Chaos is merely order waiting to be deciphered.”
― José Saramago, The Double
In the ever-changing World, one must evolve to survive. The process of evolving is not only about changing for the sake of changes in the World, but rather about adaptations and adjustments to thrive. Throughout the history of mankind, the need for restructuring and adaptation has been at its peak when there was a period of crisis; be it war, a global pandemic, or a revolution.
Mankind has witnessed its fair share of crisis over the centuries, and it cannot be denied that the outcome of crisis has always been a stride forward towards growth, towards progress- be it the economic boom after the World War II or the improved medical care after the 1918 Spanish Flu Pandemic.
It is of utmost importance that we learn lessons from the past to assess our present to design the future. Currently, we are in the middle of the biggest crisis of the 21st Century. A global pandemic, Just like any global pandemic would, it had an impact in every sector of our lives; and just like we evolved to thrive in such crisis in the past, we must find order in the chaos. .
Like every industry that took a hit due to the pandemic, the consumer product licensing industry is no different.
The economy in 2020 is impacted in almost the same manner as it was in the pandemic of 1920; the demand for the essentials has spiked up. Be it the boom in demand for toilet papers, paper towels, dish soap, disinfectants, cleaners, – the businesses for products of absolute necessity have had a much better year than most of the other businesses.
The demand for indoor games, puzzles, online and boardgames went up and the gaming market had a much better year than anticipated.
For a few industries, the year has been about increased sales and earnings per share, while for a vast majority of the industries it has been about suffering from loss; but there has been one element that has tied them all together. The element of surprise.
The unprecedented events happened in a flash. Be it cancellation of tradeshows, employees on furloughs, closure of branches, adapting to work-from-home, and more – it all happened very quickly.
The inevitable question comes in the minds of every brand owners, licensees, manufacturers, retailers- how to find order within the disorder of the market?
Let us have a look at how we can use automation in our industry to navigate through these troubled waters, steering clear of the obstacles- to get us right back at the port.
Navigation via automation
The old saying of he who has the gold makes the rules has never been truer than it is now. Many companies have exercised lines of credit and are hoarding cash- only profitable and sustainable companies pay their bills, so you need to predict the companies that will pay you on your minimum guarantees access royalties and advertising commitments.
To conserve cash, companies are eliminating variable costs, many of which are aligned around personnel on furloughs; this puts an extra strain in the licensing Department since there are less hands to do the work. Extra work is taking place to forecast cash flows to help keep the companies, both public and private, in step with the new revenue recognition rules. (ASC 606)/IFRS 15).
So how do automated processes help you navigate?
Every-day approvals are initiated by both new licensees and existing ones; your established guidelines are met as new products are completed through established processes.
Even pre-approved artwork is available to help licensees across any time zone to know which style guides to start with. Since many brand owners now have less personnel, licensees and your agents will share in creating and managing approvals online.
You now can upload royalty statements directly by the licensees, notifying the proper personnel when they do come in. They also upload the forecasts in data templates and send royalties in detail, down to the SKU level.
To gain more insight, our brand licensing software can help you track sales reported by retailer through your licensees.
Another way to distribute your workload is through automated workflows. This allows you to communicate securely between everybody in your company, outside agents and licensees knowing who receives the information at every stage of the approval process.
Products’ artwork packaging and many other types of approvals move automatically to each person.
If someone happens to be out of the office on leave, vacation or even furloughed, you can replace them with other people until they return to work. This allows you to maintain a rich history of every person’s comments and involvement throughout the entire process.
Agents are great catalysts for brand owners and even licensees to help distribute the workload. They can offer a seamless transition when people are out on furlough to help keep up with workflow processes such as contract amendments, renewals and finding new opportunities as we innovate further during the global crisis.
What must the companies do to find order in chaos?
We urge you to focus less on the five years’ forecast and concentrate on the next five weeks and next five months; any strategies made before the pandemic hit would need to be revised as the face of our economy has changed.
For the licensing industry, you need instant access to information that is coming from the licenses and agents all together in a system that you trust.
To succeed in the second quarter of 2020, it requires taking measured risks. By taking measured risks, you can:
- Double down on the licensees and retailers who have come through for you in the past and have strong balance sheets that you can examine.
- Change up your product strategy to incorporate new licenses with new innovative products, especially around the ‘stay-at-home’ market.
- Best of all, empower your people using information coming from a database and good quality licensing management software; this will allow you to optimize your licensing portfolio and not wait for the market to react.
Invest in your own future by examining what is happening today.
The good news ahead of us is that we have the two most important quarters for retail sales in the third and fourth quarter. These sales show that it should look a lot like 2019 but will end up with a small decline for 2020. These trends do come from major retailers who are expecting growth again in 2021.
Source: Globaldata Retail Market Database
How can you get these new products to market so quickly so you can pivot rather than panic?
Using structured approval workflows, you can grab information from each manufacturer/ licensee to initiate approvals which fall in the balance with their contracts. You can see the properties they are allowed to use, the available rights and channels, in the correct territories with the help have a strong database.
Through each stage of the approval process, you can capture images annotate with notes or approved with changes. You keep track of every single person involved throughout the approval process along with all their comments and actions. All of these develop a rich history of data you can use within each approved SKU around the world.
Start on the right foot by having online style guides with pre-approved artwork and images available. Licensees can see artwork you prefer and shows off your brand well. They can upload their own artwork directly for your review to speed up the time to market for quality merchandise, that looks great and keeps the essence of your brand.
Keeping track of hundreds of digital assets organized in folders by the type of image file type creation date helps you and your licensees quickly locate the pre-approved images and files.
Even images such as videos or 3D objects are shared help your licensees and agents build and design better products honoring your brand.
During the pandemic downturn, with a good brand licensing software system in place, you can:
- clean up SKUs with no sales,
- find products that are stuck in the approval process or
- terminate products that were approved but never sold.
All of this is better because you have all your data at hand across the globe.
To help spread the workload, you allow licensees and agents to load sales, forecast and approval data to you. This helps you keep track of all payments and commitments such as minimum guarantees and advances.
A pandemic changes our original business plans overnight. We can all pivot and become more resourceful of the new tomorrow. Data helps while we all show more tenderness and consideration to our employees and business partners.
We help you keep our employees, clients, vendors, suppliers, service providers informed in order to become more productive.
We look forward to helping you improve your processes to better prepared for the growth ahead and to capture the history of everything pre and post pandemic. We look forward to helping you navigate these troubled waters.