By  on June 21, 2007

NEW YORK — Licensed team sports apparel is a priority for J.C. Penney Co. Inc. even though it doesn't generate huge profits.

Bryan Nosal, Penney's senior buyer of licensed team sports and men's athleticwear, said retailers like Penney's have to deal with internal and external hurdles in seeking to fill customer demand for licensed sporting goods.

"No one wants to deal with the complexity of what could be 10 percent of their business and 40 percent of their time," Nosal said. "Five years ago, profit margins [for licensed team sports goods] were so low we considered getting out of this business."

Nosal spoke to more than 100 sports licensing professionals during a panel discussion on "Licensing's New Retail Paradigm" at the National Sports Marketing Network's Second Annual Sports Licensing Summit Monday at the Grand Hyatt here.

Licensed sports products "compete against other categories for space and inventory dollars," Nosal said, adding that this area does not "compare favorably profitability-wise to other departments."

He has to keep inventory lean and rely more on "chase" business (including ordering from teams enjoying winning seasons), so he puts pressure on vendors to give deals and to communicate what products are easy to get back into.

If a company has multiple buyers ordering team goods, the results might be New York Jets jerseys and New York Giants bed sheets — hardly a cohesive package. Nosal said he oversees the entire selection to avoid such issues.

Externally, Penney's challenge is "one of perception and respect," Nosal said, adding that the moderate department store chain does not have full access to all of the product levels and categories that sporting goods stores do.

"We are committed to the license business for the long haul," Nosal told licensees in the room.

The panel moderator, Wall Street Journal sports reporter Russell Adams, said a major industry trend was licensees and manufacturers opening their own stores, competing with traditional retailers like Penney's. Nosal expressed concern that teams may break off to do their own product licensing, and he recommended that teams sign with licensees who "own the industry.""It's fine and good that the Dallas Cowboys went out on their own, because they are only one team," Nosal said. "But if we had to buy from every NFL team individually, it would be the end of it."

In addition to Nosal, the discussion included the following panelists: Bill Kraus, Under Armour Inc. senior vice president of marketing; Scott Bouyack, vice president of apparel marketing of The Collegiate Licensing Co.; John DeWaal, vice president of brand communication for New Era Cap. Co.; Mike Loparo, vice president of consumer products for the Arena Football League, and Leo P. McCullagh, vice president of retail licensing and consumer marketing for the PGA Tour.

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