained at No.6 while Alibaba overtook Tencent and became the most valuable Chinese brand, moving up to No.7 and growing by 16% in brand value to $131.2 billion. Tencent dropped to No.8 declining by 27% in brand value to $130.9 billion. Instagram, at No.44 with a brand value of $28.2 billion, was the fastest riser, climbing 47 places with a massive a 95% growth in brand value. Lululemon, the yoga-inspired, athletic apparel company, was the second fastest riser with a 77% growth in brand value to $6.92 billion. 

Doreen Wang, Kantar’s Global Head of BrandZ, comments: “Amazon’s phenomenal brand value growth of almost $108 billion in the last year demonstrates how brands are now less anchored to individual categories and regions. The boundaries are blurring as technology fluency allow brands, such as Amazon, Google and Alibaba, to offer a range of services across multiple consumer touchpoints. Using their consumer experience and expertise, these brands are crossing over into the business services sector, creating new opportunities for brand growth. Disruptive ecosystem models are flourishing in regions such as Asia, where consumers are more technology-enabled and where brands are integrating themselves into every aspect of people’s daily lives.”
Other key trends in the 2019 BrandZ study include:

  • Luxury is the fastest growing category (+29%) followed by Retail (+25%).
  • Technology, Finance and Retail categories dominate,accounting for more than two-thirds of the total value of brands.
  • Nine newcomers appear in the Top 100,predominantly driven by Chinese and US technology brands with disruptive business models including Dell Technologies, Xbox, Haier, Meituan and Xiaomi.
  • Asian brands increase their presencewith 15 Chinese, three Indian and one Indonesian brand making the ranking among a total of 23 from the region, including LIC and Tata Consultancy Services.
  • A new generation of brands emerge – GenZ brands (created after 1996) are miles ahead in growth rate as they add more value to the ranking per year of existence – almost four times more than brands created in the millennial era of 1977 to 1995. A total of 23 GenZ brands appear in the Top 100 with an average age of 16 years compared to 18 millennial brands averaging 33 years.

Walmart: Technology is Key

The underlying theme of Walmart’s annual meeting and comments from its CEO Doug McMillan focused on the customer as it has done historically, but also on technology. Walmart has been aggressive, to say the least, in its efforts to invest, improve and develop technology driven initiatives not only ecommerce related, but also store, operations and distribution.

“If I oversimplify our ability to thrive in the future, it comes down to one thing: our ability to solve problems together well enough and fast enough. That was my message today to more than 6,000 associates at our annual associates and shareholders celebration. said Doug McMillon, president and CEO, in his opening remarks. “We’re learning how to work in an agile way, with customer experiences designed thoughtfully from the start, and with technology doing more of the work so our associates can focus on customers and members.”

McMillan highlighted the following:

  • Grocery pickup and delivery.
  • InHome Delivery, which will be available this fall in three cities: Kansas City, Pittsburgh and Vero Beach, Florida.
  • Sam’s Garage. A new app that will enable customers to buy tires in less than five minutes versus more than 30 minutes.
  • For associates, various new apps, new hardware and new forms of automation including pickup towers and floor cleaners, with cameras checking inventory. Our goal is to design tools for associates just as well as we design experiences for customers. And we want our associates to grow and be ready to use them.
  • Various environmental and renewable energy initiatives.

The takeaway here is that McMillian’s comments focused less on price and products, but more on tech-driven projects that reflect Walmart’s underlying strategy to compete with Amazon.

However, that doesn’t mean that Walmart will not continue to deliver low prices and exclusive products because that also remains a critical competitive component.

In addition, Walmart will remain a major retailer for licensed products in key categories including entertainment, sports, and home.