Licensee Feedback

Crisis Management

Inset: Piggybanks will be raided as the costof-living crisis squeezes.

Inset: Ruth Golighty is bringing her retail nous to Blues in her new role. Below: An outfit from Blues’ That’s not my… range that it developed for George@Asda.

With inflation now at over 10%, energy costs and food bills sky rocketing, the cost-of-living crisis is intensifying.

LSB asked a selection of licensees what impact this is likely to have on the licensing industry as well as what positives the sector has in its favour in the run up to Q4.

Ruth Golightly, sales and design director for Blues Nightwear (part of Blues Group)

“The challenging times we face of course should be a consideration for all companies involved in licensed products. Smarter businesses will thrive and not just survive by navigating and adapting their strategies aligned to retailers and customers wants (and needs). With household incomes being tight, many families will be carefully considering how and where they spend their disposable income with licensed products one of these considerations. I am a great believer of looking to draw out opportunities wherever there is a challenge, and ensuring products are not only of optimum value, but also have new innovation, making licensed product stand out. Products that provide a solution to customer needs as well as ease of purchase should then remain of uppermost importance both for licensees and retailers. As we move into the last quarter of the year insight suggests that buying patterns will change into

more family and experiential

purchases. This opens up a whole world of opportunity and possibility for retailers and licensees to partner together to create 'lifestyle' moments to drive sales into licensed product creating easy, fun, joyful, nostalgic and practical product solutions for families’ consideration.”

Left: Martin Withers. Below: One of Pyramid’s VHS notebooks.

Martin Withers, sales director of Pyramid International

“Clearly everyone is going to be worried about rising prices and looming huge energy bills. It must have an impact on what people have available to spend. I think the industry needs to be mindful that this will hit a larger proportion of the population than other crises/recessions and the previously more comfortable middle section of wage earners is the one that arguably will be the most impacted and squeezed. Retailers may be tempted to look more at generic offerings to save some costs, but I firmly believe consumers will shop loved characters and franchises that make them feel good and part of a tribe. A generic butterfly design just doesn’t cut it vs being part of the Hellfire Club from Stranger Things.

I think we all need to be mindful of our value proposition. Birthdays and gift events will still happen, but consumers will be looking for something that delivers something meaningful without it costing the earth. Pyramid is well placed with a wide blend of price points across our categories so we have something for everyone. We have lots of newness coming which will bring excitement to retail shelves and we have worked closely with key retailers to be part of some major Q4 activations which will tempt consumers to spend those gifting pounds with us. I’m sure the licensing content will keep coming and there is so much to be excited about from gaming, movies, streaming and nostalgia brands which people look to in times of trouble. I’m feeling positive!”

Above: Dreamtex is expecting a good sell through of its Bluey collection. Below: Anthony Duckworth.

Anthony Duckworth, managing director of Dreamtex

“In the short-term, the negative press headlines have certainly had an impact on sales in Q2. Internet sales have seen a slight reduction, although we have seen an increase in more traditional channels of distribution. Through the several recessions that we have seen, licensed products have proved resilient as pester power is still strong in the decision making process of the consumer. The appetite for new TV and characters on various platforms has never been stronger. Therefore, there is wider opportunity across the licensing industry to maximise consumer spending. Inflation will undoubtably have an impact, at least for the next 12 months or so but as retail prices stabilise, good licensed product will still sell. Q3 and Q4 are of course the busiest time for our range of licensed product and we feel confident that the ranges we have here at Dreamtex - for example the England FA and preschool licences, such as Bluey - will see very good sell through this festive season. As we look ahead to 2023 we are seeing base costs stabilising which hopefully will make forecasting somewhat easier than 2022 and we’re excited for the prospects ahead.”

Mark Lindsay, commercial director of Cotton Division

“The cost-of-living crisis will definitely impact the licensing industry in more ways than one. The costs of manufacturing,

materials, freight, petrol,

gas etc will affect our end prices to the retailer which will be passed on to the consumer. The consumer, meanwhile, will also be mindful on how they spend their money while going through this situation. The positives we have in our corner with Q4 fast approaching is we have the FIFA World Cup which will hopefully bring a feelgood factor. We’ve also upped our game in terms of licensed products by thinking outside the box and bringing new innovative products into the licensed market, as well as working with a lot of new brands who are new to licensing, which is a great positive as these brands wouldn’t have looked at exploring this in the past.”

Above: Mark Lindsay. Below: Dan Grant.

Dan Grant, licensing director of Danilo

“Everyone is going through some very tough times at the moment and it’s set to continue for a while yet. Consumers will start making much more calculated decisions over purchases, but that is obviously not specifically on licensed products.

From Danilo’s perspective, greeting cards and gift wrap will hopefully be

less impacted than some categories

as they are lower priced items and consumers will still want to send cards and gifts for birthdays and Christmas. Calendars and diaries may be more impacted where they are purchased as gifts or pick up items. However, many

consumers still see a Above: Strong licensed calendar and diary as an brands, such The Gruffalo, which appears here on a essential item each year, so I Danilo sound and motion card, will continue to resonate would expect that to with the consumer especially continue to a certain level, when times are tough. even during these difficult times. The biggest positive that licensed brands have is the marketing support that goes alongside them, to promote the brands and make them a desired item. This is especially important with kids, when they are creating their Christmas lists and specifying the branded items they want. I believe that consumer and retailers also value the strong brands and many consumers will rather invest in a higher quality branded item rather than something that may be at a lower price point and potentially of a poorer quality. So, the key thing will be carefully made decisions on purchases.”

Ashley Holman, md of ToyTopic Group

“Invariably as the crisis deepens as we enter winter and the allimportant Christmas trading period, the vast majority of the population will simply have less disposable income to spend on things like licensed toys. People will therefore naturally trade down price points, look for discounts even more and reduce their overall spend accordingly. It has always been important to show value for money in the ranges offered, but it will be crucial now for sure. Big ticket items such as house moves, new cars, holidays are normally the first things people reduce down spend on and the hope is that people will continue smaller purchases to bring a little joy at an otherwise gloomy time period. By offering exciting brands at a value proposition we hope to continue to succeed the back half of this year.”

Above: Ashley Holman.

Left: ToyTopic’s Hasbro brands outdoor games are a lot of fun, something everyone needs.

Valentin Ortiz, ceo of Storline

“In our industry raw prices have increased hugely - around 15%-20% - during the pandemic with no signs of them reducing. The current factors are more related to electricity, water supplies etc… that we have not passed to customers, though if the situation continues past Q4 we will need to impose price rises. We have been in the industry for 53 years and have to say that licensing is a security space during a time of crisis. Throughout 2021 and 2022 our sales actually showed growth. Licensed promotions bring consumers into retail and going by our current figures, we have a positive view for 2023.”

Livy Coare, licensing and marketing manager of H&A

“The licensed kids market continues to be a positive space for us and we expect it to stay that way. Our price points in the toiletries category are affordable and accessible, providing an opportunity for fans to engage with their favourite characters. The fun and familiarity of established brands resonates even more during challenging times.”

Right: Ben Lowe. Far right: Hey Duggee socks for all the family from Roy’s Boys.

Ben Lowe, director of Roy Lowe and Sons

“The cost-of-living crisis is going to have a tremendous impact on the whole country across many industries - unfortunately for the licensing industry being heavily weighted towards the Christmas season, this year it will come just

after families realise the full extent of the

heating bill increases. The power of much-loved brands has always stood the test of time, as families look for comfort, familiarity and joy in tough times. Hopefully retailers will all still buy into the power of stories rather than opting for non-licensed alternatives that may seem to offer a higher margin at the front end, but perhaps not achieve the sell-through and overall customer value and experience this Christmas. On Roy’s Boys, we remain optimistic that families will still want to enjoy Christmas festivities, of which our matching family socks and pyjamas are becoming quite the staple in a growing number of households.”

Left: Livy Coare. Below: The Spider-Man gift range from H&A.

Phil Ratcliffe, joint md of MV Sports

“There is evidence to suggest that although parents cut back on discretionary expenditure during inflationary times the diminution is less when it comes to spending on their children. Notwithstanding this, there will be some reduction in expenditure as families tighten their collective belts. Licences, especially classic properties, should be further protected as they inspire trust and confidence in consumers and the fact that licensed sales in certain sectors are at their highest percentage share in over a decade seems to support the theory.”