According to The Licensing Letter’s Annual Licensing Business Survey, over 66% of licensing companies experienced growth in retail sales in 2016. In contrast, 21% of respondents reported declining sales, and 12% had flat growth. This trend largely continues from last year, when the number of responses reporting positive growth outnumbered those reporting no or declining growth by a 2:1 ratio.
Coming off a good year—and despite concerns about ecommerce, global political controversies, and tough competition for retail space—licensing executives are hopeful for 2017. Almost 67% of Survey respondents expect their business to grow—with almost half looking at growth of 20% or higher. Last year, only 56% were optimistic about their future, with nearly 66% predicting that growth would exceed 10%.
In contrast, the pessimists were evenly split as to how 2017 would go; 22% predicted flat growth, and the same number predicted declines (the most drastic of which was 20%). Predictions were more muted last year, with 66% saying that they expected sales to be flat for 2016.
Top Trends for 2017
Much of the opportunities and concerns licensing executives expect to see this year are extensions of the same trends we observed last year, but Survey respondents have grown more confident about their ability to address these challenges. The ability of retailers and brands to adapt to ecommerce remains a top concern, but the mania from previous years has largely disappeared. The general consensus? Retail won’t entirely disappear, but for companies to survive, they must be nimble and diverse. Most executives have connected to this phenomena is shrinking shelf space among chain retailers—this remains a top concern for licensing executives as retailers remain risk-adverse. Star Wars, Despicable Me, superheros, and other A-list brands continue to dominate shelves as buyers look for the safest bet. In the long run, this might be to their detriment as they ultimately fail to differentiate themselves among shoppers.
Advancements in product design and increased interest in ethical and sustainable products are one area that brands can use to separate themselves from the pack. And while it’s becoming practically impossible to shift manufacturing stateside, many companies are working to earn a “Made in America” label as well by moving assembly or design to the U.S. in response to consumer concerns.
Opportunities for expansion include the Olympics—the 2018 Winter Olympics will be held in PyeongChang and the 2020 Summer Olympics are to be held in Tokyo. While the reception for the Winter games is chilly, excitement for the Summer games is running high and executives are eager to capitalize on the “feel good” mood that’s always generated by the games.
As for political controversies, it’s not all centered around Agent Orange. This year is a critical political turning point for many European countries, who are seeing a rise in populist conservative leaders. South Korea is the center of its own political controversies as the Asian nation enjoys its own election season. To sum it up, one of the most worrying threats to the worldwide economy today are isolationist policies by governments who are growing less eager to buy and spend with their neighbors.