Monday, January 28, 2013

Know Thy Plan



After much discussion and some interesting phone conferences we decided to turn down a licensing deal today. It seriously pained me to do it because it had the potential to sell a ton of product, probably well into 7 figures at retail, and those situations are just not as plentiful as we would like.

So why, you ask, would anyone be nuts enough to pass that up?

It was not just the licensee, we like them and hope to continue working with them for a long time to come. Nor was it just the level of distribution, typically we love mass market deals and the volume they turn. It certainly wasn’t the art, as this brand does well in the market and has many loyal licensees. It was not any one of those things, it was actually the combination of ALL those things.

Mass market exposure is akin to a hurricane: a lot is being thrown at you with great force, and as an artist or brand you need to be like the proverbial palm tree - both deeply rooted yet flexible enough to remain standing afterwards. Many artists, brands and even manufacturers who make the leap into mass market don’t survive. We refer to it as “burned up” – you’re hot for a few weeks or months and then you’re gone. It can be a fabulous opportunity, or it can be a trap, or even both. 

The problem with the mass market level of retail is that the goals of the mass retailer do not align with the goals of the artist or brand, and if you are na├»ve enough to think they do you can be heading for burn territory. (Note this is not the licensee, but their customer – the one who is calling the shots.) The mass market retail business model is two-pronged – (1) volume and (2) low cost – and EVERTHING they do is in support of those. You may note that excludes a few things such as artist promotion, integrity of design, supplier profit margins, even basic survival of the brand or supplier – all those and much more are never on the radar unless it directly affects (1) and (2). Which is OK, it’s just the way it is, but never, ever forget it.

I’m not talking here about getting a gift bag, or maybe a set of paper tableware or a roll of wrap in Target or Wal Mart, because, contrary to popular opinion – nobody really notices. It’s in and it’s out. But if you are building a brand, crafting an identity or pushing a Big Idea into the marketplace, then having a plan and controlling your distribution becomes paramount. The prize is no longer a quick run on a mass market store shelf where you sell a bunch of product in 60 days but in 90 days no one can remember you were there. Now it becomes something bigger, and the timeline stretches longer. You won’t want to sacrifice the brand equity you have so painstakingly built, the goodwill of your other licensees or even the ability to leverage that special relationship you have with your posse just to have a brief run as a commodity in a big box store.

It’s a tough decision to make but so much easier when you already know the answer.

Monday, January 21, 2013

Atlanta Snippets



We had a great time in Atlanta, people were very positive and interested in chatting about their biz, their plans and our art. That makes for much more productive (and pleasant!) meetings, and we have a wealth of snippets to show for it. Unfortunately, the downside of a busy market schedule is that we didn’t get to spend nearly as much time as we would like with all of our wonderful pals in this business. We did manage to sneak in a few moments but now we’ll have to wait until NYC.
But enough of that – fresh from Atlanta, the snippets:

“We’re doing well, I don't have any numbers yet but I know we're getting a lot of new customers, and that’s great.”  – the sales mgr at a stationery company

“I’d love to do this up big and make a statement but unfortunately I have a reality to deal with.”
- an art director commenting on management’s lack of design insight

“It sold in really well but then it didn’t retail.”
- a creative VP commenting on a line that tanked

“Let’s expand this line, so have her do some drawings and send them over – but no people, people just aren’t selling.”
- one of our manufacturers

“Just because an artist can draw it doesn’t mean that we can make it.”
- a gift manufacturer about the realities of product sourcing

“The problem with jewelry and accessories is that, unless you have something truly new and unique, it comes down to the cheapest price.” - a gift company art director

“You are not going to get anywhere in this business by doing what's already been done.” – an agent about trend shopping at the gift market

“So I told him ‘You need to take care of these artists because they all talk to each other out there and all of them will know if there are any problems’” – a creative director talking about mgmt

“I think someone would be nuts to get into this business now.”
– owner of a gift company

“The problem is that they sold all their stock during Christmas, and rather than loading up for second and third quarter they are pulling the old dusty items out of the back room and trying to sell them.” - a multi-line rep about the retailers (one of very few complaints)

“The three rules of marketing are test, test, test.” – a licensing agent

“We like to let them down easy, but not so easy that they keep coming back.” - a creative director commenting on artists whose work is not good enough for licensing

“I like it but I can’t figure out how to fit it into the marketplace.” – a comment on a collection

“We are thinking about doing the new Surtex Shanghai. We plan to hang a mini-blind over each banner and then, after we have collected all the cameras, we will flip it open so they can see what’s behind it.”
- an agency owner (in jest…sort of…)

“We’re not going to do signings anymore, we don’t get anything out of it. All we do is give away free stuff, they don’t come into the showroom and shop.” – owner of a gift company

“It’s a nice men’s line, but men don’t buy stuff.” – comment about a collection

And then there was this, overheard at the Demdaco reception desk:
“I’m an artist and I would really like to work with Demdaco”, to which the rep sitting behind the desk replied “All the artists do.”

Ain’t it the truth.

Tuesday, January 15, 2013

Doin' The Atlanta Hop



Fabulous. We have just rolled in from another Atlanta gift market, and that’s the best word we can find to describe it. We had 4 solid days of back to back meetings, almost 30 in all, and every single one of them was positive and most will definitely be productive. We also had nine new lines debut, the usual scattering of existing product and ended up planning some nice extensions to a couple current collections. It’s a good tired, as they say…

The market was hopping. It was maybe a little slow on Wednesday and then built to a very busy weekend. Traffic was snarled, elevators and escalators were jammed and the showrooms were loud. Every single client we talked to was having a good show, and only one said they were not ahead of last year – their numbers were slightly behind but they did share that last year was the best market they had ever had, and so were still happy with the sales.    

I know a lot of people talk about going to this show to trend shop, but after a dozen years of doing these markets we’ve learned a couple things – and one is that this is not the place. It’s easy to get thrown by the quantities and categories of product in the showrooms. If you walk into a greenhouse you are going to think gardening is a trend, or if you walk into a fine china tabletop showroom you’ll surely know that white is the trend. Until you go next door and everything is gloss black. Or emerald green. Or floral.

Atlanta is a great place to see what products are being offered for sale right now. It is not a great place to find emerging trends, in fact I will suggest that by the time you see products on the shelves in the Mart they are often approaching the end of the trend cycle. Trends grow organically in our culture, starting first on the streets (of Europe usually) and moving through fashion, home goods and pretty much last into gift and stationery. The internet has added some speed to this cycle but the early adopters are not the gift manufacturers. This is NOT a design show, it is a wholesale market, and these licensees tend to be conservative bunch compared to those at the forefront of trend. Also note that product development cycles typically run 6 months to a year – a lifetime in the fast moving world of trends.  While you will see the occasional fresh idea, the vast majority of the products on the showroom shelves are either classic best sellers or “me too” designs from companies playing “catch up” with the market leaders. Sad but true. (If I EVER see another “This House Does Hugs…” plaque, or any of the myriad other hackneyed phrases everybody pulls off the internet it will be too soon. How about writing something original instead.)  And don’t forget that even though a product makes it onto the shelf in a showroom it still may not sell, unfortunately a fact any experienced artist will readily attest to.

Atlanta IS a good venue to see what categories are on the upswing, for instance at this show it is very evident that clothing, accessories and jewelry have increased significantly with many manufacturers either expanding or adding them to their lines. It is also a good place to see what has gone missing from the market – things like chocolate/pink, blue/white Christmas, Spode-like Christmas, orange, mustaches and all the other hot trends that are so quickly replaced.  We’ve ditched more than a few portfolio collections over the years after coming back from the market because they were definitely “post-trend”.

One cute story: we were having a lunch meeting with some clients and were showing them some fabric kitchen product prototypes that we had mocked up when our server stopped and asked where she could buy them. She then went and got the manager to show HIM the mock-ups and see if they could order them for the hotel. We all decided that was better than any focus group!

And now off to the big stacks of follow-up from the show… somebody order me a pizza...