Over the years the number of licensing deals, especially pertaining to characters, has grown to meet the demands of young adults who are well travelled and well informed, which is evident in Disney launching Mickey Mouse inspired collection with Myntra’s in-house brand Kook n Keech and the enormous success of Salman Khan’s Being Human Clothing.
While Disney or Being Human didn’t set up unit for apparels, they simply licensed the properties to the brands to manufacture, distribute and market the branded products. Such strategies enable the parent company to mark its presence in non-core category, without actually getting into the category, thereby making profit at zero inventory cost.
Coca-Cola, the leader in beverages market is raking up strong growth by extending the brand into non-core categories, especially fashion, through licensing. To much surprise, a noticeable per cent of its sales driven through licensing, with apparel and related fashion accessories contributing to 65 per cent of its licensed sales.
Why fashion licensing is growing in India?
Pegged at $741 billion, the licensing and merchandising industry owes a majority of the revenue to fashion centric deals primarily apparel followed by footwear and accessories. Apparel as a licensed category is growing in India, reason being the increasing fan base and availability of international content. Moreover, apparel as a category starts at quite affordable ticket size thus promising great returns.
What makes fashion a profitable avenue for licensing is the fact that expenditure of Indian household on clothing and footwear contributes to around 3 trillion Indian rupees, making it 7.2 per cent of the total domestic consumption.
“Licensing in fashion apparel is very lucrative given that it gives the opportunity to marry two brand values to make a product that matches both its target consumers. What this allows is that the product becomes more accessible to the crowd carrying the aesthetics of both the brands,” asserted Manish Mandhana, MD, Mandhana Industries that is official apparel licensee for Being Human.
The international brands are also eyeing at fashion to mark their presence at retail shelves in India. Betting big on creating a lifestyle brand for Penthouse magazine, Kelly Holland, Managing Director, Penthouse Entertainment told “Penthouse Magazine, often considered an integral part for youngsters, has been a part of lifestyle. India has been a key focus in our expansion strategy for quite a while, given that the market is maturing and growing at a brisk pace. The key categories of interest include apparel, accessories where we are looking to work with premium brands.”
“Fashion licensing is a potential avenue for brands as it offers much more visibility coupled with affordable ticket-price as compared to any other category,” elucidated Chitra Johri, VP, Bradford License India. Apparel as a category contribute to 60 per cent of the fashion segment, while licensed apparel market accounts to 23.8 per cent of the revenues from licensed merchandise and 85 per cent of licensed fashion sales.
"Fashion Licensing is the 3rd biggest category of licensing globally and contributes almost 15% of the Licensing pie. A lot of factors have contributed to Fashion brands launching and growing this market in India as well. Through easy access to Technology, Internet, Social media more and more consumers in India have started following international/brands and are very well aware of the latest happenings and trends in the fashion space. This gives a big opportunity and market to fashion labels to target these consumers, adds Bhavik Vora, CEO & Founder, BlackWhiteOrange.
While apparel segment has emerged as an apt medium for characters and entertainment properties, designers labels have also found interest in fashion licensing, by extending rights to retailer or manufacturers for core as well as non-core range. As per designer Rocky S, founder, Rocky Star, “Fashion licensing helps us foray into multiple fields along with the core category. Though in India this trend is yet to catch up, up internationally, licensing is what has multiplied brand value and reach of designer labels as Elie Saab and Dolce & Gabbana.”
Adding to it, Akhilesh Sharma, GM - Rohit Bal Designs Pvt Ltd revealed, “Fashion, being a potential market, offers greater visibility to a brand. Moreover, since apparel is the largest category to be sold across markets, the expanse is much wider in this case, thus enabling a brand to churn out maximum profits.”
Disney India, which first brought its consumer products to India in 2005, is one of the major licensors in India. Working with local partners and organized retail giants such as Landmark, Amazon.in and Bestseller, Disney India has broadened its reach to over 2,00,000 outlets. Cartoon Network Entertainment, Yash Raj Films, Kolkata Knight Rider, Viacom18, Rovio, NBA are other prominent players.
Amongst domestic players, BCCL is one of the major players along with designer labels. Designer Rocky S has forayed into fashion accessories with Shoppers Stop, while Rohit Bal label is scouting for licensees for its prêt range.
Commenting on the emerging trend in fashion licensing, Pankaj Sikka, Chief Strategist, Invision Brands said, “While T-shirt is the first category any brand eyes at for brand extension, activewear is the emerging trend, with brands from Being Human to HRX launching activewear.”
The licensee pays the licensor either the minimum guarantee promised based on the projected sales, or a royalty fee for each item sold. The royalty fee varies for different categories.
Johri shared, “Minimum investment in this case is subjected to the brands and category. For a new IP, it can range from 15 to 20 lakhs while in case of popular properties say PepsiCo or Penthouse, the minimum guarantee reaches to some crores.” While the tenure of licensing agreements in this segment usually last three to five years, it can be shorter if it is a first-time partner.
As said, licensing acts as business strategy which can make or break the brand image, it is crucial for a brand to choose a licensee wisely. Briefing on ideal portfolio of licensee, Sandeep Dahiya, Director & business head – Brand Extension, BCCL Director & business head – Brand Extension, BCCL explained, “We look for three things - stability with partner, sustainability in business as getting a deal is easy, but sustaining it is a challenge; and capability to carry the brand.”
While brands swear by licensing as an effective retail strategy, the licensees find fashion licensing as less time consuming way to scale-up. “The brand does give you an entry point in the market because if you don’t have credibility in market, it is going to take you very long to get established in the market,” said Bhai Ajinder Singh, MD, M&B Footwear (licensee of Lee Cooper). Singh further adds that in all the large brands, there is 40:60 dependency on either apparel or footwear.
“What the brand wants from us a very good manufacturing facility so that they do not need to constantly check upon the quality of products that a licensee is selling off because a licensee not only sells the brand licensed products but also the brand,” asserted Amrit Sethia, COO of women’s brand SOIE that has licensing rights of wonder women and superman for innerwear.
Successful licensed programs require the perfect concoction of standout brands, high-quality licensees and retail support. Industry experts indicate that fashion licensing has immense potential in India given that modern retail is still evolving in the country, which is expected to have the highest working age population in the world by 2020.
The future aspects include capsule collections as done by JACK & JONES for Captian America. “Limited edition capsule collections have worked excellently for JACK & JONES and we hope to replicate the same success with the CIVIL WAR collection,” asserted Vineet Gautam, Country Head, JACK & JONES India while revealing details about the limited edition Captain America collection.
Moreover, India’s fast-growing eCommerce industry is also adding to the immense potential of fashion segment with a plethora of eCommerce players dealing in licensed apparel (Freecultr, Voxpop, Gabambo, Myntra, PlanetSuperheroes.com etc.)