Retailer as licensee

Licensing has proved to be a strong marketing tool, since it gives the retailer an opportunity to develop and market newly-designed merchandise that enjoys the benefits of intellectual property or character from the domains of sports, entertainment, gaming and others.

 

Understanding direct-to-retail

Today, in the licensing arena, direct-to-retail is gradually catching up. It is a system where a licensor sells its intellectual property directly to a retailer who designs and promotes the brand and sources the merchandise from its manufacturer-suppliers. Also, direct-to-retail eliminates the negotiation grind with the manufacturers that involves a lot of dilly-dally and compromises their discretion.

Direct-to-retail enables licensors to build up long-term relationships with their retail partners. It is also conducive for a brand’s increased lifecycle. In this case, a licensee or retailer has the scope to customise the brand according to consumers’ preferences and when a brand underperforms, he makes the necessary modification, such as changing the design, before taking it off the shelf. Even if the retailer is compelled to take off the brand, he generally goes for other properties owned by the licensor.

The practice is quite prevalent in the US and Disney Softlines, under Disney Consumer Products, signed the first direct-to-retail deal with H&M department store in 2000.

 

The advantages

Being positive on this recent trend of direct-to-retail, Ms Nanette D’Sa, Senior Vice-President (L&M), STAR India Pvt. Ltd hopes that the system will prove to be a perfect channel for leveraging on the expertise of a retailer. Star India has tied up with Big Bazaar and Sia Art Jewellery to sell a range of merchandise themed upon popular TV serials from Star’s kitty. 

Hot Muggs has been involved as the official licensed merchandiser for super hit movies like Fanaa, Cheeni Kum, Roadside Romeo and IPL teams like Kings XI Punjab and Chennai Super Kings. Speaking on the advantages of direct-to-retail, Mr Rajat Jain, Head – Licensing & Merchandise says, “In selling licensed merchandise, we offer value-added services in terms of in-house promotions, publicity, designers from National Institute of Design and assistance in marketing. Right from manufacturing to co-marketing, we are present across the entire value chain.” Products of Hot Muggs are available on the website. “The channel is good for customisation of the products which is not possible for SKUs at brick and mortar retail outlets,” Jain adds.

 

Celebrity endorsed

In the present context of booming organised retail, there is a huge demand for brands and direct-to-retail is successfully filling that gap. Recently, Future Group and Manipal Group formed a joint venture and signed Sachin Tendulkar to introduce a gamut of products which include health supplement, sports goods, fitness equipments and lifestyle accessories which would be marketed under the brand name S Drive and Sach.

A number of fashion designers like Manish Arora, Sabyasachi Mukherjee and Rohit Bal are lending their names to retailers like Reebok, Bombay Dyeing and Kirtilals respectively.

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