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London shopping: uncovering new categories ripe for export, others that need a U.S.-style energy boost.

While in London for Brand Licensing Europe, we toured the London-area locations of several British retail chains, including the supermarkets Tesco (the new 80,000-square-foot Extra superstore in Watford as well as a more traditional format in London), Sainsbury's, and Waitrose, as well as department stores Marks & Spencer, Harrod's, and Fortnum & Mason, and some specialty shops.

For photos of some of the displays discussed here, subscribers can visit the EPM member website at (login required).

Foods: A Lack of Character

Character licensing is surprisingly AWOL in the food aisles at Tesco, Sainsbury's, and Waitrose, with few licensed characters in any of the categories where their presence might be expected (e.g., cereals or dairy).

The notable exception was the celebration cake section, where examples of licensed SKUs ranged from Peppa Pig and Wallace & Gromit to Forever Friends and Batman. In other categories, there were a smattering of examples, such as a box of Simpsons fruit snacks among a variety of branded and private label examples, but for the most part character licensing was not a factor in foods.

Numerous instances of licensed food and restaurant extensions, and extensions of other types of brands, are evident in the food aisles across all supermarkets where we stopped, including sauces tied to the Wagamama and Nando's restaurant chains at Tesco, a Marmite chocolate bar at Sainsbury's, and Weight Watchers products in the soup, frozen dairy, and other aisles at Tesco Extra.

Waitrose's direct-to-retail deal with the Prince of Wales for the Duchy Originals brand of organic biscuits, jams, milk, bacon, and sausages is reflected in several departments in that chain, as well as on an endcap featuring all of the shelf-stable products. Royalties support the Prince's charities.

Licensing Notable in Nonfoods

The supermarkets visited feature a large proportion of licensed products in nonfoods categories, often endcapped or in separate sections.

Sainsbury's displays at least three endcaps of licensed nonfoods products. One features Moshi Monsters novelties, arts and crafts for the British art property Juicy Lucy, and a number of Star Wars items including a Darth Vader "stress head," as well as a range of science kits tied to The Science Museum and Guinness World Records. Other sections in the same store included two shelves of Hello Kitty merchandise, two shelves of LEGO/Star Wars items, and a couple of shelves of products tied to the children's book, The Gruffalo. Also noted was a section of ice cream trucks and other collectibles for Wall's, Unilever's British version of the U.S. ice cream brand Good Humor.

Licensing in pet toys is a relatively new business in the U.K., unlike in the U.S., say agents based there. But Tesco's Watford Extra store featured an extensive range tied to Dennis and Gnasher, comic strip characters from The Beano magazine, which is licensed by D.C. Thompson through agency Start Licensing.

Almost all the publications in Tesco's kids' magazine and partworks section were licensed, based on both British and global properties such as Doc McStuffins, Dora the Explorer, Scooby Doo, Pokemon, Marvel, Dennis and Gnasher, Bob the Builder, and many more. These sorts of property-specific publications, which have a generous number of value-added toys or crafts affixed to the covers, are almost nonexistent in the U.S. market.

Spotlight on Department Stores

While not much licensing is on display at the high-end Fortnum & Mason store, certain departments at Harrod's feature a high proportion of licensed products.

One of those was the large toy department, which included a Harry Potter corner with some higher-end collectibles, a variety of superhero toys from DC/Warner Bros. and Marvel/Disney, a wall display of Moshi Monsters items, and a significant Hello Kitty shop-in-shop, among other examples.

The substantial territory devoted to Hello Kitty can be explained in part by the fact that the property is the biggest girls' brand in the U.K., with 80 licensees on board and listings in all major U.K. retailers, according to Sanrio's agent in the territory, Fluid World. Retail sales volume for Hello Kitty in the U.K. in 2012 was 274 million [pounds sterling] on 50 million products sold, which equates to growth of 11% year-on-year. Fashion and fashion accessories account for 45% of sales.

Harrod's book department, adjacent to the toy department, highlighted a lot of licensed plush and book-plus-toy packages, with the nonbook product merchandised on a shelf alongside the books. Properties included book-based characters such as Eric Carle, The Gruffalo, and Moomin, as well as nonbook properties such as Angry Birds.

Down in Harrod's ground-floor food department were some unusual licensed novelties, such as Armani bottled water, exclusive to the retailer, and Mr. Tikki's Lurch Sauce, based on the character from The Addams Family. The latter was in a Halloween display; most of the retailers visited had extensive Halloween merchandise on display in mid-October, marking a holiday that has blossomed in the U.K. over the last few years.

Chefs and Celebrities

The U.K. market is as celebrity-crazy as the U.S., and some celebrity-licensed products stand out at retail. A number of chef-licensed items are on display, for example, including a range of Jamie Oliver cookware at Tesco Extra and a section of Little Venice Cake Co. gadgets at Divertimenti, a specialty kitchenware shop.

While the drugstore chain Boots is often cited as a distribution channel for licensed goods, we did not see many examples in the stores we visited. But we did see three hangers with three SKUs of Katy Perry false eyelashes.
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Comment:London shopping: uncovering new categories ripe for export, others that need a U.S.-style energy boost.
Publication:Licensing Letter
Geographic Code:4EUUK
Date:Nov 18, 2013
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