TOTAL LICENSING By Martin Brochstein SVP Industry Relations and Information Licensing International www.licensinginternational. org
A Transformed Sense of ‘Normal’
For the licensing business – as well as for the consumer products and services business in general – the outlook is generally positive. Vaccination rates in many (if not most) major economies around the globe are steadily increasing, government-mandated health restrictions are being relaxed, and businesses such as physical retail, cinemas, theme parks and in-person attendance at sports events is moving toward “normalcy.” But the definition of “normalcy” may have been transformed in ways both large and small, and companies’ ability to recognize those changes and the pace at which they are being adopted, and to factor them into their businesses will be a key determinant of success.
The pace and shape of recovery continues to be uneven around the world, essentially tracking vaccination rates. China’s economy was the first to show signs of significant bounceback, growing 18.3% (compared to the yearearlier period) in the first three months of 2021, the fastest rate since records began in the early 1990s. That’s not surprising, given that China entered lockdown before the rest of the world. In Japan, on the other hand, where vaccination rates stood at about 10% of the population in late June, retail restrictions remained in place, and the staging of the Olympic Games in July-August will be in front of virtually empty stadiums and arenas, and no foreigners aside from athletes and official delegations permitted to enter the country. In the U.S., discretionary retail sales revenue in the U.S in 2021 grew 17% through May 8, according to The NPD Group, which also points out that
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that’s an 18% jump over 2019. Growth in the U.S. economy, it says, “continues to rise as vaccination rates increase and as more consumers, as well as businesses and schools, begin to map their post-pandemic paths forward.”
That’s a faster bounceback than some had envisioned. Said one U.S. licensor in late 2020: “I don’t expect 2021 to be a magic turnaround year, I think it is going to take more time to get things back to a new normal. My biggest question is, when will people go to live events again?” That question was slowly being answered in the U.S. in June, with concerts beginning to be staged, sporting events played in front of crowds (though with restrictions in
place in some parts of the country), cinema attendance slowly rising, and theme parks reopening. Hopefully, writes one U.S.-based brand owner – who forecasts a “continued growth trajectory” – there will be “less disruption because we know better what to expect with COVID, (and have instituted) better supply change management. I hope we can get back to live trade shows; I believe a lot of the networking is lost in translation at virtuals.” But even among any dour forecasts and predictions, there’s an overriding sense of cautious optimism among most of the respondents. “We are anticipating conservative growth
through 2021 and working to manage everyone’s expectations for increased revenues,” writes one U.S.-based agent. “Hopefully the same or a little better than this year,” says another U.S. agent about 2021. “We are more than holding our own, which is great!” If there’s a single key word that’s implicit in many of the comments and insights contained in this report, it’s “comfort.” Office-goers suddenly working from home dressed for comfort in 2020; will that remain a factor in their apparel choices even as they return to offices? The year 2020, with lives upended in so many ways, was characterized by a notable uptick for many classic brands as consumers gravitated toward the familiar. And comfort is an aspect of a phenomenon that came to the fore in recent conversations with Licensing International Managing Directors around the globe. Several of them say that people at all levels of the licensing food chain are “looking inward on brands” – seeking names and suppliers from within their own borders and cultures. For business people, that may be rooted in ongoing supply chain issues -- “Retailers are asking for suppliers from within our country or within Europe,” said one -- but there’s a sense that it’s more fundamental than that. It bears watching whether that’s a short-term reaction to the troubled times we’ve lived through, or a more fundamental change. This has been excerpted from the Licensing International White Paper, Looking Forward: The State of the Licensing Business, available at: www.licensinginternational.org free to members.
