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Retail Sales

2015 Retail Sales of Licensed Goods in U.S./Canada Top $103 Billion; Entertainment, Sports Drive 3.4% Growth

Retail sales of licensed goods in the U.S. and Canada grew a robust 3.4% in 2015, according to The Licensing Letter’s Annual Licensing Business Survey. At just under $103.3 billion, total sales surpassed the $100 billion mark for only the second time.

2015 is the fifth up year in a row for the U.S./Canada licensing business. This year’s 3.4% increase not only exceeded the 2.5% growth of 2014, but overall performance of the North American economy—in 2015, U.S. GDP grew 2.4% and Canadian GDP grew 1.2%.

“Long-term, licensing is still recovering from the great recession of 2008,” notes one respondent. Although this year’s totals were the closest the industry has gotten to the 2008 pre-recession high of $104.5 billion, there are strong doubts about whether the growth is sustainable. Even before the year had ended, there were ominous signs that sales had peaked. The fourth quarter was miserable for retail. “Macro-economic factors and consumer confidence that fueled growth at the start of the year were all but gone by year’s end,” according to one licensing agent.

The 3.4% growth figure was also deceptively high. Although most segments were up for the year, the overall increase was due largely to abnormally high growth in two segments: entertainment/character at 8% and sports at 4.8%. All other property types grew at rates below the 3.4% overall licensing industry increase, many substantially below.

Entertainment Steals the Show

As in 2014, entertainment/character claimed the highest growth rate of any property type (except for the fledgling digital celebrities subcategory) at 8%. It seems hard to believe that entertainment licensing had declined every year from 2008 through 2012. That trend turned around in 2013 with 3.6% growth, followed by 6% growth in 2014.

Once again, growth in entertainment licensing was driven by Disney properties. “There’s Disney and there’s everyone else,” says one entertainment licensor executive. “Disney owns half the market and the rest is pretty fragmented.”

In 2014, the breakout Disney brand was Frozen; this year saw Star Wars: The Force Awakens break onto the scene. Global sales of the year’s hottest property began on September 4 with “Force Friday,” the official marketing campaign unprecedented in only in scale but in timing, kicking off a full 15 weeks ahead of the movie premiere.

Star Wars generated more than $700 million in retail toy sales, about one-third more than Frozen in 2014, according to NPD Group. But the force of Star Wars wasn’t limited to the usual product categories for blockbuster movies; it spanned beyond toys, video games, apparel and gifts/novelties to everything from shower curtains and duct tape to fresh produce. Analysts, including Tim Nollen of Macquarie Securities, predict Star Wars merchandise sales will reach $5 billion in the first full year, surpassing the $3 billion high for first year sales set by Cars 2 in 2011–12.

But like Frozen, Star Wars was a double-edged sword—or light saber—expanding the market for entertainment licensed goods but also taking share from other brands. “It was hard to get anything besides Star Wars on shelf,” says one agent. “Anything that did get on wouldn’t be taken very deep.”

Star Wars was just one of the mega-properties that dominated entertainment/character licensing in 2015. “It’s been a really big year for big entertainment brands,” said one licensor. Frozen continued its 2014 momentum. Other big sellers in 2015 included Minions and Avengers: Age of Ultron, as well as non-movie properties like Teenage Mutant Ninja Turtles, Paw Patrol and DinoTrux. “Because entertainment is working so well, people are chasing dollars in it,” according to a licensing consultant. However, the success of the mega-properties “is making it harder for other brands.”

Sports Thrives in Non-Olympics Year

For the second year in a row, sports was the next strongest property type, growing at 4.8%. At just under $14.8 billion, sports accounted for 14.3% of all U.S./Canada retail sales of licensed goods.

As usual, the NFL and NBA led the way, posting strong sales in soft lines, hard lines and multimedia. But this year, other leagues joined the party. After a flattish 2014, Major League Baseball had a banner year thanks to an influx of dynamic new rookies, including the Cubs’ Kris Bryant who topped all MLB jersey sales, and the newfound post-season success of popular teams like the Cubs, New York Mets, Toronto Blue Jays, not to mention last year’s darling, the Kansas City Royals. NASCAR also roared back to life after two consecutive down years thanks in part to a new trackside retail model.

The NHL and PGA TOUR remained solid. And MLS, which has posted double-digit growth every year since 2004, did even better in 2015 due to new expansion clubs in New York and Orlando.

Fashion Grows Third Fastest

Fashion grew 3.1%, above GDP but below 2014’s 3.4% growth. Fashion licensing remains robust, totaling $20.9 billion, or 20.3% of the market in 2015, second only to corporate/trademark.

But while consumer demand remains high, fashion is wrestling with the same structural changes affecting other segments of the licensing industry. One problem is product glut. Technology and social media have made it easy for newcomers, including models, reality TV stars, YouTube sensations, Hollywood stylists, athletes and other celebrities to launch their own lifestyle labels. But even as properties multiply, shelf space to accommodate them shrinks—especially within the department and specialty stores that have been fashion’s traditional retail domain.

All of this has forced established brands to turn to mass and value stores. Notable 2015 examples include exclusive limited edition fashion lines from high-end labels like Lily Pulitzer for Target and Balmain for H&M. “The stigma of selling at off-price is gone,” notes a licensor. “The challenge now is to avoid relying too heavily on off-price sales.” Or, as one consultant explains, “licensors need to strike a balance between off-price revenue and preserving the integrity of their brands.”

Performance of Other Property Types

The mammoth corporate/trademark category generated $27.6 billion in 2015 sales to make up 26.8% of the total U.S./Canada market. The 3.0% growth rate was the property type’s highest since 2012 (and 50% above the 2.0% growth posted in 2014). All corporate property types were up (except for “other”), with three exceeding the 3.4% total licensing industry growth rate:

  • Food/beverage (the largest property type in the segment at $7.5 billion) at 4.3%;
  • Hardware/appliance/tool at 3.6% ($2.8 billion); and
  • Electronics/technology at 3.5% ($3.2 billion).

At 2.5%, growth of traditional toys/games was slightly down from 2.8% in 2014. The mega-success of entertainment/character properties took sales from products based on traditional toy properties. But Survey respondents pointed to success stories, including My Little Pony (Hasbro) and the comeback of Barbie (Mattel) which kept overall growth at a positive.

Celebrities was the only other property type to outperform GDP, growing 2.5%. Although it is the smallest, accounting for just $971 million of the segment’s $5.6 billion in sales, digital celebrities is the fastest growing subcategory. TLL expects the 8% growth rate to accelerate in the next two to three years as the gestation period ends and the new digital celebrity deals signed in 2015 come to fruition as actual product sales. In contrast to the dynamic digital property type, entertainers/models, the largest at nearly $2.6 billion, grew at a more modest 1.8% clip. Chef/home celebrity properties are plateauing following 2014’s 1.0% growth with an almost equally lackluster 1.1% in 2015. “The market is saturated and the whole home chef thing seems to be getting very tired,” opines a licensing agent.

Flat Liners & Decliners

After declining 2.5% in 2014, collegiate rebounded with 2.3% growth. One major factor: The August 2014 ruling in the Ed O’Bannon lawsuit against the NCAA and its video game licensee EA Sports effectively forced colleges out of video game licensing. But while 2014 was a down year, collegiate more than made up for losses in 2015 thanks to strong soft and hard lines sales, especially in the second half.

Music fell 1.7% in 2015. Although better than the 2.5% decline of 2014, the property type is still trending down. Reasons include increased competition from entertainment properties, particularly in mass and young men’s retailers. “A couple of movie properties captured the consumer, including Star Wars and Minions,” says one music licensing agent. Another agent explains that in 2015, pop culture in general and superheroes in particular commanded retail space that might have otherwise gone to music brands.

Another big problem for music was the decline of licensing dynamo One Direction. “1D is dead at retail,” comments one agent. So far, at least, no new acts have emerged to fill 1D’s stylish shoes—although there has been an uptick in interest in pop-punk and alternative acts, such as 5 Seconds of Summer. Classic rock also maintained its evergreen fashion appeal, particularly in junior apparel, where multiple Survey respondents said new t-shirt styles and designs kept sales brisk in specialty and boutique/independent stores, as well as some mass and mid-tier retailers.

Other property types were largely flat in 2015, including:

  • Publishing grew 1.0%, at a slight lower rate than in 2014 (1.7%). Like last year, books declined and newspapers/magazines grew, albeit at a slower clip of 1.8% vs. 3.5% in 2014. The category’s flat rates can be attributed to greater competition from entertainment/character brands.
  • After a 1.6% decline in 2014, art grew by 2.1%. “Strong performance of commercial art properties made up for sluggish sales on the fine arts side,” according to one consultant.
  • Estates, which continues to yoyo from year to year, finished 2015 up 0.9% after dropping 1% in 2014 and gaining 1.3% in 2013. Amongst properties like Marilyn Monroe and Bob Marley that experience large swings in popularity there is one bright spot: “John Wayne just keeps chugging along,” according to a licensee executive.

Video games/software turned a 2014 4% loss into a 2% gain last year. The category has begun to recover from the sharp decline caused by Angry Birds, which made up the bulk of sales in the sector. Growth came from the resurgence of classic properties like Sonic the Hedgehog, Tetris and Capcom, the continued activity of franchises like Halo and Call of Duty (which have the largest esports tournaments) and newcomers like Minecraft.

Retail Sales of Licensed Merchandise, by Property Type, U.S./Canada, 2014-2015
Note: Numbers may not add up exactly due to rounding.
(Figures in Millions)
Property Type Retail Sales, 2015 Retail Sales, 2014 Change, 2014-2015 Share of Market, 2015
Art $5,665 $5,548 2.1% 5.5%
Art and Artists $4,226 $4,147 1.9% 4.1%
Museums $1,438 $1,401 2.7% 1.4%
Celebrities $5,682 $5,541 2.5% 5.5%
Entertainers/Models $2,585 $2,540 1.8% 2.5%
Chefs/Home-Related $2,126 $2,103 1.1% 2.1%
Digital/Other $971 $899 8.0% 0.9%
Collegiate $3,422 $3,345 2.3% 3.3%
Entertainment $11,878 $10,998 8.0% 11.5%
Estates $2,271 $2,251 0.9% 2.2%
Fashion $20,942 $20,316 3.1% 20.3%
Apparel $17,795 $17,277 3.0% 17.2%
Footwear $2,480 $2,393 3.6% 2.4%
Home $668 $646 3.4% 0.6%
Music $2,450 $2,492 -1.7% 2.4%
Non-profit $1,251 $1,258 -0.5% 1.2%
Publishing $4,505 $4,460 1.0% 4.4%
Books $487 $500 -2.5% 0.5%
Newspapers/Magazines $2,763 $2,714 1.8% 2.7%
Comic Books/Strips $1,255 $1,247 0.7% 1.2%
Sports $14,786 $14,109 4.8% 14.3%
Trademarks/Brands $27,645 $26,850 3.0% 26.8%
Automotive/Motor Vehicle $4,139 $4,018 3.0% 4.0%
Food/Beverage $7,595 $7,268 4.5% 7.4%
Restaurants $4,625 $4,557 1.5% 4.5%
Sporting Goods $1,324 $1,317 0.5% 1.3%
Hardware, Appliance and Tool $2,820 $2,722 3.6% 2.7%
Home-related $387 $378 2.4% 0.4%
Electronics/Technology $3,234 $3,125 3.5% 3.1%
Electronic Media $221 $216 2.0% 0.2%
Other $3,301 $3,249 1.6% 3.2%
Traditional Toys/Games $1,384 $1,350 2.5% 1.3%
Video games/Interactive/Online $586 $574 2.0% 0.6%
Other $809 $773 4.6% 0.8%
TOTAL $103,276 $99,865 3.4% 100.0%

Toys/Games, Food/Beverage & Apparel Lead Growth on Products Side

For the second straight year, toys/games was the fastest growing product category, posting an 8.1% increase. Growth in toys has mirrored (and fed off of) the success of the entertainment/character property type over the past three years.

Growth in Retail Sales, by Product Category, U.S./Canada, 2013–2015
Year Entertainment/Character Toys/Games
2013 3.6% 3.2%
2014 6.0% 7.0%
2015 8.0% 8.1%

As in 2013 and 2014, connection to “A-list” entertainment properties like Frozen, Star Wars and Minions drove growth in the toy industry. According to NPD Group, while overall toy sales for the year were up 6.7%, movie-licensed toys, led by Star Wars, significantly outperformed the overall market with 9.4% growth. And it wasn’t just movies. Impetus for growth came from entertainment/character properties in other media including TV (Paw Patrol), video games/software (Minecraft) and YouTube (Shopkins).

Food/beverage product sales increased for the sixth year in a row.  The 6.7% gain was the second highest of any product category, and even better than 2014’s 6.0% growth rate. The category is unusual in that retail opportunities are expanding rather than contracting, with distribution channels like gas stations and drug stores eager to expand their food and beverage offerings. And as one agent put it, “once brands are in the aisle, they don’t leave.”

Apparel sales rose 6.6% largely on the strength of sports- and fashion-based properties. The former influenced not just jerseys, the traditional cash cow, but also off-field apparel. As has become customary, the women’s segment grew the fastest. “Women’s pro sports apparel is no longer a sideshow,” explains a licensor. In addition to stalwarts like G-III’s Touch by Alyssa Milano, the leagues are enlisting well known women’s fashion labels like Victoria’s Secret and Dooney & Bourke. Fashion labels also spurred growth in apparel sales, especially active wear. The hot fashion trend in 2015, athleisure, was tailor-made for licensing, as exemplified by StellaSport, the collaboration between Stella McCartney and Adidas on a line of low-price fashionable athletic apparel for young women that debuted in January.

Accessories, the second largest product category behind apparel, grew a sluggish 1.8%. Licensed handbag sales actually declined (-1%). And if it were not for wearable technology like Apple Watch Hermès, jewelry and watches would have fallen too. “It was another bad year for fine jewelry,” laments one consultant. The silver lining was eyewear, the largest accessory subcategory ($4.7 billion), which grew 3.6%. The other accessory product categories were flat or down, including hosiery (2.5%), headwear (2.4%), luggage (1.7%) and scarves/ties (-1.6%).

Performance of Other Product Categories

Five other product categories met or exceeded the lofty 3.4% industry-wide growth total:

  • Sporting goods grew 3.8%.
  • Footwear increased 3.7%. It was a good year for both athletic and fashion licensed footwear. “The casual workplace and demand for comfort without compromising looks is making footwear a key wardrobe element,” explains one fashion licensor. The numbers would have been even better but for the warm weather in the fourth quarter that suppressed sales of boots and other winter footwear.
  • Consumer electronics was up 3.5%, after posting a 3.0% gain in 2014. The category includes smart watches, which are dominated by fashion brands in the high-end market and entertainment/media brands in the low-end. And electronics companies are increasingly shifting their revenue model to rely on royalties rather than manufacturing product in-house.
  • Publishing products kept up steady growth at 3.4% with activity from new licenses, particularly from digital celebrities and entertainment/media, keeping the category kicking.
  • The relatively tiny pet products category ($421 million) grew 4.8% after falling 2% in 2014. Demand for premium pet products and services, including toys and other products licensed from fashion, entertainment and celebrity properties, has grown as pet parents seek to share their favorite brands with their pets. And while large chains have dominated A-list licenses (think Star Wars for Petco and Martha Stewart for PetSmart) for exclusive deals, there was a lot of opportunity for smaller brands.

The various home-related product categories posted more modest gains, including (in order of market size):

  • Domestics ($3.4 billion) grew 2.1%;
  • Furniture/home furnishings ($3.1 billion) increased 2.5%;
  • Housewares ($2.8 billion) was up 1.5%;
  • Hardware & paint ($322 million) rose 3%; and
  • Gardening ($226 million) grew 2%.

Meanwhile, product categories in long-term decline continued their freefall in 2015, including gifts/novelties which had its fifth down year in a row. The 4% decrease was the biggest of any product categories. “Low consumer confidence and the decline of foot traffic in shopping malls are killing the gifts sector,” explains a retailer. “People are still buying on impulse, they’re just doing it online,” a consultant suggests.

Stationery/paper continued to struggle (-3.2%). Technology has dealt the paper industry a dual blow by rendering its product and distribution channel all but obsolescent. A veteran licensing agent sums it up glumly: “People don’t need paper cards anymore; and they don’t need stationery stores to get the paper goods they do need.”

There was, however, one product category that managed to arrest its downward spiral. After four years of steep decline, including last year’s 8% loss, video games/software bounced back by posting a 2.5% increase, amid strong demand for games for eighth generation consoles such as Sony’s PlayStation 4, Microsoft’s Xbox One and Nintendo’s Wii U and a growing market for mobile games.

Retail Sales of Licensed Merchandise, by Product Category, U.S./Canada, 2014-2015
Note: Numbers may not add up exactly due to rounding.
(Figures in Millions)
Product Category Retail Sales, 2015 Retail Sales, 2014 Change, 2014-2015 Share of Market, 2015
Accessories $14,913 $14,656 1.8% 14.4%
Eyewear $4,748 $4,583 3.6% 4.6%
Handbags, Backpacks, Messenger Bags $2,050 $2,071 -1.0% 2.0%
Headwear $1,378 $1,345 2.4% 1.3%
Hosiery $578 $564 2.5% 0.6%
Jewelry and Watches $3,494 $3,459 1.0% 3.4%
Luggage and Travel Accessories $1,447 $1,423 1.7% 1.4%
Scarves and Ties $154 $156 -1.6% 0.1%
Other $1,066 $1,055 1.0% 1.0%
Apparel $19,626 $18,411 6.6% 19.0%
Consumer Electronics $5,415 $5,232 3.5% 5.2%
Domestics $3,480 $3,409 2.1% 3.4%
Food/Beverages $10,783 $10,106 6.7% 10.4%
Footwear $5,672 $5,469 3.7% 5.5%
Furniture/Home Furnishings $3,111 $3,035 2.5% 3.0%
Gifts/Novelties $2,692 $2,804 -4.0% 2.6%
HBA $7,767 $7,756 0.1% 7.5%
Fragrance $4,002 $4,051 -1.2% 3.9%
Hair Accessories $264 $267 -1.0% 0.3%
Cosmetics/Nail Polish/Other $3,500 $3,438 1.8% 3.4%
Housewares $2,869 $2,827 1.5% 2.8%
Infant Products $2,703 $2,690 0.5% 2.6%
Publishing $3,648 $3,528 3.4% 3.5%
Sporting Goods $2,826 $2,723 3.8% 2.7%
Stationery/Paper $2,446 $2,526 -3.2% 2.4%
Toys/Games $7,530 $6,965 8.1% 7.3%
Video games/Software $3,003 $2,930 2.5% 2.9%
Other $4,792 $4,798 -0.1% 4.6%
Hardware and Paint $322 $313 3.0% 0.3%
Gardening $226 $221 2.0% 0.2%
Pet Products $421 $402 4.8% 0.4%
Funerary $9 $9 1.0% 0.0%
Automative Accessories $384 $372 3.2% 0.4%
Boats and Vehicles $521 $519 0.5% 0.5%
Other $2,909 $2,962 -1.8% 2.8%
TOTAL $103,276 $99,865 3.4% 100.0%

Tempered Optimism for 2016

Survey respondents reporting that their U.S./Canada licensing business grew in 2015 outnumbered those reporting declines nearly 3 to 1. When you add the “flats” to the “down” total, the ratio was 2 to 1 in favor of positive growth.

However, while 2015 seems to have been a good year for most, Survey respondents weren’t as optimistic as usual about the future. Only 56% said they thought that their business would grow in 2016, as opposed to 75% who predicted growth from last year. But among the optimists, nearly 66% predicted that growth would exceed 10%. Among the pessimists, 66% said they expected sales to be flat next year; the rest said they thought 2016 would be a down year.

Survey Methodology

TLL’s estimate of the size of the licensing business is based on its online survey of global licensing executives, conducted in January 2016; third-party research of overall category and industry size; dozens of in-depth interviews with licensing executives, both for the survey and throughout the year; annual reports and other corporate information from retailers, licensors and licensees; and news articles from trade publications covering trends in the respective product categories and property types affected by licensing.

Experts interviewed included licensors, manufacturers, agents and retailers, as well as consultants, allied professionals and individuals with multiple roles. They were based in all territories around the globe; but for this portion of the survey which focuses only on the U.S. and Canada, results are based only on responses of those doing business in those territories.

More results from TLL’s Annual Licensing Business Survey will be forthcoming in future issues, including trends in royalty rates and payment structures, distribution trends and product category results by key property types for U.S. and Canada, as well as coverage of the size of the global licensing business and trends in territories outside the U.S. and Canada.

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