Many little girls across the country are likely snuggling down tonight in bedding decorated with all things Hannah Montana.
The singing and TV star sensation is just one property that is ringing up big bucks licensing its brand. Even so, retail sales of licensed products in North America remained flat at an estimated $107.8 billion in 2007, from $107.4 billion in 2006, the result of soft economic conditions, according to the International Licensing Industry Merchandisers’ Association (LIMA). Royalties also remained about flat, slipping 0.8% to $5.98 billion last year after three consecutive years of growth.
Character licensing, which includes entertainment, TV and movie licensing, held the top spot in retail sales — and has for at least the last 10 years — accounting for about $49 billion last year. The category, which was the only one to show growth last year, brought in $2.71 billion in royalties in 2007, up 1.1%.
Characters make up 45% of the market. But despite the deep pool of options to choose from, retailers and others are becoming more selective.
“It’s getting harder and harder to get into the space,” Charles Riotto, LIMA’s president, says. “Retailers seem to be focusing on a handful of licenses they think will be most successful.”
In grocery aisles, entertainment characters continue to dominate better-for-you products as consumer packaged goods marketers press the case that they are steering kids toward more healthy foods. This year Safeway and Warner Bros. Consumer Products launched the “Eating Right Kids” food and beverage line, which features Looney Tunes characters on the packaging.
“There’s been a big improvement in using licensed characters to promote healthier lifestyles,” says Marty Brochstein, senior vice president of industry relations and information for LIMA.
Trademarks and brands, the second largest licensing category, dropped 2.7% last year, to an estimated $19 billion in retail sales, and rang up $1.09 billion in royalties. Sports followed at about $14.7 billion, bringing in $815 million in royalties. Despite a 1.2% dip from 2006, the category remains healthy, Brochstein says.
Fashion generated about $14.6 billion in sales, while royalties dipped by 2.4%, to $810 million.
Paris Hilton collaborated with the Antebi Footwear Group to launch a footwear line. That deal followed a 2007 sportswear collection with Dollhouse/BBC. The footwear will relaunch at Macy’s stores this month.
“It’s aspirational,” says Michael Stone, CEO of The Beanstalk Group, which arranged the deal. “Consumers aspire to be like the person or like their lifestyle. Everyone is chasing retailer exclusives right now. It seems to be the soup du jour.”
What will 2009 bring? Riotto says it’s too early to tell what impact this year’s economic recession could have on the industry. But one thing is certain: Shoppers are already more selective with their discretionary spending.
“People will be a little more cautious about how they are spending their dollars,” Riotto says.
SNAPSHOT
Retail sales of licensed products reached $107.8 billion last year
Royalties dipped slightly last year to $5.98 billion
Character licensing still reigns as the top category
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