Licensing 2008: Cherry-picking 2009's hits
NEW YORK (Reuters) - Dora the Explorer or Winnie the Pooh? Spider-Man or Iron Man?
As cash-strapped consumers have become more choosy, such questions dog the minds of brand owners, manufacturers and retailers at the 2008 Licensing International Expo this week.
Whoever can figure out which brands will be a hit 12 months from now will win the jackpot.
"Retailers have less space in toy aisles than ever before," said Debra Joester, chief executive of Joester Loria Group, a licensing agency. "Having a lot of brands does not guarantee any more business. It's having the right brands."
This year, everything could hinge on keeping the wary consumer in mind and cherry picking for the right brand, given the variety of brands and how careful shoppers have become with their purchases.
Charles Riotto, president of the International Licensing Industry Merchandisers' Association (LIMA), said the event has become vital to more companies than just those in the entertainment business.
"In this competitive market, the ability to create greater brand equity and at the same time derive lots of revenue is really a huge plus for a lot of companies," Riotto said.
About 25,000 attendees are expected at the event, where 6,000 toys, sports, entertainment and art brands will be on display.
Disney's Hannah Montana will jostle with Mattel's Barbie for dollars and shelf space at the show from June 10-12 at New York City's Jacob Javits Center. Entertainment brands such as Indiana Jones, Speed Racer and Iron Man -- propelled by movie releases this year -- are expected to remain popular.
In 2007, U.S. retail licensing revenue was $107.8 billion, down slightly from $108 billion in 2006, while it was estimated at $195.7 billion globally, according to LIMA.
For brand owners, manufacturers and retailers alike, licensing is an all-important aspect of business. Licensors could mint millions from just one brand.
POKEMON AND SPIDER-MAN
Toymakers are always looking to expand their brands, adding anything from toothbrushes to T-shirts and backpacks stemming from popular characters.
They could also strike deals for the rights to make a toy based on a hit entertainment brand, like High School Musical.
"(Licensing) is very important. Licenses drive a lot of activity in our industry," educational toy maker LeapFrog Enterprises (LF.N) Chief Executive Jeffrey Katz said.
This year, LeapFrog has exclusive educational licenses for Star Wars and Indiana Jones, Katz said.
With licensing, retailers are betting that consumers will buy Dora the Explorer flip-flops, Pokemon T-shirts, Winnie the Pooh strollers or Spider-Man lamps, over generics.
But picking a right brand can be hit-or-miss.
"There is no formula. If you had one, you would be very rich in a very short period of time," LIMA's Riotto said.
These days, promoting a brand online is "absolutely essential" said Reyne Rice, a toy trends specialist for the Toy Industry Association.
That, Rice said, was the case for new toy brands as well more "classic" ones like Barbie.
"Many companies have introduced products that have a physical component, as well as an online component."
Last year's toy recalls were not expected to have any major impact on 2009's licensing decisions, but safety will remain a focus, said Joester.
(Reporting by Aarthi Sivaraman, editing by Patrick Fitzgibbons and Richard Chang)
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