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The Right Fit

The Right Fit

The combination of various elements such as the No. 2 footwear brand's high profile ads and integrated marketing, its celebrity endorsements, its diverse product assortment and its popular kids characters, have all con

The combination of various elements such as the No. 2 footwear brand's high profile ads and integrated marketing, its celebrity endorsements, its diverse product assortment and its popular kids characters, have all contributed to Skechers record-breaking growth in 2010 when total revenue was up 36 percent and topped the $2 billion sales mark.

Now, as a key part of its ongoing strategy to continue this growth momentum, Skechers, which will celebrate its 20th anniversary in 2012, is shaping an aggressive foray into the entertainment and licensing business, hoping to capitalize on its worldwide brand awareness and popularity that spans more than 100 countries, its strong penetration of the kids market and its relationships with major retailers.

This commitment to entertainment and brand extensions has been in the early stages of development for over a year and is now coming to fruition in a big way. The strategy is centered on two key elements: brand extensions for the core Skechers brand (and its footwear brands such as Shape-ups and Tone-ups) and for entertainment and characters based on "Zevo-3," its first TV series, and Twinkle Toes, the character based on its top selling kids footwear brand.

"There are so many opportunities at our fingertips to grow the brand," says Michael Greenberg, president of Skechers. "Licensing has added an entirely new dimension to our business, and we're very excited about the growth potential of these new categories, ranging from Skechers-branded bags, eyewear, kids apparel, scrubs and luggage."

Skechers' commitment to brand licensing was clearly emphasized when veteran licensing executive Paul Flett joined the company in August 2009 as senior vice president of global licensing, and the announcement in March that he would also oversee all licensing efforts for its original content and characters as well.

"Great brand awareness, the increasing 'cool factor' around the Skechers name, huge marketing investment and a strong position at retail makes it a logical next step for licensees to build upon the brand presence Skechers already enjoys in the footwear category," says Flett. "The next step for brand licensing is to round-out product category assortments at retail in the U.S., expand internationally through our network of brand licensing agents and develop Shape-ups and Tone-ups licensing programs around sports and fitness categories from apparel to fitness equipment, from socks, bags and headwear to hand weights and pedometers.

"The goal for Skechers' brand licensing strategy is to extend beyond footwear into complimentary and adjacent product categories and to partner with best in class licensees," adds Flett. Key categories include socks, watches, hats, apparel, cold weather gear, bags, backpacks, luggage, eyewear, swimwear and underwear.

Several Skechers-branded licensing deals that are currently being developed include:

  • Luggage and travel accessories for men, women and kids from Olivet International will launch at retail in fall 2011 in the U.S. and Canada. It will include suitcases, wheeled totes and duffle bags.
  • Backpacks, messenger and tote bags for men, women and kids from Global Design Concepts.
  • Watches with GLAMM.
  • Prescription eyewear and sunglasses with Viva International Group.

A key point for potential licensees, Flett points out, is the significant marketing investment of $150 million annually and the clout Skechers has garnered in the marketplace with its high profile celebrity endorsements that include NHL player Wayne Gretzky, co-host of "Dancing With The Stars" Brooke Burke, Kim Kardashian and Kris Jenner, fitness expert Denise Austin, NBA star Karl Malone and NFL legend Joe Montana. In addition, Skechers operates 527 retail stores worldwide and boasts a vibrant e-commerce business with over 1.5 million unique visitors monthly.

The formation of Skechers Entertainment last year was the direct result of the company's development of characters for its kid's brands as well as its chairman Robert Greenberg's passion for the business and the comic book promotion that started it all more than four years ago. Characters Kewl Breeze, Z-Strap and Elastika all debuted in comic books that were packed in boxes of kid's shoes and first appeared in December 2006 and subsequently appeared in animated commercials. Today, Skechers Entertainment has a variety of original content projects in various phases of development and last month completed the first season of 26 episodes of "Zevo-3" on Nicktoons in the U.S.

A critical component of Skechers licensing initiatives is the development of entertainment based on the brand's popular characters. Currently, Skechers Entertainment has seven projects in various stages of development, according to Kristen Van Cott, senior vice president, of creative development. They include:

  • Zevo-3, targeted to boys ages 4-9, launched its first season of 26 episodes, in co-production with Moonscoop in October 2010 and is airing 16 times weekly on Nicktoons. The show has received strong ratings outperforming other popular boys series depending on time slot. A feature length DVD is being developed and Skechers Entertainment is currently in discussion for a second season.
  • Twinkle Toes, targeted to girls ages 3-10, has two feature-length DVDs currently in production for release in fall 2011 and spring 2012.
  • Hydee & the Hytops, targeted to girls ages 3-10, has completed production for a feature-length DVD.
  • Luminators, targeted to boys ages 3-9, is in production for a feature-length DVD.
  • Hot Lights, targeted to boys ages 3-9, is in development for a DVD.
  • Bella B, targeted to girls ages 3-10, is in production.
  • Punkie Rose, targeted to girls ages 3-10, is in development.

A critical component of Skechers licensing initiatives is the development of entertainment based on the brand's popular characters. Currently, Skechers Entertainment has seven projects in various stages of development, according to Kristen Van Cott, senior vice president, of creative development. They include:

  • Zevo-3, targeted to boys ages 4-9, launched its first season of 26 episodes, in co-production with Moonscoop in October 2010 and is airing 16 times weekly on Nicktoons. The show has received strong ratings outperforming other popular boys series depending on time slot. A feature length DVD is being developed and Skechers Entertainment is currently in discussion for a second season.
  • Twinkle Toes, targeted to girls ages 3-10, has two feature-length DVDs currently in production for release in fall 2011 and spring 2012.
  • Hydee & the Hytops, targeted to girls ages 3-10, has completed production for a feature-length DVD.
  • Luminators, targeted to boys ages 3-9, is in production for a feature-length DVD.
  • Hot Lights, targeted to boys ages 3-9, is in development for a DVD.
  • Bella B, targeted to girls ages 3-10, is in production.
  • Punkie Rose, targeted to girls ages 3-10, is in development.

"We are in the entertainment space to build an entertainment business both in selling content and in licensing tied to the properties. This is separate business and that's how we are treating it," emphasizes Van Cott. "We are exploring all new platforms and technologies."

Oftentimes Skechers has been labeled as branded entertainment because it's a brand making entertainment, according to Van Cott. "But that is not our goal at all," she says. "We are simply in the entertainment business."

She adds: "The DVD platform gives Skechers more opportunity to compete as entertainment versus television because it essentially is a direct to consumer model and consumers can make the decision instead of dealing with network distribution, which determines that Skechers is a brand and should pay a price to be picked up."

"The goal is to build a licensing program based on each character in all major categories casting a much wider and broader net than we are on doing on the Skechers brand licensing side," says Flett who is spearheading the licensing efforts for entertainment. "We are actively planning to take these character brands to the mass channel where we are not currently selling our shoes, yet where we know that kids are certainly shopping for licensed products."

Adds Flett: "As these characters have grown in notoriety and consumer appeal, they have generated a great demand for other products. We know from our own Skechers retail stores that kids are coming in looking to meet our characters."

"Kids have fallen in love with these characters and want even more ways to connect with them," says Greenberg.

Flett explains that Twinkle Toes is already a bona fide leading girls brand representing $400 million, or 10 million pairs of shoes, annually, and that extensive brand extensions can be built upon this existing business in hopes of creating a true evergreen property over the next several years.

The Twinkle Toes movies will focus on key social themes such as self-expression, overcoming fear, loyalty, family, cyber-bullying and self-confidence. It will also focus on play patterns such as dance, crafts and creativity.

Flett says that a major Twinkle Toes QSR promotion is planned for summer and that the company is close to signing licensing deals for bicycles, scooters and skateboards and craft and activity toys.

Licensed products for Zevo-3 and Twinkle Toes, as well as other characters, are planned for a wide assortment of categories, says Flett, including interactive, toys, games, gifts, stationery, back to school, crafts, publishing, apparel accessories, food and beverage, role-play, home, novelty, seasonal and personal care.

The future is taking shape for Skechers' licensing efforts based on several factors including its commitment to entertainment, its integrated marketing approach and its brand awareness among consumers worldwide.

A major strategic point for the future, says Flett, is "the active development slate in the pipeline that will deliver new entertainment and characters over the next two to five years which will help licensees build a continuity program at retail and help create best of class evergreen properties."

"The new Skechers branded product categories perfectly capture our image and lifestyle, keeping the integrity of our image intact," says Greenberg. "We have invested so much in our advertising and marketing campaigns to create a dynamic brand image for Skechers, and the new licensed product collections are right on target with our brand DNA. We want to provide our customers with the highest quality products that complement our footwear collections."

Based on its global penetration, brand equity, entertainment and character development, brand licensing is the right fit for Skechers and the footwear company is on track to become a formidable player over the next several years.

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