Danilo, Misirli, Blueprint, Vivid Toys, Character World, Redan and Amscan share their views on how COVID-19 has affected business in LicensingSource’s first industry meet up.
A host of leading licensees from across key categories joined LicensingSource.net last week (Thursday April 16) to share their views and experiences about how they are dealing with life and business during the coronavirus pandemic.
In the first virtual industry meet up hosted by Source, Dan Grant, licensing director at Danilo; Kim Bown, md at Misirli; James Redfern, sales director at Blueprint Collections; Emma Weber, marketing and licensing director at Vivid Toy Group; Tim Kilby, brand director at Character World; Julie Jones, md at Redan Publishing; and Mel Beer, licensing director EMEA at Amscan shared their experiences of how their respective companies have been shored up as the UK enters week five of lockdown, as well as how conversations with licensors have been continuing and what the landscape might look like when retailers begin to re-open.
All of them agreed that the biggest challenge was protecting cash flow and, to this end, conversations had been taking place with licensors about what can be done to stagger payments, defer payments and extend terms.
And encouragingly, the response for the most part appears to have been a receptive one.
“So far, they’ve been pretty receptive; I haven’t had anyone who isn’t understanding of the situation which is a really positive thing because I think, coming out of all this we need to really work together, as an industry, to turn it around and make it work,” commented Mel.
Redan’s Julie agreed: “We’re getting quite a lot of support from licensors I would say. We’ve been talking to a couple about some new deals but also on the proviso of what MGs are likely to be, payments, etc but they are being quite receptive to different ways of working it.”
Tim believes that not typically having a seasonal spike for the homewares category will fall in favour for Character World and that carrying stock in the warehouse is a “bonus at this stage as it means that we can keep those online sales trickling through”.
He continued: “From a supply chain point of view, we’re trying to defer payments as much as possible. Obviously there have been orders placed, but the retailers haven’t taken them… so it’s a juggling act, you’re spinning lots of plates and trying to protect your own business but also trying to protect the suppliers, who we rely on. Like everyone else, we’re working with licensors, trying to get their support and, on the whole everyone has been brilliant from a licensor perspective, very supportive.”
Seasonal activity – such as Mother’s Day, Easter and potentially Father’s Day – on the greeting cards side has taken a hit, although Danilo’s Dan explained that the likes of Funky Pigeon and Moonpig have stepped up and enjoyed an uplift, while grocery is now getting back up to a healthier percentage of what it would usually be after the first couple of weeks of lockdown.
The delay on a number of key movie releases has also created challenges. Dan continued: “Without those films happening, there’s no demand for the product. And in a lot of cases, you won’t be able to develop product anyway because it will be under embargo.”
Certain categories, however, are enjoying a significant uplift, as Blueprint’s James explained: “The two areas that we’ve seen positive sales in are colouring and activity for the younger children, plus home office. Those short-term opportunities were good in the first couple of weeks. Interestingly too, our lifestyle brands such as Sara Miller, Van Gogh and National Geographic, because they don’t hinge on movie releases or people going out, all of our retailers are still planning on listing those and are being very positive about them into the third and fourth quarter.”
James added that a key challenge for the business will be seeing where people will be for back to school in particular: “The grocers have told us that there’s still going to be a back to school and that there’s no change to their stock in-take.
“However, some retailers who are closed are either phasing their orders out or cancelling them completely. Even if they believe their stores will be open in time for back to school, they’ve got spring/summer inventory they need to sell through first.”
Encouragingly, Mel said that on the party side of Amscan’s business conversations on new initiatives with a brace of retailers are continuing on new product development and new ranges for spring/summer 2021, but the view from all of the licensees on how retail will begin to return was that it’s a difficult one to call.
“My view would be it needs to be staggered – I can’t believe that we can just go out there and open everything up again,” commented Dan. “There has to be a massive risk attached to that and I am sure we will learn from other countries that are going before us.
“I think people are changing their ways of shopping now – which is being enforced on us – and I think the whole working from home element is going to have a big impact on how business is done going forward as well. Our whole lifestyle really coming out of this will change.”
Misirli’s Kim offered: “None of us know what’s going to happen with return to work for the retailers, but the biggest ones that we’re dealing with seem to be still quite stable for the second part of the year. I think the differences we’re having are product specific – our category of socks seems to be still going ahead. The problem we’ve had for spring is moving some of those into spring/summer 2021, however autumn/winter 2020 seems to be – touch wood – holding up.”
Emma Weber pointed out that, as a business, Vivid was quite lucky as it has categories which are showing a high consumer demand, such as arts and crafts with the Crayola brand, games and puzzles and outdoor toys.
“We’re having very positive conversations with retailers, it’s really going to be about at what level sales will happen for the second half of the year,” Emma commented. “Like James was saying, back to school will still happen – I’m a parent, I hope it will still happen! But we don’t know to what level and we don’t know how quickly retail will be able to set up for it. But we’re planning full marketing campaigns for autumn/winter for new brand launches that we’re focusing on for Christmas. Toys tend to be recession proof but it will be at a level.”
Making sure that licensed products remain at the forefront of retailers’ minds and that there isn’t a shift towards generic lines is also a concern, but it was unanimously agreed that without working together, it will be a struggle to get through this.
As Amscan’s Mel pointed out: “Licensors need us as much as we need them and we all need the retailer. It’s a triangle and without any element working, it’s going to fall over. I think people do understand that.”