Retail has seen a massive shift over the last ten years. The rise of ecommerce and changing consumer habits has redefined the shopping experience in ways previously unimaginable. This dynamic alteration in the field has also had an effect on licensing as a whole. Today’s licensing players must now be mindful of modern consumer demands, including sustainability, transparency and experiential shopping.
To learn more about these new considerations and their impact on licensing, License Global caught up with Michael Stone, chairman and co-founder, Beanstalk. Stone shared with us his views on the challenges and opportunities for the licensing business in the near term. He detailed his thoughts on how essential consumer topics such as sustainability should play a vital role in any licensing strategy, and he identified other aspects that licensing professionals should prep for to stay ahead of the curve.
Stone spoke with us ahead of his upcoming session at Licensing Leadership Summit in March, where he will be doing a deep dive on trends and initiatives every member of the licensing community should understand.
Read our full Q&A with Stone below:
License Global: What has been the biggest change you’ve seen in the licensing business over the last five years?
Stone: Online and offline retailing will continue to blend and cross paths, all to the consumer’s benefit. As a result, the consumer’s shopping journey will continue to evolve, providing yet more opportunities for licensing. It’s no longer about “rounding up the usual suspects” when developing a channel strategy for a licensing program, or when reviewing business plans by licensees or when managing a program.
Instead, those of us in licensing must address how, where and when consumers are shopping. Licensing strategies today address product transparency, sustainability, product information, reviews, tutorials, videos, influencers, retail exclusives, cross-marketing and promotions, demographic targets and the different shopping habits of different generations, experiences, artificial intelligence, and augmented reality, among other considerations. The accelerating pace of change – in how marketers communicate and connect with consumers and how products and services are offered for sale – has influenced licensing over the past several years in ways that we have not witnessed before.
What is the biggest trend or industry disruption that you see on the horizon that not enough people are taking about?
The biggest disruptor coming down the road is sustainability. While the conversation has started, it remains too quiet. But it won’t stay that way for much longer. Giant companies have set themselves ambitious targets to cut carbon emissions, reduce water usage and recycle plastics and other materials, all the while offering consumers transparency in how their products are sourced and manufactured. The licensing industry needs to catch up and catch up fast before the risks become apparent. Very few licensors impose sustainability guidelines on their licensees or even provide guidance at all. That must and will change.
Consumers, especially younger consumers, are putting the future of the planet front and center in their lives. It affects their shopping behavior and purchasing decisions. Major retailers, such as Walmart, are moving ahead to get a handle on this. With consumers demanding that the brands they buy take positions on social and environmental issues of the day, property owners’ risk reputational damage if the licensed products don’t live up to the vision and equities of the property owner when it comes to sustainability.
For example, what if the licensed products are made from materials that come from precious or endangered environments or don’t live up to the claims made about the source of materials? The licensing industry will need guidelines and standards regarding sustainability. Consumers are looking for – indeed demanding – more than just words, they are demanding action. The licensing industry will need to move quickly, paying attention to sustainability across product categories. Those licensors and licensees who don’t pay attention to sustainability, do so at their peril.
How do you envision the role of licensing agencies evolving over the next 10 years?
The best licensing agencies have already moved away from being transactionally driven to strategically driven. This movement will accelerate and in 10 years the licensing agencies that not only survive, but prosper, will be those that offer a comprehensive menu of services for clients.
However, that will take resources and talented staff. It will require a mindset that doesn’t yet exist in many agencies. The best licensing agencies have always been good at seeking out the best licensees and negotiating favorable agreements. That, of course, will continue. However, given the complexities of the retail landscape today and what is anticipated over the next decade, agencies will have to provide a great many more services for their clients. Agencies will have to have a clear understanding of how, where and when consumers shop; the differences in shopping behaviors among generations; how to reach consumers with licensed products and services; the plethora of paths available for offering licensed products and services to consumers, both online and offline, and more.
Licensing strategies developed by agencies will need to be comprehensive living documents (some agencies are already doing this). And managing and supporting licensees will grow in its importance as part of the licensing journey. Agencies will learn how to collect much more data than they are collecting at present to help manage licensees and to better understand what’s working and what’s not working, and course correct. I am also confident that sometime in the next 10 years someone will finally develop the analytic research tool that will allow licensors to empirically know whether their licensed products are driving sales of their core product or service.
In short, licensing agencies will need to continue to up their game in knowledge and skill, and their ability to collect and understand data. It’s an exciting time to build a business, to build a licensing agency or to fine tune one that already delivers excellence.
What advice would you give yourself if you could go back to the beginning of your career?
The answer to this question is my next book! There is so much that I have learned and wish I could share with myself at the beginning of my career. But I’ll keep it really (really) brief.
You are more capable, more competent than you think you are. The boundaries of your comfort zone are farther out than you think. You should always look for the path that leads you beyond those boundaries, despite the fact that the boundaries are constantly moving even farther out. Some of those paths will lead to dead ends. But some of those paths will lead you to places that you never imagined; places of discovery, of learning, of curiosity, of challenge, and of success. Don’t ever be discouraged. What discourages you today, you won’t even remember in a year. Don’t be afraid to take paths where you can’t see beyond the bend in the road. Always expect the unexpected.
What are you hoping people get out of your talk at the Licensing Leadership Summit?
We live in a complex marketing and retail ecosystem with change occurring at an accelerating pace. With this presentation, I will discuss why licensing is a more valuable tool than ever before and how it can play an outsized role in this environment.
I want the audience to walk away thinking about licensing in a new context and to feel motivated to speak about licensing in this new context to other stakeholders. Marketing professionals scour the marketing landscape seeking ways to reach consumers with their brand message, whether it be a consumer products goods company, an entertainment company or a sports league. They have a plethora of options to consider to reach and engage with, to entangle with, consumers and drive them to make a purchase. To invite consumers to participate and affiliate themselves with their brand, their property. They just need to focus on where, when and how they want to connect with consumers.
Licensing today is a very valuable and a frequently unrecognized tool in their toolkit. Licensing has all the attributes and objectives of any marketing and communications strategy focused on recruiting, retaining, and further bonding consumers to a property or a brand. And, in addition to being a very valuable marketing and communications tool, licensing is also a part of the consumer shopping journey – a journey that is getting increasingly complex in our connected world – which makes it integral to a brand’s marketing and retail strategy, for both online and offline retail. Licensing is an effective way of touching, connecting and communicating with the consumer along the way in the shopping journey. In a world where consumers, particularly younger consumers, have short attention spans and jump very quickly from one connection to the next, licensing can play a very compelling role.
Like any product journey, licensing follows cultural movements and changes in consumer behavior. Participants in licensing, whether they be licensors, licensees, or retailers, must be part of the “shopping conversation.” If they are engaged in this dialogue, they can optimize success and properly manage and support their licensing programs. This engagement translates into understanding how consumers are shopping today, where they are doing their shopping, and what the dynamics are of both online and offline retailing. If they fail to be part of the shopping conversation, they cannot develop the strategic plans necessary to drive a successful licensing program and will be leaving performance to the whims of the marketplace.
It’s a shopping battlefield out there. Licensors and licensees must be aware that the transformation of retail involves more than just a balancing act between e-commerce and brick and mortar. Licensing strategies today must consider all of the ways that consumers purchase products and determine which are relevant for their particular licensing program, because where and how consumers shop is where licensed products can be offered for sale.
To hear more from Stone and other licensing thought leaders, register to attend this year’s Licensing Leadership Summit, taking place on March 16 and 17, 2020, in New York City, New York. The re-imagined executive-level conference and networking event will present a comprehensive program that covers industry-focused topics shaping the licensing world.
The Licensing Leadership Summit is organized by the Global Licensing Group at Informa Markets, the organization behind leading trade shows Licensing Expo, Brand Licensing Europe, Licensing Expo China and Licensing Expo Japan, as well as License Global.
Sponsors of Licensing Leadership Summit 2020 include JPatton, an industry leader in providing innovative, customized solutions that combine patented brand-protection products and services with unrivaled consumer engagement opportunities; Dependable Solutions, Inc., which delivers the latest financial management and creative approval systems and services to agents, licensors and licensees by experienced specialists who have licensing, creative and royalty backgrounds; Trevco, which helps materialize the brand vision of more than 800-plus licensed brands through the manufacturing and sales of licensed consumer products with a focus on apparel and accessories; and Future State Brands, a global consumer goods and marketing company with a mission to lead cannabis from the black market to the supermarket.