As an exclusive licensee, enjoy the competitive advantage of being the only retailer in a particular territory (e.g., the U.S., North America or the World) to carry a particular brand. This means that if a consumer wants certain products under that brand, they must buy them at your stores and/or website.
By licensing in or owning a powerhouse brand (including well-known national brand names, celebrities, influencers, other “household names”, etc.), a retailer “buys into” the brand recognition of, and resulting predisposition to purchase of, the consumer. This translates to stronger sell-throughs and higher sales per square foot.
As with a private label business (where the middleman is eliminated), a licensed or acquired powerhouse brand can result in merchandise bearing higher margins and/or lower prices than comparable branded merchandise purchased from a vendor. Whether through actual added value (such as licensor design input) or perceived added value (such as the value that results from years of image marketing), the right licensed or acquired powerhouse brand can also bear higher price points and produce higher margins (even with a royalty factored in) than a private label or vendor purchased brand.
A licensed or acquired powerhouse brand is a wonderful vehicle with which to capture a larger share of a particular demographic market segment from competitors and/or bring in a whole new demographic segment to your stores, or even to a department within your stores where that segment did not shop in the past.
Instead of spending many millions of dollars for several years to build the brand recognition of a private label, licensing in or owning a national brand allows you to benefit from the considerable equity and strong recognition level of that brand – without having to share those benefits any longer with your competitors.
The equity of a good licensed or acquired powerhouse brand usually provides the consumer with the same assurances that a strong vendor-owned brand carries, such as: quality, trend-right fashion, durability, or a combination thereof.
You have more freedom in merchandising a licensed or acquired powerhouse brand than you would have with products from a comparable brand purchased from a vendor.
A licensed or acquired powerhouse brand allows you to avoid various control issues that could occur with a branded vendor, including the possibility that they would change their distribution policy on a whim, thereby possibly devastating your business with that brand.
Under a licensed or acquired powerhouse brand, you can often secure the rights to produce products under, and sell that brand across, a wider range of product categories than might be available from a vendor. This can result in marketing economies-of-scale, other synergies, and a stronger presence of the brand at your stores.
With some brands, you can tap into terrific design resources of the licensor.
The marketing dollars spent on a licensed or acquired powerhouse brand help to build equity in that brand. As the owner or long-term licensee of that brand, you can reap the same benefits of this brand equity that would normally accrue to the vendor.
Licensing in or owning one or more powerhouse brands is one of the major trends that has changed the face of retailing today. It has important advantages over both the conducting of a private label business under a made-up brand and the purchasing of products from a branded vendor. It is also an essential element in bringing great value to the consumer and, thus, an important strategy of some of the most successful large retailers today.
All of the above factors can contribute to increased profits and company market value.