October 26, 2016

This is why brands should tap Gen Y through licensing

Pegged at INR 4500 crore, the merchandise market of India shown a double-digit growth rate. And a majority of growth is driven by the youth merchandise range that is the where the money lie for retailers.Given the growing base of super consumers, they have emerged as the target group every retailer wants to woo. Un...

By Shipra

Pegged at INR 4500 crore, the merchandise market of India shown a double-digit growth rate. And a majority of growth is driven by the youth merchandise range that is the where the money lie for retailers.

Given the growing base of super consumers, they have emerged as the target group every retailer wants to woo. Understanding their demands has been a tedious task for market players, credits to the brand conscious but not brand loyalist millennial youth. As said, “There is a huge gap between liking and buying for this consumer base.” This is where brand licensing acts as an effective retail strategy to get this gen Y to buy.

A testimony to this is involvement of bevy of established retailers in licensing activities, for instance – Future group has inked pact with cartoon Network for many of its properties, global make-up label Sephora launched Minnie collection and Guns & Roses collection of T-shirts is selling like hot cakes at H&M stores.

Also, licensors are empowering their youth-centric content by scaling up their youth merchandise range and launching newer product categories. Viacom18 recently added MTV deodorants, footwear, and cosmetics to its portfolio and introduced new ranges of sunglasses, watches and apparel, targeting youth between the age group of 13 and 25 years. Also, taking licensing to next level, the studio also launched the first café named FLYP@MTV under a licensing agreement with Funbar Hospitality. Viacom18 is a content creation company that has interests in films and owns television channels such as MTV, VH1, Nickelodeon and Colors.

Following the trend, Disney India has tied up with fashion brand Vero Moda to launch a limited collection clothing line inspired by Bambi in November. In past, the entertainment mogul has partnered with Only for Mickey Mouse inspired apparel range and Jack & Jones for Captain America collection.

As per estimates, the merchandise business of Disney is valued at Rs 1,500 crore in retail sales in 2015-16 and is expected to close 2016-17 with Rs 2,000 crore.

Usually associated with children’s categories like toys, stationery, and other accessories, the merchandise business at Viacom18 is also banking on the adult segment.

“We are operating in over 35 categories in the youth segment. We have more than doubled our business in youth licensing in the past one year and we are growing around 70 per cent this year, driven by apparel, accessories and footwear,” said Saugato Bhowmik, Executive Vice President & Business Head, Consumer Products and Integrated Network Solutions, Viacom 18.

Viacom18 also owns third party brands like Charlie Brown and has the master licensing rights to sell the Spanish football club FC Barcelona merchandise in India.

More than a mere extension

Once thought of as an extension to existing business, brand licensing is being observed a new business altogether. In words of Shobu Yarlagadda, CEO, Arka Productions, “The movie (Baahubali) is one part of the whole business and animated series, live action series or novels, all are equally important for us. While all of them will feed on one another, they will stand as an independent entity.”

Noticeably, Arka Productions is devising a large scale licensing program for its most talked-about movie Baahubali. Motorcycle maker Royal Enfield is also developing its merchandise range as a separate revenue stream. Samrat Som, head for gear (apparel and accessories) at Royal Enfield says that they are expanding the range to complete their core product offering to our consumer.

The growth drivers

This growth is driven by several factors, one of them being the alliances from the online marketplaces to multiply the reach. With internet reaching Tier II and Tier III cities, youngsters are able to buy merchandise of the brands they associate themselves with.

Also a lot of global companies are increasingly looking at the Indian market to monetize on their brand value. For instance, football clubs have a huge fan following in India. Also TV series such as Breaking Bad, Game of Thrones and Simpsons have marked their presence in licensing industry of India.

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