Brand Licensing India Offers Upbeat Mood, But Challenges Remain
While merchandise licensing in India is still in a “nascent” stage – to use a phrase heard repeatedly during the two-day Brand Licensing India conference in Delhi this past weekend – the attendance at the conference and the presentations by local retail, manufacturing and licensing executives portend a bright future for the business there. (LIMA UK Managing Director Kelvyn Gardner, who also attended and spoke at the conference, gives his perspective in a blog post elsewhere on this site.)
For example, Chandan Savera of bedding/bath manufacturer Creative Portico, gave an impressive case study of how the company had used licensing to initiate and grow the children’s portion of the company’s business. Utilizing such licenses as Ben Ten, Barbie, Hot Wheels and Disney, the company has increased the share of its business emanating from licenses from 10% previously to 40% now. (In addition to children’s licenses, the company also holds the Wimbledon license.)
The challenges of the Indian market are many, though, as Spacetoon India Managing Director-CEO Rajiv Sangari noted in a strikingly direct presentation. On the plus side, he acknowledged such positive trends as the burgeoning Indian economy – with projections of more than 50% growth in retail sales to nearly $550 Billion between now and 2014 – a youthful population that’s highly brand conscious, and that fact that the “organized” retail sector is expected to continue growing at 40% annually for the next several years. (It accounts for only 6% of retail sales in India now.)
By the same token, he said, India is still dominated by small stores with little or no space to properly display brands; an underdeveloped transportation and warehousing infrastructure that makes shipping and replenishing goods uncertain at best; a byzantine tax and tariff structure, particularly involving gods shipped between Indian states; and an overemphasis by Indian retail buyers on sheer cost, rather than the value added by a brand or other license.
Sangari – who functions on various levels of the licensing business as licensor, agent and merchandise distributor, depending on the property – urged licensors to “hand-hold licensees in the initial phase,” to protect those licensees by not granting multiple licenses within categories and pursuing pirates, and to be “realistic about market conditions.” Licensees, he said, need to do fulfill their end of the bargain by pricing correctly, delivering and replenishing on a timely basis, and being transparent in reporting to licensors. Retailer need to display well, understand that a strong brand sells 20% more than a more generic version of the same product, and pay within realistic credit periods.
By most accounts, the product licensing business in India is dominated by fashion brands from elsewhere in the world, with much of the merchandise sold in licensed single-brand retail outlets or shop-in-shops. Some Indian brands and characters have had limited success via licensing, but Western brands dominate the business. For the most part, the huge Indian film industry hasn’t leveraged the licensing business in any meaningful way. Celebrity licensing – primarily actors and cricketers – seems to be a growth area.
During the conference, Mark Jeffrey Mikulich of Wiley – owners of the For Dummies brand – announced that licensees Maylong Group and HiQuest will begin marketing a “GPS for Dummies” package in through auto dealers, auto equipment retailers and other outlets in India in February 2011. It notes that India is the world’s sixth largest automotive market. The company is planning a broader re-invigoration of the For Dummies brand in India via publishing and other agreements.