A sweet dream for licensing biz

In 1998, when the Beanie Baby craze was at its height, MLB offered a bear as a gate premium at its All-Star Game. The fervor surrounding the limited edition “Glory Bear” was so ardent that fans exiting Denver’s Coors Field that night were accosted by men thrusting multiple hundred-dollar bills at them, seeking to buy the treasured collectible. Published reports had the bears resold outside the stadium for $500 apiece.

The rise and swift fall of various Beanie Baby sports premiums — last week, a “Glory Bear” was listed on eBay for as little as 99 cents — was the last time sports merchandisers got overly enthusiastic about stuffed animals. But now, they are excited again, as the sports-licensed Pillow Pets, a new plush offering, are this season’s “it” item.

Like so many licensing hits, Pillow Pets is a deceptively simple idea that has become a rage. Jennifer Telfer, a San Diego mother, saw her son using a stuffed animal as a pillow, inspiring her to create a plush and cuddly puppy in 2003 that flattens out to become a pillow when a strap is unfastened. Buoyed by a direct-response TV campaign with a jingle that drove home the point that “It’s a pillow, it’s a pet,’’ sales exploded. After $300,000 in first-year revenue, Telfer’s CJ Products sold $3 million worth of Pillow Pets in 2008, $7 million in 2009 and more than $300 million last year.

Assuming, conservatively, that just the ones purchased over that period sold for $10 each wholesale (many were sold direct-to-consumer), that’s more than 30 million generic Pillow Pets sold before any sports licenses were attached.

With that kind of lead-in, sports-licensed Pillow Pets have been easily able to corroborate a licensing maxim that says any hit gift or novelty item will eventually end up at retail adorned with a sports logo.

A tribute to the widespread success of the original Pillow Pets is that officials from Manhattan-based licensee Fabrique Innovations first saw them at a trade show for hardware retailers. Rationalizing that the only bigger passion for sports fans than their teams is their children, Fabrique owner Sy Garfinkel immediately saw the possibilities in a Pillow Pet using sports logos and team mascots, and reached a deal with CJ Products to obtain the rights to license the products to sports brands.

Fabrique’s first retail test at Wal-Mart stores in Alabama, Arkansas and Oklahoma confirmed his initial enthusiasm: 1,500 pieces sold out in 48 hours.

The race to fill orders began, and it hasn’t stopped.

“We knew there’d be demand because of how many had been out there,’’ said Garfinkel, surrounded by licensed Pillow Pets at his Garment District showroom. “Look at any game, and it’s the father and son watching together. We’re just tapping into that connection.’’
No one is suggesting that Fabrique has the next Beanie Baby, but it does appear to be this year’s hit. The company is tight-lipped when it comes to sales specifics, but Garfinkel acknowledges selling “multiple, multiple’’ millions of licensed Pillow Pets so far this year.

MLB-licensed versions were first to market in April, and more than a million have been sold since then, causing Fabrique to increase original production plans for 2011 by tenfold, according to MLB officials. Even so, Garfinkel says sales of MLB Pillow Pets will finish far behind those of NFL and college versions, which hit retail in late summer. The NFL saw enough potential that a child hugging a Pillow Pet appears in a current TV ad (see photo) showcasing the breadth of its licensed offerings. IMG’s Collegiate Licensing Co. already counts Fabrique as its third-biggest licensee behind perennial top dog EA Sports and Wilson, which sells the most endemic of products: an NCAA-embossed football that does not carry school logos.

The NFL featured team-branded Pillow Pets in a TV ad about its licensed products.

As for pricing, generic Pillow Pets sell for $15 to $20 compared with the licensed Pillow Pets price points of $25 to $30, giving an indication of how much a sports license adds to an item’s price. Even so, the licensed versions are sold at an attractive price point for a gift, and while kids are the primary target, Pillow Pets have an appeal that cuts across ages. Consequently, they’re being sold across a remarkable variety of retailers, including Wal-Mart, Walgreens, Modell’s, QVC and Hobby Lobby.

“It’s not just plush; it’s plush with a schtick,’’ said MLB licensing chief Howard Smith, when asked to explain Pillow Pets’ success. “With any hit, it is always tough to say exactly what nerve they are hitting, but as a licensor, you want to offer fans anything tied in to what’s popular, and this is a prime example.”

There’s also the utility that made Pillow Pets a hit in the first place.

“It’s simple,’’ explained Bryan Swallow, vice president of marketing and sales at online retailer FootballFanatics.com, “Adults like them because they’re a connection to their favorite team. Kids need pillows for car rides, nap time or whatever, so they won’t be dropped in the toy chest and forgotten.’’

Brian Jennings, NHL executive vice president of marketing, said that while NHL-licensed Pillow Pets have only been sold since August, they’re already in the top three of sales of among league-licensed nonapparel items. Jennings compared the licensing success around Pillow Pets to other licensed phenomena, like Crocs and bobbleheads. “They hit a great combination of the right emotional chord and the correct price point,’’ he said. “Their universal appeal is impressive and they run the gamut as far as multiple channels of distribution.”

Also working in favor of licensed Pillow Pets is the quality of the product, generally acknowledged as an improvement upon the generic versions, along with Fabrique’s industry expertise. Last year, Fabrique handled the first licensed sports versions of Snuggies, another TV-fueled hit that turned out to be the ideal preparation for a company that began selling licensed fabric but more recently has turned to selling finished goods.

“After Snuggies, Fabrique understands how to identify an opportunity and really come after it,” said Dave Kirkpatrick, vice president of nonapparel marketing at Collegiate Licensing Co., which has licensed more than 50 schools for Pillow Pets. “It’s a strong product, shipped on time, and we’re looking for really big holiday sales.”

As with any licensing hit, whether it’s Crocs or Silly Bandz (last year’s one-trick pony), the question of sustainability is paramount.

Fabrique has a number of extensions in the works for next year, including mini Pillow Pets and a plush piece that reverses from a ball of the type used in the sport to a team mascot.

“It’ll be strong through the holiday, and then we’ll see where it settles,” said FootballFanatics’ Swallow.

Garfinkel sees Pillow Pets eventually becoming a staple item.

“Every hit goes this way and that way,” he said, gesturing left and right, before pointing downwards. “Hopefully, it doesn’t go that way too soon.”