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Licensed Ecommerce Sales Jump 3.5%, Outpacing B&M Channel Growth in 2019

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Licensed retail sales in the U.S. and Canada were up 3.2% in 2019, with ecommerce sales outpacing the industry average at 3.5% growth and sales through brick and mortar channels up 3.0% per TLL’s Annual Licensing Business Survey. Of the total $114.0 billion in licensed retail sales estimated in the territory, sales attributable to brick and mortar channels totaled $98.4 billion and those through ecommerce $14.2 billion.

Retailer bankruptcies continued throughout 2019 as consumers continued to gravitate towards the convenience of ecommerce and, to a lesser extent, TV shopping. Licensed retail sales through ecommerce channels made up 12.5% share of all sales in the U.S. and Canada in 2019, up 0.1 percentage points from the previous year.

Brick and mortar sales, on the other hand, dropped 0.1 percentage points to reach 86.3% share. Sales through other channels, such as TV shopping and mail order, did not decline from the 1.2% share of licensed sales held every year since 2017.

Share of Licensed Sales, Brick & Mortar versus Ecommerce, U.S. & Canada, 2019

Notably, pop-up formats (considered under “other” sales) are expected to grow in share of licensed sales for 2019 and to exponentially jump in dollar growth for 2020 due to a shift in physical retailing as permanent storefronts continue to grow out of fashion. Channel sales continued to grow throughout 2012 as pop-ups became more accepted by commercial retail lessors, traditional retailers sought cost-effective methods to test new formats and store concepts, and ecommerce-based stores experimented with physical storefronts. New factors speeding up this trend in 2020 include retailers following consumers bunkering down during lockdown, such as from Manhattan to the Hamptons in New York City, or otherwise seeking to comply with social distancing protocols, such as by installing pick-up sites and minute stores outfitted with mobile payment options in parking lots.

The winners among brick and mortar channels were those retailers which could offer exceptional value in one of two ways—either by offering low prices, as did discount, mass, dollar, value, and off-price retailers, or by offering unique in-store experiences and strong customer service. Most mid-range retailers in the department store and specialty channels struggled between providing either, but those that did were rewarded by licensed sales growth outpacing even the ecommerce channel as a whole.

Retail Sales of Licensed Merchandise, by Distribution Channel, U.S. & Canada, 2019

It should be noted that although ecommerce is the fastest-growing distribution channel, it is not the most popular. Estimates of ecommerce retail sales as a share of total sales in the U.S. range from 10.9% to 16.0% in 2019 (estimates based on U.S. Census Bureau data from FRED and Digital Commerce, respectively).

Historically, total generic sales have outpaced licensed sales through ecommerce channels. Licensors had held back on selling goods through online channels because of concern over their lack of control over pricing and counterfeit products as well as backlash from established brick and mortar partners.

Even as online retailers improved their reputation with increased safeguards, and traditional retailers began to see the benefits of an omnichannel presence, many retailers still held back on investing in online selling. Some, like high fashion Chanel, were reluctant to risk diluting their brand image. Others, like specialty retailer Toys’R’Us, were wary of the extraordinary expense involved in launching an online enterprise. For some retailers, that delay spelled disaster as consumer expectations rapidly shifted and they struggled to play catch-up.

These historic trends continue to play out today. Interestingly, licensors reported nearly twice the rate of growth in licensed retail sales through mass/discount channels as compared to licensees. And while licensors largely reported flat to no growth through department and mid-tier retailers, licensees saw dramatic double-digit growth through the same channel.

Share of Retail Sales of Licensed Merchandise, by Distribution Channel, U.S. & Canada, 2019

Entertainment/Character Lead Licensed Ecommerce Sales

Entertainment and character brands edged out other major property types for the most dollar value with $2.4 billion in licensed sales, or 16.7% share of sales through ecommerce channels.

Corporate trademarks and brands follow with 16.2% share, or $2.3 billion. Sports- and fashion-based brands count $2.0 billion in sales each, or 14.3% and 13.8% share, respectively. Art rounds out the five major property types with just over $760 million in sales, or 5.4% share.

Other property types take up 33.6% share of licensed sales through ecommerce channels in the U.S. and Canada.

Corporate TM/Brands Dominate B&M Channels

Licensed corporate trademark/brand-based goods make up the largest single-category share of sales made through brick and mortar channels at $28.5 billion in sales, or 28.9% share. The property type was also the fastest-growing among the five major types TLL tracks, with sales up 4.2% compared to the previous year. Discounters make up the largest share of retail sales channel sales for the property type, with sales up 4.2% (or $447 million). Sales through dealers, wholesalers, and distributors were up 4.4%, the fastest rate of growth of any brick and mortar sales channel since 2016.

Fashion-based brand sales were relatively slow with just 2.4% growth, reaching $20.0 billion in sales through brick and mortar to make up 20.4% share. Discounters and value channels make up 44.2% of all brick and mortar sales for the property type, followed by specialty stores (29.1%) and department and mid-tier stores (26.8%). The fastest-growing brick and mortar category was speciality stores, up 2.6%, or $148 million, in 2019.

Sports sales totaled $14.3 billion, or 14.5% share of licensed sales through brick and mortar channels in the U.S. and Canada. The property type jumped 3.2%, just barely outpacing overall brick and mortar growth of 3.1% in 2019. The largest brick and mortar channels through which sports-based licensed goods are sold were discounters (42.7% share) and specialty stores (38.0%). The fastest growing channel in 2019 however, was institutional and venue-based retailers through which sales jumped 3.6%, or $49 million.

Entertainment brands make up 10.3% of brick and mortar sales, up 3.6% in 2019 to reach $10.2 billion in licensed sales. Over half of licensed brick and mortar sales are through discounters (56.3%), through which sales jumped 3.6%, or $215 million. In 2019 there was a three-way tie for the fastest growing brick and mortar channel, with the distinction of a 3.7% jump in sales shared by speciality, food and drug, and department/mid-tier channels.

Brick and mortar sales of licensed products based on art brands were up 3.0% to reach $5.3 billion, with the property type making up 5.4% share. Brick and mortar sales are evenly split between specialty stores and discounters, which make up 40.2% share each of licensed sales. In 2019, art was the only major property type in which sales through a brick and mortar channel were faster than through ecommerce—licensed sales through drug, variety, and convenience stores were up 3.5%, compared to 3.4% growth through ecommerce channels.

Outside of the five major property types, other brands constitute 40.9% share of licensed sales through brick and mortar channels. In 2017 and 2018 most sales growth was generated by the five major property types, with other brands growing only by 0.1% and 0.5%, respectively. In 2019, growth was stronger at 2.3% despite lagging behind the channel-wide average of 3.1% growth.

DTR Deals Remain Consistent

Within the U.S. and Canada, 44% of respondents to TLL’s Annual Survey reported that the incidence of direct-to-retail (DTR) deals increased compared to the previous year. Thirteen percent reported that they decreased, and another 44% that they stayed the same.

Representative Retail Stores by Distribution Channel

Mass/Discount/Club/Big Box: BJ’s, Costco, Kmart, Sam’s, Target, Walmart

Specialty Stores: Ace Hardware, Barnes & Noble, Bass Pro, Bed Bath & Beyond, Best Buy, Cabela’s, Cracker Barrel, Dick’s, Forever 21, GameStop, H&M, Home Depot, Lowe’s, Michaels, Modell’s, museum stores, PetSmart, Sherwin-Williams, Staples, Zara

Department Stores & Mid-tier: Bloomingdale’s, Dillard’s, JCPenney, Kohl’s, Macy’s, Neiman-Marcus, Sears

Grocery and Drug: Aldi, CVS Caremark, Giant Eagle, Kroger, Meijer, Publix, RiteAid, Safeway, ShopRite, Stop & Shop, Walgreens, Whole Foods

Dollar/Value/Off-Price: Amazing Savings, Big Lots, Dollar General, Family Dollar, Ross Stores, Save Mart, Supervalu, TJ Maxx

Online/Ecommerce: Amazon, Café Press, eBay, Fanatics, Gilt, Zappos, Zazzle

Variety and Convenience: 7-Eleven, Circle K, Speedway

TV Shopping: HSN, QVC, ShopHQ

Mail Order: Oriental Trading, Signals

Other: Kiosks, on-site, vending, and others.


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