June 2, 2020
Can licensing keep brands alive?
Can licensing keep brands alive?

The retail sector has been taking a beating in recent weeks. Will some of our best-loved brands disappear completely or can they retain a presence by leveraging the value of their IP through licensing?

We’ve seen some of our well-known high street brands entering administration including Cath Kidston, Laura Ashley, Oasis and Warehouse, and these are just the tip of the iceberg.

Some of these brands already have licensing arrangements already in place which allow category specialists to sell products under license or run franchise stores in international markets. These agreements will mean that despite the closure of stores owned and operated by the brand directly, revenue will still be generated for the brand via licensees.

How will licensing help Laura Ashley?

Laura Ashley went into administration in April 2020 and was rescued by Gordon Brothers, a global advisory, restructuring and investment firm, who bought assets including the global brand, its archives and related intellectual property as well as the online store (but not the physical stores). It is the brand IP and archives that are important for licensing.

The Laura Ashley stand-alone stores may all but disappear, but the brand still has its online store and around 70 licensees globally who are all selling Laura Ashley licensed products (including bathrooms, carpets, shutters, fitted bedrooms and bathrooms, stationery, toiletries, digital radios). Gordon Brothers have indicated that part of their ongoing strategy will be to continue expanding the portfolio of licensees and franchisees internationally. 

A licensing arrangement allows the brand owner (Licensor) to grant another company (Licensee) the right to use its IP in specified categories, territories or distribution channels. The licensee takes responsibility for the running the business and owns the product design, development, manufacturing, marketing and distribution.

In return, the licensee pays the licensor a royalty on every product sold. The licensor earns money with very limited risk, making it a very attractive proposition. It’s a business model that brands all over the world use to extend their brand reach and brand owners typically use licensing to enter new areas where they don’t have the expertise or the desire to run the business themselves.

A key benefit of licensing is that the brand can be sold through any distribution channels approved by the brand owner. This means that the licensees don’t need to rely on the Laura Ashley stores and can utilise their own distribution channels and focusing on their online offering will be especially important going forward.

It’s not all about the UK.

Back in September 2019, global licensing agency IMG were appointed to grow the Laura Ashley business in Asia. A smart move often used by western brands. Whilst we in the UK might have an impression of the brand being a little bit tired and not as popular as it once was, it’s unlikely that the average consumer in China will be aware. On the basis that Laura Ashley is a well-loved quintessentially British brand with a rich heritage and an enormous archive of prints, there is likely to be a demand from companies wanting to take a license – for example in homewares (a growth area in China), health and beauty products, and apparel and accessories.

In addition, online purchasing, which is so important in the current climate, is huge in China, with online platforms Taobao and TMall recently ranked in the top 10 most valuable retail brands in the world (Brand Finance Retail 50 2020).

Building the Laura Ashley brand in Asia through licensing will create another low risk revenue stream for the brand.

What next?

Gordon Brothers will need to ensure that the licensing programme and related marketing is carefully managed and will also need to make sure that creative direction is ongoing, giving licensees new assets to work with. Hopefully they can generate a healthy profit, potentially without owning any stores or inventory. Genius!

How can we help you?

Licensing is a fantastic strategy for any brand owner wanting to maximizing revenue from their IP with a low risk strategy. We can help you make, execute or optimise your plan. You can get in touch with Esther directly on esther.jolley@iamstobbs.com.

Esther has spent many years in senior positions at two of the leading global licensing agencies: Beanstalk and CAA-GBG. She has been responsible for growing and managing licensing programmes for global brands including Procter & Gamble, Coca-Cola, Harley-Davidson, Hershey’s, Mercedes-Benz, Ford and Kodak.

Fashion /  Advertising /  Brand Valuation /  Brand Extension (licensing) /  Commercial Contracts /  Brand Structuring

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