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When asked about how direct the impact of Covid-19 is on their business, 98% of respondents to The Licensing Letter’s 2019–2020 Salary Survey indicated that there was at least some indirect impact, with 60% reporting that there was a direct impact.
On a scale of 1–5 where 1 is “not at all” and 5 is “direct”, the average respondent reported a 4.3 level of impact. A month previous, the average respondent to TLL’s 2019–2020 Licensing Business Survey reported a 3.8 level of impact when asked the same question.
American executives were more likely to see a direct impact, with 83% of respondents indicating as much compared to just 50% of Western European respondents.
Roughly 84% of all licensees and 81% of licensors indicated that there was a direct impact on their business, compared to 71% of agents who said the same.
Within the U.S., total retail sales dropped 16.4% in April, (versus a 12.3% expected decline), after falling 8.3% in March, according to the U.S. Census Bureau. Clothing and accessories stores saw a massive -78.8% decline in April, followed by electronics and appliances retailers (-60.6%), furniture and home furnishing stores (-58.7%), sporting goods/hobby/musical stores (-38%), food and beverage stores (-13.1%), and other miscellaneous retailers (-24.7%). Consumer spending through non-store retailers, including ecommerce, rose only 8.4% in the same month.
The drop in licensed retail sales was exponentially steeper, according to Salary Survey respondents. When asked what impact Covid-19 would have on their business in 2020, 83% predicted a decline in sales, 5% an increase, and 12% were not sure. The average drop in licensed retail sales amongst those who predicted a decline was -43%, with responses ranging from -20% to -80%.
Americans were more varied in their responses, with 80% predicting a decline and 7% an increase, compared to Western Europeans (91% versus 0%). However, Americans were also more pessimistic about the impact of Covid-19 on their business, with an average predicted -45% dip in licensed retail sales compared to the relatively more optimistic drop of -33% in Western Europe.
Licensees were the only respondents who predicted an increase in business, with 14% of the cohort stating as much.
Notes: Numbers may not add up exactly due to rounding. *Total average calculated including the New England, Midwest, and Southwest/Rocky Mountain regions (not broken out separately due to insufficient data). †Total average includes Asia and Latin America. | |||||||||
Territory | Percentage Change | ||||||||
---|---|---|---|---|---|---|---|---|---|
U.S.* | -45% | ||||||||
West Coast | -48% | ||||||||
Mid-Atlantic | -43% | ||||||||
Southeast | -58% | ||||||||
Western Europe | -33% | ||||||||
Worldwide† | -43% |
Note that responses to this year’s survey were collected through the month of April, before the first hotspots in Western Europe began large-scale recovery and just on the cusp of the worst impact in major U.S. metropolitan areas. As a result, Western Europeans reported higher levels of personal stress than their counterparts across the pond. Despite reporting higher stress levels, Western Europeans predicted that there would be less negative impacts on their business (specifically, licensed sales) and reported less direct impact on their livelihoods (such as pay cuts and terminations) than did Americans.
As a result of Covid-19, roughly 84% of respondents stated that they were working from home, 25% that they had reduced working hours, 14% that a freeze or stay was placed on new business, 8% that furloughs were instituted, 3% that their workplace had layoffs, 3% that a hiring freeze was placed, 2% that they had pay cuts, and 5% that there were no changes at all. A month earlier, 76% of licensing executives had indicated that their company or division had taken some action in response to Covid-19—of those, 67% said that they were working from home. An additional 14% of respondents to the original question said that no action was taken, while 10% were not sure.
There were wide disparities between American and Western European respondents as to steps taken by their employer in response to Covid-19. Most Western European executives were working from home (92%), 25% reported reduced working hours, 8% that there was a stay on new business, and another 8% that furloughs were instituted for some employees. No respondent from Western Europe indicated that their company or division was instituting layoffs, hiring freezes, or pay cuts.
In contrast, only 53% of American respondents were working from home and just 16% stated that their working hours had been reduced, with 5% reporting furloughs. Despite fewer changes in the workplace, a higher percentage reported a freeze on new business (11%), hiring freezes (3%), layoffs (3%), and pay cuts (1%). Respondents based on the West Coast were more likely to report reduced working hours (21% of executives from that region, compared to 14% in the Southeast and 11% in the Mid-Atlantic). Mid-Atlantic professionals were the most likely to see layoffs (11% of that cohort).
Agents were the most likely group to indicate that there were no changes in their business (10% of agents compared to 3% of licensees and no licensors) and that there was no change in working hours (only 10% stated that hours were reduced, compared to 17% of licensors and 16% of licensees).
Surprisingly, agents were also the most likely to have a freeze on new business (20%) compared to licensees (16%) and licensors (7%). Licensors were the most likely to work from home (65%) followed by agents (60%) and licensees (53%). Licensees were the only cohort to see layoffs (5%) and pay cuts (3%), although licensors were more likely to institute furloughs (7% versus 5% of licensees).
When asked about their personal level of stress related to the effects of Covid-19, 85% of licensing executives stated that they were at least “somewhat stressed” and just 3% that they were “not at all” worried. On a scale of 1–5 where 1 is “not at all” and 5 is “very” stressed, the average respondent clocked in at a 3.6 stress level. This is compared to an average stress level of 3.7 for respondents to TLL’s 2019–2020 Licensing Business Survey, which was administered a month earlier.
Nearly half of Western Europeans reported the highest value of stress, with 45% stating that they were “very” stressed. Just 24% of American executives said the same. Executives based in the Mid-Atlantic were the least likely to be very stressed (4 or 5 on a scale of 5) with 40% reporting higher levels of stress compared to executives based in the West Coast (67%) and Southeast (62%) regions.
Despite the fact that as a group, agents predicted fewer impacts on their business and saw less disruption in their workplace, they also experienced the highest levels of stress related to Covid-19. Almost two-thirds, or 63%, of agents said that they were very stressed (4 or 5 on a scale of 5) compared to 57% of licensees and 42% of licensors.
Licensees were the most likely to state that they were “not at all” stressed (10%), while licensors were the most likely to state that they were only “somewhat” stressed (45%).
Numbers may not add up exactly due to rounding. *Total average calculated including the New England, Midwest, and Southwest/Rocky Mountain regions (not broken out separately due to insufficient data). ?Total average includes Asia and Latin America. | |||||||||
Territory | Working from home | Reduced | Freeze/stay on new business | Furloughs | Layoffs | Hiring freezes | Pay cuts | No changes | |
---|---|---|---|---|---|---|---|---|---|
U.S.* | 53% | 16% | 11% | 5% | 3% | 3% | 1% | 4% | |
West Coast | 57% | 21% | 7% | 7% | 0% | 0% | 0% | 7% | |
Mid-Atlantic | 50% | 11% | 11% | 6% | 11% | 0% | 6% | 6% | |
Southeast | 52% | 14% | 19% | 5% | 0% | 5% | 0% | 5% | |
Western Europe | 92% | 25% | 8% | 8% | 0% | 0% | 0% | 0% | |
Worldwide† | 84% | 25% | 14% | 8% | 3% | 3% | 2% | 5% |