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Retail Sales of Licensed Goods in U.S./Canada Grow 2.5% in 2014: Entertainment, Sports, Food Make Biggest Gains

Retail sales of licensed goods in the U.S. and Canada reached $99.9 billion in 2014, according to The Licensing Letter’s Annual Licensing Business Survey. That’s a 2.5% increase over the $97.5 billion in retail licensed goods sales generated in 2013.

2014 is the fourth positive growth year in a row for the licensing business in the U.S. and Canada. The 2.5% rate of increase in licensed sales was slightly higher than 2013’s 2.2% growth rate and in line with the overall performance of the North American economy—in 2014, U.S. GDP grew 2.4% and Canadian GDP grew 2.5%.

“Long-term, licensing is still recovering from the great recession of 2008. Although nothing dramatic, 2014 was another step in that direction,” according to one respondent. “The generally good economy and lower gas prices made consumers feel more confident and willing to spend extra for brands and enabled the business to finish the year strong,” he added. “Overall, the licensing climate has improved with the economy,” said a licensing agent.

“Frozen” Drives Growth in Entertainment/Character

At 6%, entertainment/character had the highest growth rate of any property type. This is significant considering that entertainment/ character licensing had declined every year since the great recession of 2008. In 2013, the sector turned around with 3.6% growth. This year, entertainment continued the momentum.

Of course, the headline story in entertainment and perhaps all of licensing in 2014 was “Frozen.” “The Frozen effect lifted licensing,” said one licensor. Various reports put retail sales of licensed Frozen merchandise in 2014 at between $800 million and “roughly $1 billion,” the latter according to Disney, though Disney did not specify whether that figure is for U.S./ Canada or worldwide. Regardless, respondents agreed that the property had a very strong impact in categories including toys, apparel, gifts/novelties, books and others.

For many in the different sectors dominated by Frozen, having Frozen meant a good 2014 and not having Frozen meant a bad year.

But Frozen was a double-edged sword that crowded out existing brands like Hello Kitty and even Disney’s own Princesses and Disney Junior characters Sofia the First and Doc McStuffins, among others, that had been on strong growth trajectories at the beginning of the year. For many in the different sectors dominated by Frozen, having Frozen meant a good 2014 and not having Frozen meant a bad year.

Still, it would be a mistake to overstate the significance of the Frozen effect—domination of entertainment/character licensing by superstar properties owned by Disney, Nickelodeon, Sanrio and others is nothing new. And, “as potent as Frozen was, Marvel and Teenage Mutant Ninja Turtles might have done just as well if not better in 2014,” according to one licensing agent. “While the A properties keep sailing along,” another licensing agent explains, “the B properties get harder and the C properties become just about impossible to sell.”

Key Trends in Licensed Properties

Sports had the second highest increase in sales by property type at 5%, nearly double the 2.8% increase of 2013. At $14.1 billion, sports accounted for 14.1% of all retail sales of licensed goods. The NFL had a strong year. While hurting the NFL’s image, the Ray Rice and Adrian Petersen domestic abuse scandals harmed neither the NFL’s popularity nor its licensed sales. “The year started strong with the Denver-Seattle Super Bowl and momentum continued through the year,” notes one licensee. All three legs of the NFL’s licensed products triad—apparel, hard lines and even electronic games that had been reported to be soft at the start of the year—were up. “The obituary of the console game turned out to be premature,” chuckled one licensee, noting the four new NFL games successfully launched for PS4 and Xbox systems during the year. “For the first time in years sales of men’s jersey and NFL apparel grew faster than women’s,” he added.

At 3.4%, Fashion was one of only two other property types to post gains above the overall licensing business average of 2.5% in 2014. Although it constitutes 20.3% of sales, second only to corporate/trademark, the fashion sector is getting tougher each year. “People just aren’t as motivated by fashion labels as they were before the recession,” according to one licensing agent.

Echoing themes we heard over and over again in all sectors (and that we’ve been hearing for at least a decade), the glut of licensed brands and shrinkage of available retail space are making for intense competition. As one licensing agent explained, “to get on the floor, you need to be either an established label like Ralph Lauren, Calvin Klein or Donna Karan or a hot designer like Tory Burch.” As retail space in department, specialty and even “mass stores like JCPenney, which are increasingly focusing on private label and moving away from licensed brands dries up,” more fashion properties are turning to value stores and e-commerce.

At 2.8%, Traditional Toys and Games was the other property type to increase over the 2.5% industry average. But the gain was well below 2013’s 4.3% growth.

Although the Celebrities segment was up 1.8% overall, it was a mixed bag. Entertainers/models increased 2.5%, even though one licensing agency described the sector as “saturated, fragmented and tired.” Although “they keep coming out of the woodwork, chefs and home celebrities have definitely cooled off,” growing just 1%. The biggest growth area is digital celebrities like fashion vlogger Bethany Mota, whose new retail line for mall store Aeropostale proved popular. In fact, while the individual licensing programs for digital celebrities aren’t huge, the rapidly growing number of celebrities emerging from Youtube, Instagram, Pinterest, the blogosphere, and other sources has driven a rise of 3.0% for this portion of the celebrity sector, albeit from a small base.

Publishing grew 1.8%. The growth in this sector was fueled by the newspaper/magazines segment and exemplified by the development of lifestyle licensing programs built around magazine properties including Seventeen (Hearst exclusive to Sears for products for teens and millennials), and on-going programs such as the one for Better Homes and Gardens (Meredith with Walmart, focusing on outdoor and gardening products). “These deals represent the wave of the future for the magazine licensing business,” says one licensing agent. On the downside, licensed sales of branded book properties fell 1.5%, despite the strong performance of young reader programs like Eric Carle.

Other property types that had flat or down years in 2014:

  • Sales of licensed Corporate Trademark property goods grew 2.0%, as compared to 0.8% in 2013, thanks to strong sales in food/beverages (3.5%), restaurants (3.0%) and electronics/technology (2.0%). “We did better than last year but not as well as 2012,” noted one licensing agent in the sector.
  • Video Games/Interactive/Online fell 4% due to disappointing sales of Angry Birds (Rovio) branded goods. “Angry Birds is basically the entire video games property category at this point,” according to a consultant. “Take it out of the equation and the segment would have actually increased in 2014 thanks to licensed sales of Call of Duty, Halo and Minecraft merchandise, whose programs are relatively small.”
  • Music, traditionally an “evergreen” category, fell 2.5% in 2014. Don’t blame classic rock, “which stayed steady as always,” according to one licensing agent. The decline was largely due to fall-off of younger acts that generated strong licensed sales over the last two years—especially One Direction and Justin Bieber. Although new acts will eventually take their place as they always do, rising stars Austin Mahone, 5 Seconds of Summer and Fifth Harmony were unable to fill the retail void in 2014.
  • After gaining 1.3% in 2013, Estates sales fell 1.0% in 2014. As in other sectors, retail success in estates was largely limited to a couple of dominant properties, notably Marilyn Monroe and Bob Marley. “The Marilyn business is incredibly successful in reinventing itself and staying fresh and in the public eye,” notes one licensing consultant, citing “Lil’ Marilyn” and the Norma Jean promotional campaign for Maybelline. Bob Marley, meanwhile, launched a new line of hemp apparel and announced new food and even marijuana lines for 2015.

Retail Sales of Licensed Merchandise,
by Property Type, 2013–2014
Note: Numbers may not add up exactly due to rounding.
(Figures in Millions)
Property Type Retail Sales, 2014 Retail Sales, 2013 Change, 2013-2014 Share of Market, 2014
Art $5,548 $5,641 -1.6% 5.6%
Art and Artists $4,147 $4,254 -2.5% 4.2%
Museums $1,401 $1,387 1.0% 1.4%
Celebrities $5,541 $5,444 1.8% 5.5%
Entertainers/Models $2,540 $2,490 2.0% 2.5%
Chefs/Home-Related $2,103 $2,082 1.0% 2.1%
Digital/Other $899 $873 3.0% 0.9%
Collegiate $3,345 $3,430 -2.5% 3.3%
Entertainment $10,998 $10,376 6.0% 11.0%
Estates $2,251 $2,274 -1.0% 2.3%
Fashion $20,316 $19,654 3.4% 20.3%
Apparel $17,277 $16,612 4.0% 17.3%
Footwear $2,393 $2,418 -1.0% 2.4%
Home $646 $624 3.5% 0.6%
Music $2,492 $2,556 -2.5% 2.5%
Non-profit $1,258 $1,277 -1.5% 1.3%
Publishing $4,465 $4,388 1.8% 4.5%
Books $505 $513 -1.5% 0.5%
Newspapers/Magazines $2,714 $2,622 3.5% 2.7%
Comic Books/Strips $1,247 $1,253 -0.5% 1.2%
Sports $14,109 $13,437 5.0% 14.1%
Trademarks/Brands $26,850 $26,314 2.0% 26.9%
Automotive/Motor Vehicle $4,018 $3,920 2.5% 4.0%
Food/Beverage $7,268 $7,022 3.5% 7.3%
Restaurants $4,557 $4,424 3.0% 4.6%
Sporting Goods $1,317 $1,310 0.5% 1.3%
Hardware, Appliance and Tool $2,722 $2,681 1.5% 2.7%
Home-related $378 $374 1.0% 0.4%
Electronics/Technology $3,125 $3,063 2.0% 3.1%
Electronic Media $216 $220 -1.5% 0.2%
Other $3,249 $3,299 -1.5% 3.3%
Traditional Toys/Games $1,350 $1,313 2.8% 1.4%
Videogames/Interactive/Online $574 $598 -4.0% 0.6%
Other $773 $769 0.5% 0.8%
TOTAL $99,870 $97,471 2.5% 100.0%

Food/Beverage Leads Growth on the Products Side

On the products side, Food/Beverage remained dynamic posting sales increases for the fifth year in a row. The 6.0% gain was the third highest of any product category, behind only Toys/Games and Apparel. “There’s more licensing of non-food brands for food products than ever before,” explains one licensing agent. “It’s not just chefs and restaurants. Entertainment companies and celebrities are now turning to food licensing,” he says, citing new entries into the market from companies like CBS (“Cheers” beer) and celebrities like Justin Timberlake (Sauza 901 tequila for Beam Inc.).

There are also more licensed product offerings in the food and beverage space—everything from soup to coffee to sauces. But the real battlefield is in the frozen food aisle, another licensing agent adds. “Improvements in frozen food technology have improved quality and emboldened restaurants like P.F. Chang’s, TGIF and Steak and Shake to see their brands associated with frozen foods.” And because they’ve been selling so well, retailers like Target and Walmart are dedicating more space to licensed frozen foods.

Key Trends in Other Licensed Products

Other licensed product categories that did well in 2014 include:

  • Toys/Games was the fastest growing product category posting a 7% increase (more than double last year’s 3.2% increase). The NPD Group estimated that sales of licensed toys outpaced overall toy sales in 2014 almost 2 to 1 (7% v. 4%). Of course, the Frozen factor had a lot to do with that, generating $531 million in licensed toy sales with more than 300 different items on store shelves, according NPD estimates. But other big entertainment properties also had huge toy sales in 2014, including Spider-Man, Ninja Turtles, Batman and Power Rangers.
  • Apparel was next with a 6.5% increase, due in part to strong sales of licensed men’s products. Between 2010 and 2015, online sales of menswear have grown an average of 17% per year, higher than any other retail category, according to research firm IbisWorld.
  • Sporting Goods increased 4.5%, thanks to surging sales of sports apparel. “Branded yoga suits, sweats, socks and headphones are everywhere; they’ve gone from fitness equipment to wardrobe staples,” notes one licensee. However, fitness equipment, gear and hard goods were mostly flat or down, other than hunting, fishing and outdoor equipment.
  • Hardware/Paint grew 3.0%. According to a licensing agent in the space, “2014 was a big year for the do-ityourselfers.” Sales of licensed tools were up; and the few paint brands that were able to reach the shelf, like HGTV, were huge sellers.
  • Accessories were up 2.7%. As competition for retail shelf space among apparel products intensifies, fashion houses are directing more licensing effort toward accessories. “Belts, socks, scarves and such take up less shelf space than apparel,” explains one licensor. Licensed accessory subcategories posting the greatest increase in U.S./Canada sales in 2014 were eyewear (3.5%), jewelry/watches (3.2%) and handbags (3.0%).
  • Automotive Accessories bounced back after 2013’s 5.3% decline by posting a 2.0% gain in 2014. (The reversal was also mirrored on the property side with automotive accessories posting a 2.5% increase after a 2013 decline of 0.6%.) “Customize-your-car shows on TV are fueling the demand for licensed accessories and licensors, including luxury auto brands like Mercedes and companies outside the automotive sector, are supplying the licensed products to satisfy it,” summed up one licensing agent.

Product categories that did poorly in 2014 U.S./Canada sales include:

  • Gifts/Novelties: Alas, not even the Frozen factor could keep sales of licensed products in this category from declining for the fourth year in a row. This year’s 5.0% loss was almost 10% bigger than 2013’s 4.5% decline. “Because it’s so dependent on impulse purchases, decline in foot traffic and growth in DTR and e-sales is killing the gifts industry,” explains one licensee.
  • Videogames/Software, for the second year in a row, had the biggest decrease of any property category, -8.0%. Factors for the continuing decline include the fact that we are in a transition period to the next generation of consoles (although NFL games did just fine with the PS4 and Xbox consoles), the lack of new NCAA titles from EA and growing popularity of lowprice (or free) mobile games and apps.
  • Stationery/Paper declined 3.5%, the sector’s fifth straight negative year. Observers and survey respondents agreed that retail sales of licensed party goods were way down in 2014—although some cited Sesame Street as an exception.

Retail Sales of Licensed Merchandise,
by Product Category, 2013–2014
Note: Numbers may not add up exactly due to rounding.
(Figures in Millions)
Product Category Retail Sales, 2014 Retail Sales, 2013 Change, 2013-2014 Share of Market, 2013
Accessories $14,656 $14,264 2.7% 14.7%
Eyewear $4,583 $4,428 3.5% 4.6%
Handbags, Backpacks, Messenger Bags $2,071 $2,010 3.0% 2.1%
Headwear $1,345 $1,319 2.0% 1.3%
Hosiery $564 $550 2.5% 0.6%
Jewelry and Watches $3,459 $3,352 3.2% 3.5%
Luggage and Travel Accessories $1,423 $1,395 2.0% 1.4%
Scarves and Ties $156 $155 0.5% 0.2%
Other $1,055 $1,055 0.0% 1.1%
Apparel $18,411 $17,288 6.5% 18.4%
Consumer Electronics $5,232 $5,079 3.0% 5.2%
Domestics $3,409 $3,342 2.0% 3.4%
Food/Beverages $10,106 $9,534 6.0% 10.1%
Footwear $5,469 $5,415 1.0% 5.5%
Furniture/Home Furnishings $3,035 $2,947 3.0% 3.0%
Gifts/Novelties $2,804 $2,952 -5.0% 2.8%
HBA $7,756 $7,911 -2.0% 7.8%
Fragrance $4,051 $4,242 -4.5% 4.1%
Hair Accessories $267 $265 0.8% 0.3%
Cosmetics/Nail Polish/Other $3,438 $3,404 1.0% 3.4%
Housewares $2,827 $2,785 1.5% 2.8%
Infant Products $2,690 $2,663 1.0% 2.7%
Publishing $3,528 $3,426 3.0% 3.5%
Sporting Goods $2,723 $2,605 4.5% 2.7%
Stationery/Paper $2,526 $2,618 -3.5% 2.5%
Toys/Games $6,965 $6,510 7.0% 7.0%
Videogames/Software $2,930 $3,184 -8.0% 2.9%
Other $4,803 $4,948 -2.9% 4.8%
Hardware and Paint $313 $303 3.0% 0.3%
Gardening $221 $226 -2.0% 0.2%
Pet Products $402 $410 -2.0% 0.4%
Funerary $9 $10 -4.0% 0.0%
Automative Accessories $372 $365 2.0% 0.4%
Boats and Vehicles $519 $516 0.5% 0.5%
Other $2,967 $3,118 -4.8% 3.0%
TOTAL $99,870 $97,471 2.5% 100.0%

Increased Competition

More licensed products, consolidation of retailers, less retail space. These are by far, the most commonly cited themes of respondents, as they have been for the past 20+ years. Even though the retail licensing pie is steadily growing, the field keeps getting more crowded and subject to domination by the giants. The evolution of licensing is really the story of how licensees and licensors are experiencing and adapting to this growing competition.

2014 Retail Sales Varied Widely

Individual respondents to the 38th Annual Licensing Letter Licensing Business Survey reported wildly varying results for their own businesses, even compared to other respondents in similar property types, product categories, geographic territories, etc.

In 2014, 68% of respondents doing business in the U.S. and Canada reported higher retail sales of licensed goods in those countries, 20% reported lower and 12% reported flat sales of licensed goods.

Among respondents reporting growth, 29% cited single-digit, 66% cited double-digit and 5% cited triple-digit growth; among respondents reporting falling sales, 24% cited single- and 76% double-digit declines.”

Factors most frequently cited by respondents for increased sales were, in order: i. success of a particular industry or property, e.g., Frozen or Ninja Turtles; ii. entry into new markets or territories; iii. lower gas prices, unemployment and other favorable economic conditions; and vi. strong performance of e-commerce or another sales channel—although we also heard from many that believe the e-commerce effect is overstated.

Based on survey responses, performance of licensed goods was stronger in the U.S. than in Canada, particularly in the Northeast and Pacific Northwest; by contrast, the number of respondents describing Canadian sales as down or flat exceeded “up” responses by better than 2 to 1.

Optimism for 2015

Most respondents doing licensing business in the U.S. and Canada had a good year in 2014; about one in three had a bad year. But when it came to the future, there was general optimism. 75% of respondents said they expect their licensing business to grow in 2015. Among these respondents, 40% projected increases of between 10% and 20%. Only 8% said they expect their business to decline next year.


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