THE LICENSING GAME: HIGH-STAKES JUGGLING OF IMAGE AND GROWTH
Who calls the shots?
In the stock market-happy, megabranded era, designers are under unprecedented pressure to grow — and grow fast. Licensing has been one of the fastest tickets to wealth and fame, delivering everything from retail units in Hong Kong to water bottles in California.
But ubiquity can exact a high price: loss of control of product, image and distribution — the very stuff that puts most designers on the map in the first place.
European houses, some of which are already public or at least flirting with IPOs, are, unlike the American megabunch, pulling in the reins on licenses in order to get a firmer grip on their brands. Gucci and Dior are among those applying this tactic.
Meanwhile, the Americans — Ralph Lauren, Tommy Hilfiger, Donna Karan, Calvin Klein and a few others — seem to be swinging deals at a near-dizzying pace, but with a marketing sophistication that keeps their carefully honed lifestyle images consistent, from product to product.
In fact, today’s licensing is a far cry from the credibility-straining days that gave the world Pierre Cardin commodes, Bill Blass chocolates and YSL cigarettes.
The issue of control just won’t go away, however.
It’s no secret that Donna Karan is one reluctant licensor. Even though her beauty deal last week with Estee Lauder is widely viewed in the financial community as essential to Karan’s bottom line, it will likely force the designer to personally take a step back. Beauty — a different world from fashion design — is perhaps the most difficult industry for a fashion designer to exert a controlling influence.
And the recent agreement in principle for Linda Wachner’s Warnaco to purchase Designer Holdings, the company that has the long-term Calvin Klein CK Jeans license, reportedly had Klein executives all steamed up. Klein executives were said to be concerned that Wachner, who owns Klein’s underwear brand, but is not a jeans producer, would have control over virtually one-third of Klein’s total product sales. While Klein could not stop the deal, all parties involved have apparently made peace, and Klein publicly gave his support to the Warnaco/DH deal.
But questions remain: In the quest for growth and the race to rack up numbers, how much are designers getting and how much are they giving up?
Following is a look at the state of designer licensing in key fashion markets.