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Brick-and-mortar retail concerns still roiling licensing industry

Industrywide anxiety about the consolidation of brick-and-mortar sporting goods retailers has morphed into a more broad-based concern about softness of retail in general.

In February, U.S. retail sales recorded their smallest gain in six months, which produced even larger concerns about the domestic economy. Retailers including JCPenney, Macy’s, Abercrombie & Fitch, Sears and Kmart are combining to shutter 450 stores this year. Meanwhile, apparel specialists including American Apparel and The Limited are closing all of their 350-plus stores. That follows last year’s shutdowns by The Sports Authority, Sport Chalet, City Sports, Eastern Mountain Sports and Golfsmith.

Consequently, an industry already muddled from changes wrought by Fanatics’ rollup of rights and expansion into manufacturing and retailing now has additional worries.

“Everyone in sports licensing needs to be concerned about brick-and-mortar retail,” said John Killen, president and CEO at licensed novelty product market leader WinCraft. “You’ve seen over 900 [retail] rooftops disappear over the last nine months and those aren’t being replaced. You look at retailers like Dick’s and Lids, and you see it’s all about making the retail experience compelling.”

At the NFL summit, WinCraft was showing new cross-licensed products combining Mickey Mouse and other classic Disney IP with the NFL’s.

“For traditional retailers, it’s been soft, especially in apparel,” said Chris Halpin, NFL executive vice president of consumer products. “Finding the right mix of e-commerce for traditional retailers and the right shopping environment for a retail floor are things everyone’s working on.”

Sol Werdiger, founder and CEO of kids apparel licensee Outerstuff, added: “Brick and mortar is still 80 to 85 percent of the pie, so leagues, licensees and retailers have to work on making retail more exciting.”

First Look podcast, with licensing discussion starting at 6:00 mark:

Jacksonville’s EverBank Field hosted this year’s event.
Photo by: TERRY LEFTON / STAFF

> STRATEGIC MOVE: Halpin, who has headed NFL licensing since August 2014, is adding responsibilities as the NFL’s first chief strategy officer, leading a strategic planning, data analytics and insights group. The move is part of a larger NFL re-org (see story, Page 3). Consumer products will continue to report to Halpin.

“We’re looking to align strategic planning across league businesses and set out a vision of priorities, investment and performance tracking for us and our teams,” said Halpin, who joined the NFL in 2013 as vice president, media strategy and business development.

> NO TRUMP: It wasn’t long ago that candidate Donald Trump was running on a platform promoting protectionism and trade tariffs — anathema to an industry as dependent on imports as licensing. Now that he’s in office, there seems to be little concern.

“Licensees haven’t raised the issue,” Halpin said, “but I don’t believe it would impact us any more than broader retail.”

“We looked at some pricing models that were scary,” said Eric Schapiro, vice president of G-III apparel, which is augmenting its NFL license with the Football Greats license of retired NFL players. “But more recently, we’ve seen no pressure in that direction.”

Most thought that even if trade skirmishes did erupt, they were far more likely to be centered on high-priced durable goods. “I’d be shocked if this industry were affected,” said Charles Sizemore, owner of The Memory Co., which manufactures around half of its “homegating” and novelty licensed products domestically. “They’re going to be looking at items with a high cost of manufacturing because of the jobs involved.”

Added Outerstuff’s Werdiger: “We’re already paying more than 30 percent duty on the jerseys we import. How much could they add?”

Offered Adam Pennington of longtime watch licensee Game Time/Artinian: “Our economies (U.S. and China) are so intertwined, a trade war would just mean mutual destruction.”

Promotional material features team-branded drones.
> DRONING ON: After hearing raves during the past several holiday seasons about drone sales, we’ve been waiting for them to be licensed by a large sports property. Normally, an NFL license is the last one obtained by a new licensee. However, DGL Toys is bringing out several NFL-licensed drones as part of a toy line that also will include NFL team-branded RC cars, talking banks and 3-D puzzles. Toys are a category in which every big sports licensor wants a bigger presence.

DGL already sells five different models of drones under license from Activision’s “Call of Duty” video game. Pricing and availability on the NFL models is not complete, but DGL Vice President Victor Sardar said his company’s NFL drones will start at $40. Retail delivery is expected in time for holiday shopping.

> AWARD WINNERS: Honored by the NFL as new members of its “million-dollar club,” were BIC, for its NFL disposable lighters, along with two licensees who sold enough to generate a million-plus in royalties in their first year:

Dooney & Bourke (now working on additional NBA and NHL licenses), for its high-end women’s purses ($218 and up) and accessories ($88 and up), sold strictly within the department and specialty store channels.

Icer Brands’ “trend-driven” NFL togs. The Seattle Seahawks took honors as Team Retailer of the Year, while Dick’s Sporting Goods won Retailer of the Year. Wilson and WinCraft were feted for their 50 years as NFL licensees. Wilson also received the Innovation Award for its $140 “connected” football, which tracks speed, distance, spin rate and spiral efficiency.

Hometown company Fanatics’ camo line
Photo by: TERRY LEFTON / STAFF
“I guess this means we’re old and we’re cutting edge,” Kevin Murphy, Wilson vice president and general manager of team sports, said with a laugh.

> LICENSING LINES: In its hometown of Jacksonville, Fanatics had the biggest booth we’ve seen it take at any show, within which it was showcasing a new camo line, initially with NFL indicia. One sign of the enmity it has created within the licensee community: A major licensee asked to move when it realized it would be located next to Fanatics’ booth. The request was accommodated. … Stephen Roche, longtime general manager and vice president of Majestic Athletics’ MLB business, is leaving Majestic to join Major League Baseball as a vice president in charge of on-field. Presumably, Roche’s new responsibilities will be making some sense out of the MLB rights situation, which currently sees Majestic with jersey rights through the 2019 season, when Under Armour and Fanatics take over. Of course, Majestic’s lame-duck status would change if the long-rumored sale to Fanatics were completed. March 25 marked the one-year anniversary of parent VF putting its Licensed Sports Group up for sale. … We’re uncertain if it was prompted by Boelter’s licensed inflatable snowman, first shown in January, but the always-creative folks at Fabrique Innovations had a similar licensed product that was a show stopper in Jacksonville simply because of its size. The 4-by-8-foot inflatable helmet comes with a light inside and will be available in August with a suggested retail price of $90 in NFL and college versions, soon to be followed by an NHL-branded inflatable hockey helmet.

Terry Lefton can be reached at tlefton@sportsbusinessjournal.com.

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