A Bullish Forecast through 2010

Editor's Note

When the annual industry data for 2007 is released next year, it will likely indicate one of the strongest years for the business of retail licensing in more than decade. And that's following a 3.6 percent increase in worldwide retail sales in 2006 as reported in License! Global's exclusive Annual Industry Report beginning on page 18.

And as the licensing and retail executives look to the future, the good news is that this strong sales momentum will continue as worldwide retail sales of licensed merchandise could surpass $200 billion in global sales in 2008 and hit $210 billion in 2010! Among the reasons for this bullish outlook:

Blockbuster nirvana. After a summer that produced one blockbuster after another and set record numbers at the box office, it is feasible that summer 2008 could duplicate this year's success beginning with Iron Man, Speed Racer, and Indiana Jones 4 in May. The trend to simultaneous theatrical release worldwide, as per Spider-Man 3, will also create more opportunities in licensing.

Global innovations. The recent Licensing Challenge competition, co-sponsored by License! Global and MIPCOM Junior, which received almost 50 entries for new children's programming with potential for licensing, reflects only a small percentage of the many new TV licensing opportunities as well as the many cross-border deals that were announced this year.

Emerging global markets. The potential for licensed products in China, India, Russia, Poland, and Brazil will continue to mirror the potential for retail growth in each of these countries.

Retailer response. The keys to partnering with the major retailers are licensing/merchandising programs that have proven consumer research and demographic data, in-store promotions/displays, strong margins, and long-term value.

Traffic builders extraordinaire. Many licensing programs, particularly those driven by entertainment, publishing, and sporting events have become today's traffic builders for the retail chains. A great example was the huge spike in retail sales tied in to the debut of UK soccer star David Beckham with MLS's Los Angeles Galaxy.

Direct-to-retail. Or even retail-to-retail. Steve & Barry's, one of the hot retail growth concepts, is based on DTR licensing as the driving factor for the company's success. This year, several exclusive licensed programs, including Bitten by Sarah Jessica Parker and EleVen by tennis star Venus Williams, were launched. There will also be more RTR deals similar to the one that brought the UK's Boots the Chemist's health and beauty brand No. 7 to U.S. retailers CVS, Target, and Canadian retailer Shoppers Drug Mart.

Consumer demand. It's evident by numerous global events—including the popularity of the summer blockbusters, the record viewership of Disney's "High School Musical," and the recent hoopla and sales of Microsoft's Halo 3—that consumers of various age groups are reacting to promotions and merchandising of licensed products.

International sports fans. With the Beijing Summer Olympics in August 2008, Vancouver Winter Olympics in 2010, and FIFA World Cup in 2010, as well as the expansion of American football and basketball to global venues, the popularity of licensed sports products has the potential to grow significantly over the next several years.

Fashion influence. The celebrity fashion phenomenon will not wane in the foreseeable future nor will the demand for licensed product. However, retailers will become more cautious and more demanding with the personalities and licensing deals they negotiate.

While some naysayers might argue that there are too many licensed products competing for shelf space, conventional wisdom suggests the more competition, the better.

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