The worldwide retail sales of licensed merchandise declined for the first time in five years as the global economic crisis,
recession, retail bankruptcies and shifts in consumer spending took its toll beginning in the fourth quarter of 2008 and ended
a boom period for licensing.
Total worldwide sales of licensed merchandise dropped 2.2 percent to $187.5 billion in 2008 virtually affecting every major
category from the largest, entertainment and character, to the smallest, interactive, according to the exclusive License! Global Annual Report. It was the first decline since 2003 when retail sales of licensed merchandise worldwide dropped .5 percent
over the previous year and the largest since 2001 when retail sales dropped 6.7 percent as a result of the economic downturn
from the aftermath of the terrorist attacks on Sept. 11.
For the licensing industry, it's truly a bad news, good news scenario. The bad news is that the decline in retail sales and
general malaise in retail experienced in late 2008 continued throughout mid-2009 and will be reflected in the analysis again
next year, possibly with an even more substantial decline.
Overall Retail 2004-2008 (Click to view larger.)
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Yet, the good news, based on various economic and retail studies and projections, is that the worst is over and that 2010
will likely show a modest improvement in retail sales, and in turn, an improvement in the sale of licensed products worldwide.
Indeed, the future looks brighter. In July, Newsweek magazine boldly declared "The Recession is Over." And last month, U.S. Federal Reserve Bank chairman Ben Bernanke, claimed
the "recession is very likely over."
But the caveat is that recovery will be slow and methodical and take several years before consumer spending, retail sales
and sales of licensing products climb back to pre-2008 levels.
For the holiday season in the U.S, Deloitte's Retail Group expects total sales to remain flat. Deloitte projects total sales
(excluding motor vehicles and gasoline) to reach $810 billion for the period November to January, which represents a zero
percent change over last year. However, Deloitte points out that this would be an improvement over last season's 2.4 percent
decrease, which was the first decline in holiday sales, according to Deloitte's analysis of Commerce Department data dating
back to 1967.
Estimated Licensing Revenue by Property (Click to view larger.)
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"Although there are signs that suggest the economy is nearing the end of its darkest days, many consumers remain burdened
by restricted credit availability, high unemployment and foreclosures," says Carl Steidtmann, chief economist with Deloitte
Research, a subsidiary of Deloitte Services LP. "Americans continue to save at historically high rates while also paying down
debt, and these factors combined suggest another chilly holiday season for retailers. "We are seeing certain economic indicators
move in the right direction," adds Steidtmann. "The consumer's desire to spend may rally somewhat if gas prices remain stable,
home values continue to strengthen and the stock market's comeback persists. These small improvements are part of the reason
that retailers may avoid another negative season."
According to Retail Forward's forecast for the 2009 holiday season, "Retail sales will be on the road to recovery, but it
still will be the second worst holiday of the past 42 years." Retail Forward forecasts flat growth, compared with a 4.5 percent
decline last year, and also projects that this sales growth trend will gain strength quarter by quarter in 2010.
There are several other trends and indicators that the global recession is ending and economies worldwide are showing signs
of improvement.
