SHARPENING THE FOCUS
Byline: Holly Haber
DALLAS — Being a control freak is not a bad thing when it comes to licensing accessories.
Licensing can be a lucrative way to expand a brand’s volume and influence in the marketplace. But, executives stress, it must be done with strict control over design, marketing, pricing and distribution to maintain the integrity of the brand.
“Licensing is essential to growth,” said Tracey Nelson, vice president of licensing at Nine West. “A brand has limited growth potential without a licensing program, but you can go too far — Pierre Cardin literally licensed toilet seats. It makes sense when you are following a strategy that is true to the meaning of the brand. Nine West is all about fashion at a great price point.”
Longtime shoemaker Nine West started its licensing program only three years ago, beginning with sunglasses and belts, followed by jewelry, kids’ shoes, outerwear and socks. Watches were launched last spring, and Nine West is introducing sheer hosiery this fall. With the firm’s recent acquisition by Jones Apparel Group, clothing is in the works.
“What we were doing is taking the brand from a shoe brand and evolving it into an accessories brand, and outerwear is a bridge into lifestyle apparel,” Nelson explained. “If I had gone from shoes to towels and sheets, the customer wouldn’t have come along with me. This doesn’t mean I can’t get into home later, but I have to evolve it so by the time a product appears at market, she says, ‘Of course.’ “
Licensees help finance marketing, but Nine West creates all promotional materials, right down to point-of-purchase displays. Its design director dispenses themes and direction to licensees and approves every item.
“It’s key because if everyone figured out their own look, then we wouldn’t have a cohesive brand identity,” Nelson noted. “Control is the only way to have a successful licensing program — that and picking the right licensees.”
Accessories maker Kenneth Cole has more than 30 licensees, the first of which, started in 1988, was handbags — a business Cole subsequently bought. The company will launch contemporary women’s sportswear for fall 2000 through a new license with Liz Claiborne.
Cole’s strategy is similar to Nine West’s — it dictates design direction, manages marketing and oversees pricing and distribution of all licensed products. More than half of Kenneth Cole’s revenues comes from licenses, and those businesses are up dramatically this year, according to Paul Blum, executive vice president and chief operating officer. Watches and jewelry are growing most quickly.
“Basically, the goal is that to the consumer, it doesn’t look like a license,” Blum explained. “It is a cohesive lifestyle package and brand presentation.”
The benefit of licensing is that it’s an effective way to expand a fashion business without creating too large an infrastructure, Blum pointed out.
“Licensing enables companies to come together in a joint venture, bringing together their strengths,” he noted. “The licensee tends to have sourcing and infrastructure and the licensor tends to have marketing and brand positioning expertise. Design is a joint venture, with the licensor having control and direction, and the execution left to the licensee.”
Echo Design Group, a 75-year-old company known for its printed silk scarves, functions as both licensor and licensee. Echo has licensed its own name for bedding and bath, wallpaper, home textiles, napkins, plates and stationery. It also holds the licenses for scarves for Polo for Men, Ralph Lauren, Lauren by Ralph Lauren, Laura Ashley, Coach and Save the Children, plus scarves and ties for the Museum of Natural History and the Smithsonian Institution. It will introduce cold-weather products next fall for Chaps and Coach.
“Licensing is a great vehicle for growing your market,” said Steven Roberts, co-president and chief marketing officer. “It gives you more opportunity to offer customers a great product and be true to what the brand is all about.”
By producing several key scarf brands, Echo gains strength in sourcing and distribution, he noted.
“It wouldn’t be as easy to have buying power or global exposure if we only had one brand,” Roberts pointed out. “And we can make the buyers’ shopping experience easier as opposed to running around to four or five different places. They can get different looks and brands and have a diversified look at retail but still work with one wholesaler.”
Echo employs design teams for each brand and works closely with the licensor, gaining approval on products.
“We work with strong brands that have a true identity and sign off on everything, and we totally support that,” Roberts noted. “It’s a wonderful marketing partnership between two companies.”
Westport Corp. produces its own line of Mundi small leather goods as well as women’s small leather goods for Kenneth Cole and a men’s line for Perry Ellis. It will introduce Totes for Isotoner next spring.
“The quality licensors are very focused on keeping the equity of the brand intact, and there’s nothing wrong with that,” said Richard Rubin, president. “Once it’s bastardized, then nobody wants it in all channels. At the end of the day, you’re only as good as your licensor.”
And having a license is not necessarily money in the bank, Rubin cautioned.
“A lot of people sign licensing agreements and it doesn’t work out,” he noted. “You have no idea how many licensing agreements we turn down a month.”‘
For instance, Rubin said, he was asked by major retailers to do agendas for Kenneth Cole, but he declined because it would cannibalize his own agenda business.
“What would be the point of just switching dollars?” he asked. “We don’t do it if we don’t feel we can do justice to them and make incremental volume for us. The biggest issue right now is getting back to quality and value of product. If you don’t have that, you’re not going to win.”