Licensed to sell
Licensing players have to be adaptable to change if they wish to be in the game tomorrow. They might be competing in a cut-throat industry climate and softening US economy, but there are still many opportunities to better serve the licensed apparel consumer. And, as with branding in general, it all comes down to knowing the customer - which doesn't mean delivering what you think they want, but truly knowing what they want - as this article from ABOUT Style's new Global Branding Report explains.
Consolidation appears to be the buzzword of the licensed product industry, and in a short period of time this segment of apparel has changed in much the same way as new millennium business in general.
There has been contraction, merging and partnering, with all eyes focused on finding new and different ways to speak to the consumer. In the case of the licensed product industry, these consumers are the sports fans, the brand loyalists or perhaps trendsetters looking for products with the label of the moment. But they don't just want products with familiar labels - they are looking for brands backed with unparalleled high-level service.
There's another twist too. A major question being debated in the licensed product industry is this: in an era when licensed apparel sales have frequently been flat, how important has it been to grow the non-apparel business? The answer for creative, entrepreneurial apparel manufacturers is to license non-apparel products as part of an overall lifestyle branding strategy, such as designer Kenneth Cole, retailer Banana Republic, sports licensor NASCAR and others.
Combine this cut-throat competitive industry climate with a softening US economy and the licensing players left on the field have to be adaptable to change if they wish to be in the game tomorrow.
“Dominate” appears to be the most accurate description of licensed products in the apparel industry.
More than anything else in a segment of the industry that is ever changing, branded licensed styles continue to dominate. “If you case today's mall scene, many teens are wearing more neutral apparel styles, ie, the brands are less identified than they used to be,” says Michael J Pallerino, co-founder of Sporting Kid and SportsEdge magazines and former editorial director of Sporting Goods Business, Sporting Goods Dealer and SportsTrend magazines.
“While there are subtle differences in brand identification among brands such as Tommy, Abercrombie & Fitch and DKNY, these names are still dominant. On the sports product side, apparel featuring the name of Nike, adidas, Reebok (more on Allen Iverson-inspired looks), and And1 are popular.”
Global produce licenses
In terms of sports product licenses on a global scale, adidas, Nike and Fila products continue to be popular among teens and adults alike. While Nike has worked feverishly to overcome the European dominance of adidas (in footwear and apparel), the “three stripes” look still overshadows the “swoosh.”
This is not to say that there have not been changes in the overall sports licensing industry. For the most part, this market segment has reverted to its roots - the true sports fan, says Pallerino.
“In the height of its market growth, teenagers - who are the real keys to the fashion swings - swarmed all over the licensed look,” he says. “This trend really heightened in the early to mid 1990s, when any apparel featuring the Chicago Bulls, Oakland Raiders, Los Angeles Lakers, etc, dominated the teen look. This shifted to apparel featuring manufacturing brands such as Nike, adidas, Fila, FUBU, etc. Today, the branded look is reflected in styles from Abercrombie & Fitch, Tommy, DKNY, etc. With the ever-changing style preferences of today's teens, looks can change in a moment.”
Who is the licensed product consumer? It is not always an easy generalisation in the case of a brand, but with licensed products, they are much easier to identify. On the licensed side, the true sports fan continues to be the main consumer - especially on the collegiate side. This trend can be validated by watching any US collegiate basketball or football game - rows of fans sport the team colours and logos of their favourite teams.
“Retailers of licensed apparel such as The Pro Image and Fan-A-Mania report that the licensed product industry is showing signs of growth - calling the hardcore fan a steady consumer who is willing to buy products that support their teams,” Pallerino says.
The major sports leagues and associations are working closer than ever with retailers to gauge the wants and needs of today's fan. This working partnership - and their attention to the fans - has helped the licensed industry steer through its recent rough times, he adds.
In the fashion segment, teens continue to hold the key to the future success of this market. Most attribute this power to their high discretionary income. That, combined with their volatile taste, can sink a brand in the blink of an eye.
“Ask any sports product retailer, they'll tell you that when teenagers stopped buying licensed product apparel (as well as athletic footwear styles), it turned the sports product market upside down,” Pallerino says. “You're really not going to find any sports product retailers that believe - or who are waiting - for this side of the business to return.
"A surge in branded apparel - such as apparel sporting Nike, adidas or FUBU logos - helped sports product retailers capture some business. The teen obsession with caps, both branded and team licensed, also helped to score major sales in the sports product sector. But cap styles, much like apparel, can move in and out of fashion with shifting teen tastes.”
Tomorrow's hot looks
And what is likely to be hot with today's teens tomorrow? Today's teens continue to ride on the non-athletic branded styles. Blue jeans slipped back into style, which means as they continue to make their way through the fashion cycle, these looks will take on a new spin from the A&Fs, Tommys, etc, and will stay hot.
“As for the sports licensing side, unless growing music icons like Eminem and Limp Biskit start supporting their favourite teams on MTV, that style will be hard pressed to regain its status among today's fashion circle,” Pallerino says. “And if you talk to sports product retailers, you'll see that they have more than accepted this.”
Movies and music have always been - and will always be - the driving factor of the licensed product industry. A perfect example is that as soon as Limp Biskit wore an off-colour NY Yankees cap on MTV, it became the rage of teens everywhere.
“This was the same back in the early 1990s when the sports licensing look exploded along with the rise of rap,” Pallerino says. “Let's face it: urban kids - who are carrying a lot of discretionary income power these days - are always going to try to imitate the inner city looks.”
What seems to separate the powerhouses from the smaller players is resources, mainly spending capacity. Pallerino strongly believes that marketing power creates successful licensed brands.
“For the perfect example, take Nike's recent commercial, which features both NBA stars and New York City street basketball players, dancing and dribbling to dance-inspired music,” he says. “This hits right at the heart of both the inner city customer and urban customer, who has always been driven by what's hot in the inner city. The commercial is so popular that it is not only selling shoes and apparel, but videos, too. There is also a rumour of a Broadway play. Now that's marketing brilliance.”
There are still many opportunities to better serve the licensed apparel consumer. Just as in branding in general, it all comes down to knowing the consumer. And that doesn't mean delivering what you think they want, but truly knowing what they want.
More than ever, retailers, manufacturers, licensees and licensers have been working closer together to find out what the consumer wants. Focus groups. Marketing surveys. Getting out and visiting the stores and talking to customers is critical to success.
There really is not a better option than that, Pallerino notes. “The successful brands are those who are in the know.”
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