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Year in Review: A Study in Contrasts

In 2016, we tracked 2.7% growth worldwide from the previous year to bring licensed retail sales up to a record $167.5 billion. The U.S./Canada was responsible for over 60% of that total (with almost $106.6 billion in sales) and provided much of the impetus for growth worldwide—the territory grew 3.2% in licensed sales from the previous year.

This year, we saw the largest Black Friday every recorded, on the tail end of a series of natural disasters and spurts of sociopolitical anxiety. Even as governments around the world are becoming ever more isolated and nationalistic, organic social movements are increasingly uniting the citizens of the world. And as consumers are stressing their own individuality and spurring labels, it is more important to their sense of else than ever to be part of something bigger—a movement, a conversation, a connection with a brand and a pre-built message.

As we prepare to look back at the numbers behind consumer product licensing in 2017 in our upcoming Annual Licensing Business Survey, we expect to record a seventh straight year of grow in retail sales for the U.S./Canada as well as globally.

The key ingredient behind the most successful brands in 2017 was living in the moment—allowing consumers to enjoy small, everyday moments of joy with a blind bag, a Vine, a sweet but healthy treat. The Great Recession is over, but consumers have learned to become more discerning and selective. They are not simply looking for the lowest price, but are also willing to invest in quality, convenience, and longevity. And while they’re willing to spend the time in researching purchases, they are also busier and more inundated by outside messaging than ever before. Their mental well-being, physical health, and time are just as important.

Experiential licensing initiatives are fast becoming a consistent source of revenue for a good chunk of the licensing industry—that is, not just the top players. The most popular initiatives include pop-up shops, cafés, live theater and stage shows, and location-based attractions (such as in theme parks and malls). These experiences are short, but sweet—they are affordable, everyday luxuries that can be easily accessed and digested.

While we don’t currently track royalties, sales, or profits from experiential licensing, it is estimated that these ventures make up around 10% of the overall licensing business (counting “retail sales” as ticket, food, and drink purchases as well as on-site merchandise purchases). If we counted these types of sales in 2016, for example, the global licensing business would have generated over $200 billion.

Some of the most in-demand brands are those that have already been proven—the nostalgic, classic properties that evoke a simpler, happier time. Or the brands that have never failed, the go-to name when you’re in a rush and need an immediate fix. Of course, simply having a legacy is not an automatic win—a brand must practice what it preaches. If loyalty and trust is broken, consumers are far more willing to shop around and take a chance on a new face.

No matter how beloved a franchise may be, if the newest film in the series is not up to the discerning standards of theatergoers, it will be a flop. On the other hand, of the 50 top-grossing films of 2017, almost 80% had successful merchandising programs.

In juxtaposition, 2017 also saw the continued rise of digital content and ecommerce as the preferred vehicles for consumer engagement with brands—in other words: cheaper, more flexible alternatives. Only about 10% of shopping is done online in the U.S., with most consumers preferring to shop in-person and enjoy the touch, sound, and interactions in a brick and mortar store. But the development of new technology is allowing retailers to do more with less in the face of expensive store leases and rising upkeep costs—that is, offer engaging, rewarding experiences in smaller spaces that keeps shoppers coming back for more.

More than ever, innovative in-store activations, advertising, and product placement are key to grabbing consumer interest. To better develop attention-grabbing strategies as well as quality content and merchandising, large companies are growing their technology and talent pools. But size isn’t critical—it’s only one piece of the equation.

If brands and retailers aren’t careful, they might face the fate of the pug—a big dog in a small package, with all the problems that come with it.


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