As we begin the countdown to October’s Brand Licensing Europe (BLE), what is the “state of the licensing nation” here in the UK? Outside of politics (more on this later) there’s been a good deal to cheer up the country through spring and summer. In sport, women’s teams came to prominence with good performances in football and rugby union, progress for star tennis players and even a world cup win for our cricketers. The men continue to confound in team sports though the cricket team won a series against South Africa.
LIMA played its part (ahem) by staging our Licensing Essentials Course and Spring Fling at the end of May in the famous Long Room at Lord’s. Add that to a successful IAAF World Athletics Championships at the 2012 Olympic Stadium and anticipation for England’s rugby League side in this winter’s Aus/NZ World Cup, and the mood has been upbeat.
On the surface in licensing, too, all is well. The LIMA Global Licensing Survey for 2016 shows the UK still as the number two market after USA/Canada, with overall sales at retail (US$13,599 bn) up by 4%, on a par with worldwide results. The raw figures mask some major issues, however, which are coming home to roost.
In the natural course of things a huge amount of licensed merchandise sold in the UK is manufactured in Asia and beyond. Toys, apparel, accessories, consumer electronics, sports equipment and many other categories are imported in great volumes. The collapse in the value of £ Sterling after June 2016’s Brexit vote is costing all licensees in this market upwards of 20% of their margin. At the same time consumer incomes continue to be squeezed so that retailers are themselves under pressure to keep prices low, so there’s no comfort there.
It’s hard to understand, therefore, why a number of licensors and major agents are pushing for tougher terms – higher royalties, annualised guarantees – just when the licensee community needs support to get through this difficult period. What’s more, there’s really no end in sight: until the outcome of Brexit becomes more clear (and the very earliest that will happen is March 2019, our official ‘departure date’) then the dreaded word ‘uncertainty’ dominates the economic scene. The multiple alternative outcomes of Brexit will, one way or another, affect how license agreements are drafted and how trade between the 28 EU countries will function (customs and tariff implications) and, put simply, right now no one can be sure how this will play out. Great for forward planning, don’t you think?
Licensing is doing its best to sail these choppy waters, nonetheless, and BLE 2017 looks set to be the biggest yet in terms of exhibition space and, probably, visitors. Visitor numbers were up 2016 over 2015 at the event itself. At LIMA, we recently analysed attendance at the LIMA BLE Garden Party. For those of you not familiar, this is the biggest social event of BLE at the famous Kensington Roof Gardens, with a sold-out capacity attendance of 500 people in 2015 and 2016. What we found is that 40% of ticket sales for the evening went to non-UK residents, which is yet more proof of BLE’s truly international status in the global licensing business. Licensing events now run from Monday afternoon to Thursday night at BLE, so it’s a big week for licensing here. If you’re coming over for BLE this October we look forward to seeing you there, if not, we’ll promise to drink a beer for you.