Below you will find Raugust Communications’ detailed coverage of trade shows and conferences that are of interest to the licensing business. They are listed chronologically with the most recent at the top. Scroll down for past events.
You will also find our coverage of Licensing Expo here, coverage of the Festival of Licensing/BLE here, and coverage of Toy Fair here. See RaugustReports for twice-weekly coverage of licensing trends.
Showcase and Noted 2021: Highlighting Trends and Best Practices in Art Licensing
May 27, 2021: The inaugural Showcase conference and trade show, launched by Jewel Branding and Licensing and powered by its Artonomo content management platform, was held May 20-21, 2021. Co-located with the Greeting Card Association’s Noted: The Greeting Card Expo, now in its second year, the virtual event was aimed at artists and the agents, retailers, and licensees that work with them. Here are some takeaways for the art licensing community and the broader licensing business.
Examining Artists’ Place in the Post-COVID Retail Landscape
Panelists in a session about retail trends in the post-pandemic world discussed how the crisis sped up changes that were already ongoing. “Walmart and Target gained enormous market share, and ecommerce gained enormous market share, and brands going direct to consumer gained enormous market share,” said retail expert and journalist Warren Shoulberg. “The strong got stronger and the weak got dead.”
“The concept of traditional retail has been long gone, except for mom-and-pops in small towns without access to larger stores,” said independent retail and brand consultant Sheryl Dubitsky. The growth in importance of digital channels for large and small retailers alike underscores the need for a seamless experience between ecommerce and bricks-and-mortar, she added. “That has to include new technologies that will align the in-store experience with the digital experience.”
The conversation turned to how retailers can continue bring consumers back into their physical stores. Dubitsky noted that chains such as Nordstrom and Bed Bath & Beyond are carrying a lot less inventory than they used to. “To some extent, less is less,” she said. “If you go in once and you can’t find what you want, you won’t come back.”
Bringing people into physical stores, whether through product selection or the experience, is a prerequisite for survival, panelists agreed. Greg Wyman, vice president at Jewel, likened retail to restaurants in that respect, noting that no matter how great an eatery, if no one else is there, many people will not go in. “We feed off that energy,” he said. “If that’s not there, it’s really hard to fix.”
Licensing International president and panel moderator Maura Regan noted that consumers are looking for “that theater of retail” to give them a compelling reason to go into a store. “Pre-pandemic we lost a lot of that,” she said. “It became a transactional experience driven by price.”
Content and storytelling can play a role in attracting customers, and artists can be part of that. “If an artist brings a unique story, there might be a place for it in the right retailer,” Wyman said.
“It’s incumbent on the designer or artist to know who they are as an artist or brand and be able to communicate that,” added Dubitsky.
The panelists called out a number of retailers that are doing a good job of nurturing artists and designers while telling a compelling story, citing Anthropologie, Crate & Barrel and CB2, Urban Outfitters, and the whole Williams Sonoma group of brands, including Pottery Barn and West Elm. “West Elm works with tons of third parties, both nationally and locally with makers and creators, and that’s brilliant,” Shoulberg said. “I think what they’re doing is wonderful. I’d put them ahead of almost everyone else on that front.”
It was noted that local stories are important but are also niche opportunities. “I think that’s what we might go toward,” Wyman said. He cited Ace as one example of a national franchise with a localized story that draws regular repeat customers.
Dubitsky noted that Bed Bath & Beyond formerly operated with a measure of localization, with store managers having the power to spend certain levels of open-to-buy dollars to meet local needs. “Maybe we’ll see a swing back to that,” she said.
Regan wondered, however, if a strategy of localization is viable for most players in licensing and retail. “Licensing is predicated on a volume business,” she said. Similarly, localization does not fit retailers’ current model. “It’s counterintuitive to how they operate.”
Whether local or national, retailers can benefit from the relevancy and currency offered by limited collaborations and co-brands with artists, if they are open to it, said Wyman. “It gives some of those retail brands life,” he explained.
“It’s a good trick or stunt or play that keeps things fresh,” Shoulberg said. “The danger [to the artist partners] is that big boxes can chew through these programs pretty quickly. It works, but there are only so many places you can take it. You need to have a strategy for when the program ends, which it will.”
A discussion took place about whether consumers differentiate when an artist has different sub-brands or exclusive collaborations in multiple retailers. The answer was “probably not.” “We’re speaking to our navels in many cases,” Dubitsky pointed out.
That said, art and lifestyle brands that are established and resonate with consumers—Shabby Chic and Magnolia were mentioned—can not only make multiple brands and retail partnerships work but need to make them work to reach their full potential. “Consumers don’t shop at one tier,” said Regan. “They shop at Costco and Walmart and Bloomingdale’s and everything in between.”
Shoulberg explained that artists must maintain a direct-to-consumer hub in order to maintain a cohesive brand as they offer different programs to different retailers. Rachel Ashwell’s 30-plus-year-old Shabby Chic label, for example, has had relationships with multiple retailers, from Target to House of Fraser, and maintains six sub-brands. It also has a physical retail store in Texas and a brand website. “Whatever happens with their third-party programs, they still have an anchor,” Shoulberg says.
As in most conferences these days, the topic of ethical and social responsibility came up. “Those things are important, but they are secondary to the brand, the product, and the price,” Shoulberg said. He believes the current premium on sustainability and social consciousness may not last. “Baby Boomers were very socially conscious at one time and went on to become the most conspicuous consumers known to mankind.”
While Dubitsky believes that great product, great value, and great price are essential, “I think [social responsibility] is really important for the Gen Z customer,” she said. “You have to be cognizant of being able to communicate where you stand, and it has to be authentic.”
Wyman agreed. “Shopping has become a political act, and we are engaging retailers in that conversation,” he said. “The authenticity means everything. You can’t paper over that. You have to find the stories that are yours and are true.”
Brand-Building, Collaboration, and Storytelling Are Key to Artist Success
One of the topics covered in a presentation featuring the success stories of four established licensed artists was the importance of creating a cohesive personal style or image, beyond simply focusing on the quality of the art.
“I worked hard on developing a personal style that became recognizable and part of the brand,” said panelist Elizabeth Olwen.
Jessi Raulet of EttaVee said her positioning followed from her fans’ perception of her work. They were telling her over time how her bright colors made them happy. “That made me realize my art is serving a purpose and doing something,” Raulet said. As a result, she expanded her vision of optimism and happiness by launching a licensing program and painting classes, creating “an EttaVee universe.”
The artists also discussed the power of collaboration. Raulet said that a true collaboration, where both parties contribute their strengths but are open to ideas from each other, leads to a better product. She cited the example of her recent partnership with PB Kids and Teen. “I was thinking, how can I bring something unique to their existing, beautiful product, how can I be playful and imaginative with it and bring my designs from 2D to 3D.” The PB team suggested an idea she hadn’t considered: using shag. “It’s all about getting playful to see if you can push it and elevate the creativity, and just being open to learning on the job and asking what the possibilities are,” she said.
Surface designer Elizabeth Silver, who moderated the panel, stressed that being able to collaborate and take direction are critical skills for artists. “Most are thinking about the art, but you have to start thinking about the product,” she said. “Your art is selling the product, but it’s also the product that sells the art.”
Olwen has entered into a number of brand partnerships. One of her newest is a swimwear collection with Align Swim. She collaborated with the company closely on creating the prints and designing the swimsuit itself. “I worked on them with the naming and branding and storytelling,” she said. “It’s the perfect symbiosis.”
Cat Coquillette of CatCoq said one of the primary challenges in her business was how to address growth. She had to learn to trust outside parties to share her vision and handle some of her business duties so she could focus on what she was good at. “I was working in my business and not on my business,” she said. “I needed to find partnerships to scale my brand. But letting go of control was really hard.”
Another theme was the power of Instagram to create a following, both for artists’ work and for their licensed products, as well as to develop their brand positioning. “Instagram has made it where we can play in the same space as the big brands and communicate with our customers like they do,” Raulet said. For example, she can craft a story around a new product. “People can follow the whole process on Instagram. They feel more connected and excited about the finished product.”
“I’ve spent years cultivating my social following and they communicate with me a lot,” said Coquillette. “It’s sort of a personal connection, so I approach it with authenticity.” When she announces a brand collaboration, she shares her personal story about how the deal came about, why she selected the client, and how she developed the art. With wall decor partner RoomMates, she recorded a meet-the-artist video that included the story of her entire process and was shared by both partners on their YouTube channels. “It makes the designs much more impactful,” she explained.
Olwen also uses Instagram, and especially its Reels feature, to tell her fans the entire process of how the product was inspired and made. “It’s not just a picture,” she said. “I can tell a story.”
Noting that her following has grown organically, slowly, and authentically over time, Olwen said she had long been telling her fans on Instagram about how much she wanted to create a swimwear line, even posting a mock-up of a bathing suit. She was approached by Align because of that thread. “My followers knew I wanted this and now they’re cheering that I did it,” Olwen noted.
Instagram is also an opportunity for artists to share their values, which can lead to new business. Olwen said she has been planting seeds over time about what she cares about, and companies are starting to approach her because there is a fit between their priorities and hers. “More people are coming to me that say, ‘we care about that too and we want to work with you because we care about that too.’ It has led to better partnerships because we’re aligned on the same values.” One of her recent collaborations is with Tate + Zoey for a range of eco-conscious products using sustainable materials.
Diverse Creators Make Their Voices Heard
A theme that came through in a digital trip through the booths at both Showcase and Noted was a growing focus on diversity and inclusion in the surface design and greeting card worlds. For example:
• Hallmark highlighted its press release from February of this year about the hiring of Alexis Kerr as the new vice president of its 30-year-old Mahogany brand, which honors and celebrates Black culture. The hire comes as the company plans to build the brand beyond cards into other products and experiences for its customer base.
• Madison Park Greetings featured a March release in which it announced the three latest additions to its portfolio of artists, which already includes Olwen, Ine Beerten, Rachel Schafer, Moran Georgie, and many others. The new additions are emerging makers who are influenced by their diverse cultures: Emma Schonenberg is a surface designer from El Salvador, Emiko Rainbow’s patterns are inspired by her Japanese and Scandinavian ethnicity, and Kathy Cano-Murillo and her Crafty Chica! brand celebrate the Mexican-American maker’s Latino style and creativity.
• Black Joy Paper is a new venture that serves as an umbrella for the work of six Black artists and greeting card/stationery makers, meant to amplify their voices by collecting them under a single brand. The Black Joy Paper line is published by Biely & Shoaf and features artists Lauren-Ashley Barnes, Tiffany McGraw, Natalie Henry Charles, Tiffany Grimes, Andrea Williams, and Amy Slaughter. Greta Heida of sales agent Air Co. is credited with bringing the artists together.
Several exhibitors across the two co-located shows featured the products or artwork of artists of color. One of Noted’s Pitch Programs was focused on makers of color as well.
FMX 2021: Three Case Studies Highlight Use of Licensed IP in AR, VR, and Location-Based Entertainment
May 17, 2021: FMX 2021, a conference focusing on animation, effects, games, and immersive media, was held May 4-6, 2021. The digital event featured 178 presentations and 100 live Q&A sessions, presented by 388 speakers, and attracted 2,200 participants from 45 countries.
Three presentations highlighted case studies on the use of licensed intellectual property in augmented reality, virtual reality, and location-based entertainment ventures. The insights from these sessions will likely be of interest to property owners considering extending their IP into these sectors.
Galaxy’s Edge: Bringing Star Wars to Life
The team charged with creating the new land at Disneyland and Disney World, Star Wars: Galaxy’s Edge, had a number of goals. They wanted to offer immersive storytelling that was authentic (e.g. no Star Wars signage, since that would not occur within the universe of Star Wars, and bespoke in-world logos for modern-day products such as Coca-Cola). They wanted the experience to be timeless, so anyone could enjoy it, no matter where they are in their Star Wars journey. They wanted it to connect with other parts of the Star Wars universe, so characters and storylines can go back and forth. And they wanted to provide a fun place that exceeded expectations and where the visitors are “the heroes in their own story.”
An FMX panel consisting of key players from Walt Disney Imagineering outlined how they solved the many challenges that arose on the way to reaching these goals. They included Scott Trowbridge, creative executive and studio leader; Margaret Kerrison, managing story editor; Anisha Deshmane, assistant producer; and Asa Kalama, senior creative director.
Rather than recreating an existing part of the Star Wars world, the team built a brand-new trading post where visitors and original, new characters would be able to interact with existing characters from all over the galaxy. In addition, visitors, no matter their level of engagement with Star Wars, would be able to explore this new world together.
Immersion is the goal across all facets of the world. Visitors can pilot the real Millennium Falcon and participate in a climactic battle as part of the Resistance; visit stores to make a droid, build a lightsaber, or buy in-world collectibles from a character called Doc Ondar; or spend time at the Cantina to drink blue milk and listen to original John Williams-composed music played by a DJ who is familiar as a pilot in a Star Wars storyline. All the while guests are interacting with filmed, animatronic, and live cast members who each have a role and help make the experience seem real. The idea is to engage all five senses.
There are no phones in the world of Star Wars, but there are data pads, and visitors’ mobile devices assume that role. They can scan a crate and see what’s inside, read the latest gossip at the Cantina in real time, and scan door control panels at each part of the land they experience. The last offers gamification, allowing guests to collect points, as well as creating a personal history within the world. For example, if they are low on points, a bartender might check their credit, or a cast member might question their fitness to pilot if they performed poorly in a past attempt. All the activities of every visitor become part of a single ecosystem, which adds a level of reality and interactivity to their experience.
At its peak, the design and development team consisted of 4,000 people, who brought realistic animatronic characters to life, created filmed scenes of space that could change depending on the decisions made by a pilot, and brought built-to-scale spaceships to life. With the Millennium Falcon, the designers started with the original models, turning them into a working, code-compliant building. To make each “crew” of guests feel like they were alone in the ship, while moving lots of people through, they designed a complex consisting of multiple cockpits that could rotate—four turntables with seven cockpit segments each—with each group taking different path to get to theirs.
The team pioneered a number of technologies to create these experiences, but also turned their attention to the smallest handcrafted physical details. And the live actors, who play robots, Star Troopers, villains, store proprietors, and Trading Post employees, are critical to the experience as well, staying in character and helping visitors feel like they are part of the world. “The cast members are our best asset,” said Trowbridge.
Of course the Galaxy’s Edge experience has been taken beyond the parks, into everything from VR to in-world books allowing the experience to continue after the visitor leaves. Next up is the Star Wars Galactic Star Cruiser, a two-day, two-night immersive experience where a group of visitors serves as the crew of the ship, with their experience there interconnecting with their experience at the park.
One challenge was to figure out how to engage visitors and allow them to take ownership of their destiny, without “breaking the system,” as one questioner during the Q&A put it. The cast members help in this regard, as did many, many iterations of testing of the technology—which was being developed on the fly—to see how much control guests could realistically have.
Beyond Gaming: A Multimedia, Multiperson Adventure with a Live, Community Element
Fictioneers, a collaboration of three commercial partners (Potato, Sugar Creative, and Tiny Rebel Games), submitted, along with the University of South Wales, a cutting-edge transmedia experience to Innovate UK’s Audience of the Future Challenge in 2017. The parameters required the creation of an experience for an audience of at least 100,000, using the technology of three years in the future. Fictioneers ended up winning the “Moving Image” category, which gave it funding to make its idea a reality and demonstrate the use of cutting-edge technology in practice.
The next step was to find an IP partner willing to take on the challenge of trying something completely new. To that end, Fictioneers partnered with Aardman Animations, and its original concept became Wallace & Gromit: The Big Fix-Up. The app-centric experience was based on an all-new feature-length Wallace & Gromit story, the first in more than a decade. The app included all kinds of media, from holographic phone calls featuring live and animated characters, to black-and-white digital comics, to game-like tasks. Through the use of augmented reality, users can have experiences such as seeing a rocket land in their back yard.
A presentation at FMX described the product and the process. Speakers from Fictioneers included Susan Cummings, co-founder; Taavi Kelle, design team lead; and Jamie Innes, creative product lead. A Q&A session featured Cummings as well as two Aardman executives, story lead Lee Cummings and creative director Merlin Crossingham.
The project was complex in that users had agency over how the story unfolded. At the same time, all of them, no matter how engaged they were, had to hit certain story points so that they would all arrive at the same point at the same time. This was because the experience was designed to culminate with a live event in Bristol, U.K., that wrapped up the story with AR elements in a real-life setting.
Some of the decisions that had to be made by the design and production team included how to balance the real-time story with the ability for the user to direct what happens; what types of media should be included in addition to the AR; how to integrate all the different media elements so that they served a purpose within the story; how often new content and activities should be posted; and how fast the story should roll out, given consumers’ desire to binge coupled with the need for the story to end at a fixed point. Creating the finished product required developing a real-time, multiuser platform that worked in three countries over three time zones and contained parallel timelines and more than 190 interactions.
The intelligent app delivers information to the user depending on where they have been before, so the story makes sense and moves forward no matter how engaged they are or what path they have taken. At the same time, all of the key points they must know within the story—the “steel thread”—are delivered in time for the jointly experienced conclusion. There’s no wrong path, and each person’s experience of the story is unique. The app is also dynamic, so the producers can change it to account for real-life events or tweak it depending on how consumers are using it.
The producers opted for a lower level of resolution and rendering than was technically possible, so the look and characters would be familiar and consistent across media and optimized across all devices and platforms. The point is not to wow users with the technology but to have it feel right as a tool for storytelling, with each aspect having a legitimate reason for being.
A human character was brought in to serve as an assistant to the characters of Wallace and Gromit in their new business venture, which is at the center of the storyline. She is a younger character who has her own story arc, which helps users of all ages relate to her and the experience. She uses technology to perform her job, just as the users do in their role as employees. She also serves as a bridge between the real world and the world of technology, bringing Wallace and Gromit into the users’ reality and vice versa. The character also plays a role in the real-life aspects of the experience.
When COVID arrived, it threw a wrench in the plans for the live, final scene that was meant as the culmination of the experience. The intent had been to create a stripped-down digital version of the final scene for those who could not make it to Bristol. So the producers bulked up that part of the experience, precisely scanning real-world locations and integrating those models into the game. They were essentially bringing Bristol, or at least a lifelike facsimile, to the users rather than the other way around. Doing the final scene digitally also allowed the app to launch in additional territories, including the U.S.
As the world starts to open up post-pandemic, Fictioneers created a separate large-scale live experience that allowed it to showcase its original vision for the use of AR in a live location when safe to do so. Thanks to additional funding from Innovate, the live event will take place in Bristol; Cardiff, Wales; and one city in the U.S., with San Francisco the likely choice at the time of the panel.
Despite the cutting-edge technology, the story had to be consistent with the old-timey feel of Wallace & Gromit. There is humor in every frame of the story, whether in dialog or details such as signage on the sets. Whenever Wallace appears as a hologram, there are technical glitches, in keeping with his personality and history. One of the tasks users are asked to accomplish within the experience is putting jam on toast, a very Wallace activity.
The presenters noted that it has been a challenge to describe the experience to others. It is the first project to use AR technology on this scale or depth, and it is neither a game nor filmed entertainment of the sort consumers are used to. That has implications for marketing and sales.
A New Frontier: Free-Roaming, Full-Body Tracking VR
MackNeXT has introduced Yullbe, a free-roaming, full-body tracking VR experience, along with a lighter but still free-roaming version, Yullbe Go. The first full implementation of Yullbe is at Europa-Park in Rust, Germany, one of the biggest amusement parks in Europe and a sister company to MackNeXT. Guests take on the role of avatars who can walk freely through the location and experience things only possible with virtual reality.
Sven Meyer, consultant for MackNeXT, who oversaw the project, explained in his presentation that Yullbe was meant to be more of a theme park than an arcade experience so it would appeal to non-gamers. MackNeXT paired the technology with an IP, The World of Rulantica, that is based on Europa-Park’s water attraction and owned by its parent company. The property has already been extended into novels for young readers, published by Coppenrath, a themed hotel, and merchandise, with a movie being considered. “The goal is to make the technology disappear behind the experience,” says Meyer.
He notes that it is important that visitors are completely immersed and that the experience consists of elements that can only be accomplished in VR. In the Mission Rulantica experience, your friend can become a giant, for example. “Any content is possible as long as it makes sense in VR,” he says. “It has to be the best medium for it.”
Similar to Fictioneers’ experience, MackNeXT has found that one of the challenges of a technology like Yullbe is that it can be a tough sell. “It’s hard to explain what it is, because it’s totally new,” said Meyer. He also stresses that it is important to test, test, test, to determine how the technology works and how the user will react to characters and occurrences that are bigger than life and hyper-real. “Things can be quite overwhelming in VR. If it’s too much, people stop using it.”
The use of VR can be isolating, but that disappears when it is integrated into location-based entertainment, even when there is no eye contact between players. Talking to each other is a key part of the experience, allowing users to feel part of a group, even if they are with strangers that they only know as avatars. One insight MackNeXT has learned: While guests experience Mission Rulantica through the perspective of their avatar, they would like to be able to look in as an outsider as well, so they can see how they look while in the environment.
Full-body, free-roaming VR is expensive to build and difficult to monetize, so MackNeXT created a lighter version called Yullbe Go that is 80 square meters and accommodates up to eight people at once, versus the 250 square meters and up to 32 people of the full version. It is still free-roaming, but the tracking is inside the glasses. Yullbe Go allows easier and less expensive content creation, which is attractive to IP owners, and can be used in a mobile exhibit. If on-site, it can be built and taken down in a couple of hours.
The first two implementations are based on the company’s own IP. The first is called Traumatica and the second, currently in development, is Artiality. The latter is an experience where the user is inside a 3D version of paintings by Kandinsky, Mondrian, and more, which will premiere at Kunstmuseum Stuttgart on July 2.
Global Pet Expo 2021: Despite the Challenges, 2020 Was A Banner Year for the Pet Industry
March 31, 2021: The pet industry in the U.S. reached $103.6 billion in retail sales in 2020, exceeding the $100 billion mark for the first time and experiencing growth of 6.7% over 2019. The American Pet Products Association (APPA) released the figures during the virtual Global Pet Expo, held March 24-26, 2021.
Like some human categories (e.g. canned foods and toilet paper), pet products experienced a period of what the APPA terms “emotional stockpiling” at the beginning of the crisis in the U.S., followed by a steep drop in sales of 20% in April as consumers used what they had purchased and faced product shortages when they tried to replenish. From May through December, however, sales grew strongly and steadily. “The fourth quarter saw unprecedented growth in all channels,” said Celeste Powers, president of the Pet Industry Distributors Association.
Almost all product categories grew significantly during the year, although services such as grooming, dog walking, and boarding saw a 21.4% decline during the stay-at-home era.
Categories on the rise in the pet industry over the past two years included those with a significant licensing presence. For example, pet beds were up 35.3% in 2020 versus 2018, decorative collars up 62%, leashes up 34.6%, and toys up 16.6%. Sixty-nine percent of dog owners purchased toys for their pets in 2020, up from 63% in 2018, APPA’s research found, as did 67% of cat owners, up from 59% two years earlier.
The Global Pet Expo offered research and insights into how the industry fared in the past year, along with the consumer trends driving sales, many of which are expected to stick in the years ahead.
Pandemic Leads to More Pet Ownership—and Spending
The share of households owning pets increased to 57% in 2020, from 54% in 2019, according to Packaged Facts. In addition to households getting a pet for the first time, many pet owners have purchased additional pets, often diversifying their menagerie, for example by adding a cat or a small animal to the household along with an existing dog.
More than three-quarters (76%) of pet owners said their pets helped reduce their stress levels in the past year, according to APPA research. More than 70% have spent more time with their pets and more than 60% felt they were bonding more with their pets.
That close connection translates to continued purchases of pet products, even during economically uncertain times. Thirty percent of pet owners spent more on their pets in 2020 than 2019, according to APPA, with 10% saying they spent less and 60% saying they spent the same. Almost three-quarters (73%) of pet owners, including those with financial concerns, do not plan to make changes to their pet’s diet in the future, and only 20% said they planned to spend less on pet food.
Pet supplies outside food and medicine—the sector where the bulk of licensing activities lie—face a slightly higher risk for decreased spending going forward, according to Julie Springer, APPA research analyst. Twenty-eight percent of consumers said they plan to spend less on those items. Millennials and Gen X are the two groups most likely to worry about finances and to see pet supplies as discretionary, although they were also the most likely to spend more on pets during 2020.
Pet Parents and Premiumization
Consumers have long considered their pets part of their family. Seventy-seven percent of pet owners strongly agree that pets are part of the family and purchase differently from those who don’t agree, according to David Sprinkle, research director at Packaged Facts.
Many product trends arise from the fact that consumers want their pets to have the same products and services they do:
Premium foods: Natural and organic products and other healthier choices for pets have been seeing growth for several years, just as they have for humans, said Amy Kerr, director of business development and client development for pets at SPINS, a research and consulting service for independent retailers and specialty brands, which entered the pet category in August 2020.
Some of the other food categories with growth trajectories to watch, according to SPINS, include plant-based options; animal products outside of the traditional beef and chicken, such as venison, elk, turkey, and bison; and human-grade products that are less processed, have visible ingredients, and often are fresh, frozen, or freeze-dried. These can include soups, stews, purees, patés, and more, often packaged in jars, pouches, or other containers typical for human foods, rather than in cans.
NielsenIQ measures similar trends. Some of the food categories that are showing the fastest growth, as measured by the number of manufacturer claims, include meal enhancers (up 5.9%), dehydrated foods (10.7%), refrigerated/fresh products (20.7%), frozen items (15%), and freeze-dried raw foods (7%), according to Sam Smith, NielsenIQ’s client manager.
Health and wellness: Dollar sales in the pet care and wellness category in total were up 20% in specialty stores in 2020, with grooming and bathing, vitamins and supplements, and flea and tick products all up double digits, according to SPINS. Growth categories include antioxidant and immunity (up 4.9% in specialty channels), gut health (up 3.5%), and anti-inflammatories (up 2.6%), with interest also evident in skin and coat health and brain health (e.g., DHA, flax seed, and fish oil).
One indicator of the strength of the health and wellness trend: a recent Petco remodel in South Miami featured new branding positioning Petco as “the health + wellness company,” with the store’s assortment and layout supporting that image throughout, according to Dave Bolen, founder of the Bolen Group.
Stress management: In 2020, 51% of pet owners purchased calming products—diffusers, collars, sprays, toys, etc.—for their dogs and 51% did the same for their cats, up from 22% and 19% in 2018, respectively, according to APPA research. And 35% of dog owners and 31% of cat owners purchased CBD products, a new category in this year’s survey, in 2020. Treats were the top CBD category, followed by shampoo, oil tinctures, powders, and sprays. The top reason for the purchase was to treat anxiety and stress, followed by arthritis and other types of pain.
Smith at NielsenIQ, who estimated growth for CBD at 50.5% in 2020, on a small base of $11.7 million, notes that CBD products have a high price per pound of $37.83. NielsenIQ’s research found that consumers paid $32.96 on CBD per trip, on average, and had a robust repeat purchase rate of 20% for a pricy and niche category that still has some stigma associated with it.
Gifts: Gifts purchased for pets also increased during the pandemic, APPA found, for occasions like Christmas and birthdays and for no occasion at all. The recipients included all types of animals; 58% of fish owners bought a gift for their pet, for example. Pet parents give their pets gift cards as well.
Comfort: This has been a theme for many years. “We’re trying to do for our pet in part what our pets do for us,” says Sprinkle. He cited the licensed La-Z-Boy Pet line (from exhibitor Petmate, which acquired the license in 2018) as an example of this trend; it features items such as fold-out sofa beds and chaises.
All of these trends have contributed to the premiumization of the pet category. Prices in the pet food sector, for example, have grown 34.8% over the last decade, according to Jared Koerten, head of pet care research for Euromonitor International. This is largely due to consumers trading up to higher-quality and higher-priced products.
Retail Trends: Omnichannel Gains Traction
Every distribution channel in the pet industry experienced sales growth in 2020, but ecommerce far outpaced the rest and took share from other retail tiers. In 2020, Internet-based shopping accounted for 30% of sales in the pet category, according to Euromonitor, which forecasts that share to rise to 53% by 2024.
Bolen’s estimates show similar trends. While all channels saw a hefty increase in sales in 2020, ecommerce grew to account for 29% of the market in the U.S. in 2020 compared to 23% in 2019, he said. Other segments lost share, including grocery and mass, which declined from 41% to 38%, and specialty pet, which dropped from 26% to 23%. Farm and fleet stores retained their 8% share.
Almost half of pet owners (47%) said their online purchasing of pet products increased in 2020, with 21% saying it increased “a lot,” APPA found. The increase held true for 58% of millennials, 56% of Gen Z consumers, 45% of Gen X, and 33% of baby boomers.
The online landscape includes a variety of delivery methods, including curbside pickup, buy online/pick up in store (BOPIS), subscriptions, third-party delivery from the store, and direct-shipped orders. Subscription services, along with loyalty and membership programs, have become increasingly important in the pet space. Seventy percent of sales at the big specialty ecommerce site Chewy come from its Autoship program, Koerten says, while 50% of Europe-based global site Zooplus’ sales are from Subscribe & Save customers.
Bolen identifies DTC as a major growth channel in the years to come. With a dozen or so major players currently, from Just Food for Dogs to The Farmer’s Dog, this sector saw sales growth of more than 100% in 2020 to $250 million.
While pet-related services declined during the pandemic, experts expect them to come back big in 2021 and 2022. Most are hard to replicate online, so retailers have developed safe alternatives such as curbside drop-off and pick-up of the pet, online booking, and flex scheduling. “Pandemic or not, the fur is growing,” says Andrew Kim, founder and CEO of Healthy Spot, a 21-store retailer in California.
“It’s hard to groom a dog through the Internet,” adds Jeff David, CEO of Independent Pet Partners, owner of the Loyal Companion, Chuck & Don’s, Kriser’s, and Natural Pawz specialty chains. One service that has been working online, he said, is training. Consumers have embraced training sessions on Zoom, even asking grandparents, cousins, or others who take care of their pets to join the call.
While consumers are trading up to premium purchases, they continue to want value for money, and this is part of what is propelling many retailers’ increased focus on private labels. Chewy, for example, has said it wants 50% of its accessory sales over time to be attributable to private-brand products, according to Bolen. And Zooplus has seen its private-label sales grow 331% in the past five years, according to Koerten.
Several retailers are also increasing their focus on private label in the pet department. Petco has developed and prominently merchandises a number of private labels across the store; Tractor Supply has established its own premium pet brand, 4health; and Walmart relaunched its Pure Balance pet food brand, to name a few examples.
Supply Chain: Challenges to Continue
The pet food and product supply chain faced a number of challenges throughout the year, similar to other industries. Manufacturers had a hard time shifting production quickly enough to meet spikes and freefalls in demand early in the pandemic; many have been dealing with worker shortages due to COVID and other factors, which continue today; and there were spot shortages in packaging, especially early on, as bottles were rerouted for hand sanitizer and corrugated cardboard for delivery packages.
Some researchers have estimated that supply has been 70% of demand in some food categories at times throughout the year.
Delays in shipping continue today, due in part to shortages in ground transportation equipment, said Steve King, APPA’s president and CEO. In addition, fewer ships and containers than normal are available, with many awaiting unloading at clogged ports. Container prices have tripled since the start of COVID, with freight inflation expected to continue through the year, and lead times for imported products have doubled to 120 days. The growing demand in pet products from May through December, and beyond, has exacerbated these challenges. King predicted that supply chain issues will continue into 2022.
Meanwhile, retailers have been reluctant to add new lines and take inventory risks, although they have maintained higher-than-normal inventory levels on key items to minimize out-of-stock situations, according to Powers.
That said, the outlook for industry-wide sales in 2021 is positive. The APPA projects a growth rate of 5.8% in 2021, higher than the 3% to 4% historical average and not too far below the 6.7% achieved in the record sales year of 2020.
See our related post in RaugustReports for a look at the Global Pet Expo virtual exhibitors that highlighted licensed products.
IHA Connect SPRING 2021:
Evolving Consumer Needs Dictate Product Development Opportunities
March 29, 2021: Connect SPRING, presented by The International Housewares Association in partnership with The NPD Group and Springboard Futures, was held digitally from March 16 to March 26, 2021, and helped fill the gap caused by the cancelation of The Inspired Home Show (formerly known as the Housewares Show) this year. Many of the sessions examined how consumer trends that have emerged or accelerated during the pandemic offer opportunities for product development in the home and housewares industry. The information offers inspiration for marketers of licensed products in this sector and beyond.
For 2020, almost all home-related categories tracked by NPD—home textiles, housewares, home environment, kitchen appliances, and personal care appliances—grew substantially. The researcher estimates retail sales in all of those sectors collectively increased by 21% in 2020 over 2019. The strong performance held across the board; in home environment, sales rose in 90% of sub-categories, while the same was true for at least 70% of subcategories in the other segments measured.
Performance was driven by changing consumer behavior, assisted by a redirection of discretionary funds away from experiential activities such as eating out, as well as bumps from stimulus payments along the way.
All of Life Happens at Home
When the home became workplace, school, gym, coffee shop, restaurant, and movie theater, new needs arose that spurred housewares and home goods purchases. “Our home has suddenly become our whole world,” says Tom Mirabile, principal and founder of Springboard Futures.
One need was to create spaces that served multiple functions, such as work and dining, while also maintaining a boundary between the various activities. Thus the rise of the “cloffice,” for example, which Leatrice (Lee) Eiseman, executive director of the Pantone Color Institute, identified as a top Pinterest trend. This is the idea of putting an office in a closet, thus transforming a section of the bedroom or living room into a home office that disappears when the door is closed.
“We have seen so many unique creative hacks the consumer has done,” said Joe Derochowski, NPD’s home industry advisor. “Now how can we as an industry leverage them?”
“The consumer has created a tremendous capacity to do life at home in a variety of ways,” agreed NPD’s David Portalin, VP and industry advisor for food.
Accommodating different activities and multiple generations in the house at all times, along with a desire to interact with friends and family safely, accelerated the trend for outdoor spaces. These have been used not just for traditional leisure activities like grilling and gardening but for everything from watching TV, films, and sporting events to participating in work-related Zoom calls. Some families converted their garages to living spaces as well.
Many consumers went even further by moving into bigger homes, giving them room for a dedicated home office, for example. As it became clear that many employees would end up working from home full- or part-time after the pandemic, a growing number have moved out of urban areas, reversing pre-pandemic trends.
Of course a critical need during the pandemic was to keep the whole family occupied, both alone and as a unit. “Last year  was about giving time back to the consumer,” says Leana Salamah, IHA’s VP marketing. “Now it’s more about what consumers can do with the time on their hands.” One key activity has been cooking and baking together, with consumers trying new recipes or techniques, learning to cook or bake for the first time, and/or focusing on kids’ cooking activities. Gardening and home improvement also saw a burst of activity as a way to fill time in a rewarding way.
Celebrations, too, came into the home. Weddings, much smaller than planned, took place in the backyard. More people cooked Thanksgiving dinner than ever before. Graduation celebrations took place over Zoom. “Gen X and millennials have this ethos of celebrating everything,” says Mirabile. “They’re stir-crazy and depressed inside the house and need something to celebrate, then share on Instagram.”
Impacts on Product Development
These trends not only boosted sales in many categories, they also offered opportunities to create new products and reposition existing ones for new purposes. Some notable developments have included:
• Cookware and appliances for multiple occasions and functions. Examples range from appliances that cook using multiple techniques to mini-refrigerators with reconfigurable shelves and storage. This is a pivot from pre-pandemic, when specialty items were proliferating. And the compactness of the object is not as important as its range of function. “We’re moving away from how products fit into a space,” says Salamah. “Now it’s how they transform the space into one that can serve multiple purposes.” Kitchen electrics in the U.S. showed 27.9% growth in 2020 versus 2019, according to NPD, with multifunctionality being one big growth driver.
• Products to support one-pot or one-dish meals that are simple and versatile while allowing for the efficient use of leftovers. NPD found that Dutch ovens, stockpots, and other one-pot-style categories grew 50% to 60% each in 2020.
• Solutions that are portable to be used in any room, outdoors, during the commute, or in the office when that time comes. A coffee maker or prepared-smoothie maker is useful all around the house, not just in the kitchen.
• Products for outdoor (and garage) living. The needs are beyond traditional patio and garden décor, extending to areas ranging from portable cooking devices (not just the grill) to projectors for watching TV and streamed entertainment on the side of a garage.
• Appliances that bring off-site experiences home. These range from sophisticated, restaurant-style cooking techniques, to massagers and hair care solutions typically offered by a spa, to cold-brew coffee makers (the last up 72% last year, per NPD). Personal care items, including hot air stylers, massagers, facial trimmers, and home hair clippers, were up 9.3% collectively.
• Gadgets, appliances, and tools that allow consumers to experiment in the kitchen with new techniques. These fit the need for new pastimes, activities to share with family in person or via Zoom, or variety in meal preparation. Such solutions must come with adequate information to help inexperienced cooks participate.
• Products to reduce the stress that comes with cooking more meals at home. This means not only easy-to-use functionality and clear instructions, but also an appealing story about the benefits of a new gadget and plenty of ideas for new ways to use it.
In general, anything related to cooking, baking, and home décor showed strength in 2020. “Cookware had a monstrous year,” said Derochowski. He added that that bed and bath textiles were up 18% each and window treatments up 30%, driven by the need to redecorate alongside DIY projects around the house. “It’s been awhile since we’ve seen growth in these areas,” he said.
Comfort, Cleanliness, Security, and Safety
Not surprisingly, the idea of keeping oneself and one’s family clean and safe has come to the forefront since the pandemic began. COVID fears drove the change, but other factors, such as widespread civil unrest, also contributed.
Home environment was up 31.3%—the biggest increase of the major categories tracked by NPD across industries—led by air purifiers with growth of 138% in 2020. New products appropriate for the times, such as touchless hand sanitizer dispensers and portable UV light sanitation boxes, were introduced throughout last year and into 2021.
Bathrooms became more of a focus for new products and DIY projects than they had in years, thanks not only to a desire for cleanliness for the family but also to a trend to set up separate bathrooms for visitors. Safety extends throughout the home, with soap sanitizer dispensers (up 40% in sales this year) located in living rooms, patios, and inside the front door, not to mention in the car, workplace, airplane, hotel, school, and everywhere life happens. The design of the object must work for all of these spaces.
Closely related to safety and security is comfort, which has driven numerous trends. Pillows were up 23% in 2020, for example, while the boost in floor care (representing four of the top five growth categories in the home environment space) was propelled largely by the growth in pet ownership, one way families have found comfort during the pandemic. Self-care products such as massagers (up 64%) also play into this trend, as do breadmakers, home décor to create an appealing sanctuary, and much more.
Comfort can take many forms, according to speakers at Connect SPRING, including stress relief, a sense of togetherness and community, or small indulgences (e.g., carb-filled dishes or cocktails).
Safety and comfort are key factors across categories. Copper nanoparticle-infused placemats are anti-microbial, anti-fungal, and anti–viral (including killing the virus that causes COVID-19). Individual cake pans and personal pizza makers prevent the spread of germs by giving everyone their own entirely separate serving. Sometimes innovation is about repositioning; individual cake pans would previously have been more about personalization than safety and comfort.
What products will continue their fast growth trajectories after the pandemic? What future needs can the industry meet? Forecasting, as in any sector of licensing, is difficult given the uncertainty ahead.
Some of the changes that have occurred during the pandemic are structural, such as the fact that people have moved or reconfigured their homes. They are not going to go back to the old ways in these circumstances.
Most experts currently agree that working from home will remain in place in some form post-pandemic. This will continue to drive the need for products to help maximize small spaces and serve multiple functions. It will also likely cause more families to upsize or relocate further outside the cities, creating more opportunity to meet their needs as they furnish their new homes.
Another thing to consider is what needs can be addressed during the different stages of society reopening. It is difficult to predict the timing, given uncertainty about vaccination rates and new variants. But it is certain that each stage will require different products, services, shopping methods, and experiences.
Throughout all the stages of reopening, it is important to remember that individual consumers will handle the process uniquely, with their own behaviors and preferred products, services, and shopping options along the way. There will also be regional differences, stops and starts in the reopening process, and different levels of comfort depending on specific behavior (e.g. hugging a grandchild versus going back to a manicurist).
That means marketers must provide many options along a continuum. People working from home will need solutions for quick and convenient lunches, for example, while those going to the office, at least initially, will need products to allow them to remain at their desks as much as possible rather than visiting the break room.
Empathy for the consumer was one topic that came up often during Connect SPRING. “It starts with the listening and the watching and the anticipating and asking questions,” said Derochowski. “It’s really a deep empathy with the consumer.”
Since everyone has gone through the pandemic together, consumers have an expectation of empathy from marketers. “Last year the message was ‘we get you,’ but now it’s ‘we are you,’” said Mirabile.
Cross-industry collaboration will also be key to success. The food, housewares, and technology industries need to work more closely together than in the past to identify and solve needs in the kitchen, for example.
A key area of opportunity will be addressing the tension between wanting to retain some of the benefits of the stay-at-home era—such as stronger family connections, more time for DIY projects and hobbies, and simply enjoying the sanctuary of home—and the pressures of restarting aspects of a busy former life, such as kids’ soccer games, commuting, going out to concerts, running errands, and the like.
“Any time there’s a lot of change, there’s money to be made,” says Derochowski. “Innovation is critical. If I can solve those pains and wishes and frustrations better than what they’re currently doing, I can make a lot of money. It’s a time when we can revolutionize all of our business and really help make our consumers’ lives better, if we’re creative.”
CES 2021: Pandemic Spurs Innovation in Consumer Electronics
January 19, 2021: The four-day, all-virtual Consumer Electronics Show 2021, while smaller than a typical physical CES show, still featured close to 2,000 exhibitors and more than 100 conference sessions. Presentation topics, along with the products on display, reflected an industry that has faced challenges over the past year, like any other. But consumer electronics firms have also innovated to help drive and support many of the critical changes implemented at record speed across industries.
“Everybody has been flying by the seat of their pants,” said Rick Webb, COO of Timehop, a nostalgia app, in a presentation. “It’s been radical improvisation as opposed to experimentation.”
Licensing had a relatively small presence at this edition of the show, although there were a number of licensors (e.g., Blaupunkt, AT&T via Equity Brands) and licensees (Spectra, Skoog) exhibiting. But a number of the trends highlighted at CES are having an impact on the licensing business. Following are our observations about some of them.
The pandemic has, as expected, given rise to a number of tech products that support safety, notably sanitizing devices and next-gen masks.
On the mask front, exhibitors were offering high-tech versions that allow increased comfort and airflow, as well as connectivity. AirPop launched a line of consumer face masks that boast a better fit for all face shapes and improved filtration, airflow, and breathability, while Nexvoo was touting its clear smart mask, which provides UV light disinfection and integrates quiet, three-speed, brushless micro-fans.
Hubble Connected introduced the MaskFone, a medical-grade N95 mask with a built-in microphone and earbuds, as well as connectivity with the wearer’s smartphone. Even gaming peripherals maker Razer got into the act, introducing a mask concept design called Project Hazel, which has detachable active ventilators, smart ports that regulate airflow and filter out 95% of particles, a built-in microphone, and a clear design (along with lights for nighttime use).
A number of companies introduced products for sanitizing and disinfecting. Panasonic showed a NanoE air-purification device to make flying safe. Seoul Semiconductor exhibited Violeds, a UV LED light technology that disinfects within a second. Ubtech and LG were touting disinfecting robots. And a device called Blue uses electrolysis to produce 350 milliliters of disinfecting and detergent cleaning solution from 98% tap water and 2% natural ingredients in 10 minutes.
For public health, Clean Motion offered a self-disinfecting door handle, while Smart Sanitizer offered a kiosk that distributes hand sanitizer and also offers a screen for advertising messages. Steri-Write is a touchless sanitizing and distribution device for shared pens and styluses.
Some exhibitors were spotlighting products that are not COVID-related per se but meet needs that have arisen from a mostly at-home lifestyle. These included smart lockers for contactless order pickup, devices to protect packages from porch pirates, mobile production studios for high-quality remote streaming and broadcasting, and all-in-one desktop home offices that support working at home and help reduce distractions.
A Smarter World
Connected “Internet of Things” (IoT) technologies permeated more categories, use cases, and multifunctional devices than ever, and were often combined with robotics, machine learning/artificial intelligence (AI), voice communication, and the like. The marriage of AI and IoT, sometimes called AIoT, had a particularly high profile.
The Consumer Technologies Association (CTA), which owns and operates CES, reported that smart home products experienced growth of 17% in shipments and an 8% increase in revenues in 2020. Hot categories in the past year included smart speakers, displays, and lighting.
One area of wide interest, given the ongoing COVID-19 crisis as well as pre-existing trends, was digital wellness. The value of shipments of connected health-monitoring devices increased from $365 million in 2019 to $632 million in 2020 (up 73%), according to the CTA, which predicts the market will grow further to $845 million (up 24%) in 2021. Meanwhile, U.S. consumer spend on digital fitness increased by 30% to 35% from the start of the pandemic to September 2020, also per CTA.
Digital wellness devices take many forms. Just a handful of the many examples at this year’s show:
- The Oura ring, which has been used by the NBA and UFC to help prevent the spread of COVID among their athletes.
- Taison Digital’s Upmood, an emotion-tracking and self-awareness wearable.
- Brightday, which fosters healthy posture and movement practices by monitoring the user through a camera.
- Lify’s wellness drink brewer, which makes formula recommendations (with and without CBD) based on the user’s body conditions and the weather.
- Bisu’s Body Coach home health lab, which allows users to precisely analyze their urine and saliva and receive personalized advice on diet and lifestyle.
A wide variety of exhibitors and presenters, from Icon.ai and Ultrahuman to WW (formerly Weight Watchers), were touting wellness-tracking apps, which increasingly monitor not just exercise and calories, but sleep, stress, and emotional wellness. Many also foster relationships between the user and live coaches, nutritionists, psychologists, and the like, as well as providing AI-driven recommendations based on self-reported and/or biofeedback data.
The smart beauty and fashion sector was also prominent among the exhibitors at the virtual show. Examples included technologies for virtual try-on (for jewelry from Deepixel and for makeup from Perfect Corp.’s YouCam); AI-powered perfume where each spray can be a different scent (Ninu); AI-based programs that analyze skin data, prescribe solutions, and supply personalized products (Art Lab, Lululab, Lillycover); and sensor-based measurement-capture programs (MySize).
As more consumers turned to home cooking in 2020, CES exhibitors offered a number of smart kitchen products, including several robotic cooking systems that can cook, clean up, and alert the customer when ingredients are running low. iWonderCook creates meals from fresh ingredients shipped to the user, meal kit-style; RoboEatz cooks more than 1,000 customizable dishes from up to 80 ingredients in as little as 30 seconds; and Moley Robotics’ robot chef can cook 5,000 company-provided recipes, or family recipes, emulating human skills using custom cooking implements, rather than cooking like a machine. Celebrity chef Tim Anderson was 3D recorded to develop RoboEatz’ algorithms.
Smart indoor gardening systems were also in evidence. Rise Gardens is a modular, app-guided, and WiFi-connected hydroponic garden for home use, including a new countertop-size model and an Alexa skill to allow system control via voice commands. The company says it has seen a 750% increase in sales since March, thanks to pandemic-fueled interest in indoor gardening. Similarly, Gardyn is a fully automated vertical produce-growing system complete with an AI-based assistant.
In the children’s space, exhibitor Skoog announced a deal with Sesame Workshop for an educational platform for young kids that combines interactive content and a tactile experience. It was just one of several exhibitors offering a variety of products combining learning and play, often with a focus on pairing interactivity with touch.
A few examples: Hancom and Roybi were promoting educational robots; Tonies showed its Toniebox, a listening device for kids 3 and up that is paired with collectible characters and has signed several content licenses in recent months; LudoTech was selling a board game enabled by OLEM, a robot that plays a different role in each game; and Dipongo offered an interactive storytelling application that also integrates manual activities.
Other smart products on virtual display included intelligent baby cribs, cameras, toilet paper holders, chessboards, earrings, a smart alarm to prevent drivers from accidentally leaving their child in the car; wearables with gesture control and fingerprint authentication; and a pet monitor that distributes treats.
Changing World of Entertainment and Sports
How consumers are enjoying sports and entertainment has changed during the pandemic, and that was a topic of conversation in several of the educational panels at CES 2021.
Responding to these transformations is a challenge, of course, but also necessary. WarnerMedia has attracted pushback from theater owners for its decision to release its 2021 films day-and-date on both its streaming platform HBO Max and in theaters. “It’s about adjusting to the pandemic environment,” explained Ann Sarnoff, chair and CEO, WarnerMedia Studios and Networks Group. “I have amazing films I would like the fans to see, and 60% of theaters around the world are closed right now.”
A number of speakers reported positive results from new strategies undertaken in the face of pandemic challenges. Stephanie McMahon, chief brand officer at WWE, for example, discussed how her company’s expanded content, which is distributed through linear television, paid and advertising-supported streaming (both DTC and third-party), and on social media platforms such as TikTok, has seen a spike in viewership. That includes an increase of 55% on the WWE Network and 70% on YouTube.
CES panelists noted that, with the COVID-fueled uptick in viewing, consumers are now spending more time streaming than on linear TV. Older demographic groups in particular have embraced the technology for the first time and are expected to continue viewing now that they have the infrastructure. Consumers are also using streaming for an ever-wider assortment of content, from cooking information and news to traditional entertainment. And viewers are looking for a balance of new, appointment viewing, bingeable library content, and recommendations.
Like TV, gaming also saw a surge in usage in the past year. According to Nielsen, 82% of consumers globally played or watched video games in 2020, as the increasingly community-oriented activity allowed people to safely socialize as well as pass the time. And esports also experienced a landmark year, even though live events, a core part of its model, were not possible.
In sports, the lack of live fans at games has made the second screen ever more important. The WNBA invested in creating a real second-screen experience throughout the season, leading to an 85% increase in engagement. “The second screen is changing everything,” said Cathy Engelbert, WNBA commissioner. She pointed out that not only does real-time gamification and data integration, fan competitions, trivia, polling, behind-the-scenes content, and the like increase fan engagement, but “everything you do is a sponsorable asset.”
Augmented reality is increasingly used effectively as a part of the second-screen experience, and on social media and other digital platforms generally. The WNBA integrated AR on Snapchat, as well as during its Draft Day broadcast on ESPN, for example.
Kenny Mitchell, CMO of Snap Inc., said a lot of brands were using AR on Snapchat. One effective tactic is to allow consumers to try on goods, from Gucci’s or Footlocker’s shoes to Sally Hansen’s nail polish, and then purchase directly through an AR shopping environment that emulates a physical store. He noted that AR, which is core to Snapchat’s business, generates 2.5 times the level of engagement and purchase intent as a typical video ad.
Several presenters addressed the need to create an ecosystem where all aspects of franchise management complement and enhance each other. Sarnoff cited WarnerMedia’s DC FanDome digital experience in August, which involved 500 creators, celebrated the diverse properties and products—movies, TV shows, consumer products, games, streaming content, etc.—tied to the DC universe, and generated more than 22 million fan interactions. She says WarnerMedia has weekly meetings to discuss how to collaborate on big franchises and present a unified front rather than siloing the different businesses. “You don’t want your fans to be able to see your org chart,” she says.
The coming together of different forms of entertainment can occur across companies and industries as well. “Music and sports have come into our world,” said Darren Yan, head of talent management for the esports organization FaZe Clan. Music festivals on game-centric streaming channel Twitch and inside of games such as Fortnite have popped up as alternatives to live concerts during the crisis, for example. “Even post-pandemic there is going to be a world where some of these things will continue,” Yan noted.
Live events, which were growing by leaps and bounds as a means of fan engagement, have not been possible during the pandemic. That has led to the launch of a number of digital options, but they have not compensated for the decline of that business. “We lost a brand’s primary way of making a real connection,” said Webb of Timehop. “Losing the events category is devastating and I don’t think we should ignore that fact.”
A number of exhibitors at CES were showing technologies to support COVID-friendly digital or drive-through experiences, as well as to foster tech-driven live experiences involving projection or VR, once those are possible again.
Several key retailers spoke in keynotes or on panels about the challenges they faced during COVID, the role of the bricks-and-mortar store, and a number of other topics faced by store chains and other marketers.
One theme was the important role physical stores can continue to play even as e-commerce and contactless service remain critical. “Our stores became the hub of the omnichannel experience,” said Lauren Hobart, president of Dick’s Sporting Goods, who noted that 70% or more of purchases are passing through the stores in some form, whether through an in-store purchase, curbside pick-up, or ship-from-store. “We feel the store is a critical part of our future.”
Similarly, at Best Buy, even as online sales ramped up by more than 175% by the third quarter, compared to before the pandemic, 40% of the purchases are still being picked up in-store or curbside, according to Corie Barry, CEO. “The store will have a massive role in fulfillment,” she said, adding that there is also an experiential need for support that is best filled by a physical store. “When we re-opened, customers gravitated to the stores for more complex sales where they needed interaction and consultation.”
Alibaba Group’s Tony Shan, head of Tmall Global in the Americas, talked about the ability of a marketplace like Tmall to give brands data about who is shopping, where they buy and how often, micro and macro category trends, and the like, all of which help analyze and guide future planning.
Not surprisingly, the use of data was a topic that came up often throughout the show. “We have to understand real-time data to know where our customers are in their journey and deliver up content that is interactive and informative,” said Adrienne Lofton, vice president of North America marketing at Nike.
“We can utilize data to create intimacy in so many different ways,” said Mindy Grossman, president and CEO of WW International. “Technology also enables you to be more agile and nimble and learn in real time so the investments you’re making are as strategic as they can be.”
The retailers at the show also talked about purpose, a hot topic among all marketers today, ranging from staying true to a company’s core—enriching lives through technology, in the case of Best Buy—to making progress toward diversity and sustainability goals. “If companies went into the pandemic with a strong sense of purpose, they were able to double down on it in a time of crisis,” Barry said.
Mitchell reported that 82% of U.S. Snapchat users believe they have a personal responsibility to create change. As a result, the company has developed content, such as shows highlighting the unique experiences of Black citizens, and tools, such as a big push for voter registration. Data shows both efforts have performed well in reach and engagement.
“To be purpose-driven, you can’t be afraid of making mistakes. You have to take risks,” stressed Lofton of Nike, which took a leadership role on diversity and inclusion by partnering with Colin Kaepernick at a time when other companies were running away. “Nike wanted to begin the conversation and let others follow,” she said.
Doug McMillon, president and CEO of Walmart, noted that purpose-driven initiatives encompass both internal and external elements. Walmart has augmented its internal efforts on sustainability and social responsibility by bringing its partners throughout the supply chain into the process (e.g. by requiring them to meet certain milestones). “We can apply that model to racial equity,” he says.
Coresight Research found that 56% of global consumers are willing to pay 35% more on average for sustainably made goods, and such products not surprisingly had a notable presence at the show. The eco-initiatives took a variety of forms: Samsung announced eco-packaging for all TV products and a Galaxy Upcycling at Home program where, the company says, users can decide how to repurpose their Galaxy phones as other home devices. Ecojoko touted an AI-powered home energy monitoring device that it said could reduce electricity consumption by 25%. Woodoo makes high-tech products such as smart surfaces from wood rather than plastics. And Hydraloop added to its line of water recycling products.
The pandemic spurred innovation, not just in sustainability but in business models, the supply chain, marketing, and other components of the consumer electronics industry. Observers expect that to continue. “The pace we’ve been moving is a different pace and I think it’s sustainable without too much fatigue,” said McMillon of Walmart. “I think the run rate going forward will be faster because of what’s happened.”
Tech Tidbits from the Digital Kids Conference
Note: This is an extended version of the March 13, 2017 edition of RaugustReports.
March 13, 2017: The 2017 Digital Kids Conference, held at Current at Chelsea Piers in New York on February 20, 2017, focused on the intersection of technology and kids’ media, entertainment, and marketing.
Here are some of the takeaways of potential interest to the licensing community:
Teens and tweens rely on YouTube. Streaming video is the go-to entertainment medium for Generation Z (ages 8-15), 61% of whom say they use streaming channels, especially YouTube and Netflix, most often, according to research firm KidSay. That compares to 26% who rely on traditional TV channels. In 2013, those numbers were reversed.
The reasons for the change are twofold, according to Terence Burke, Kidsay’s SVP of research and editor-in-chief. First, kids like the control streaming gives them and, second, many of their parents have already cut the cord, giving them fewer traditional options.
Streaming is also important from a marketing perspective. When making a purchase decision, 7% of tweens and young teens say they follow the recommendation of friends. But 67% say they trust the opinion of influencers familiar from YouTube or other streaming channels.
Young people also love Snapchat. It’s fun and ephemeral, they like the storytelling, they can be themselves, and they can create their own content in their own way. “There’s autonomy, control, and self-expression, in abundance,” Burke says. Marketers do best on the platform if they “see [users] as collaborators, not consumers,” he adds.
It’s all about the story. “People know us through our stories and not our toys,” says Kenny Davis, chief marketing officer of GoldieBlox, the STEM-focused building kits for girls. He says 51% of U.S. consumers are aware of the brand, which operates within a small niche in the toy industry. From its launch in 2012, the company built this following through free exposure in the press and then on YouTube and Facebook, speaking first to parents.
When the company finally took its storytelling to children in 2014, it did so through an app, which generated 1 million downloads almost immediately and still has 60,000 active users. It then made a 16-episode series of streaming stories—the first time it paired with a professional production company—attracting 3 million views. It now has a chapter book series with Random House and is shopping an animated TV series.
“The challenge is, you don’t write the story, you evolve with it,” Davis says. “We’re starting to spend now, but we have five years of experience telling our story within our community. And it’s not the same story now that we were telling five years ago.”
It can be tough to be creative and COPPA-compliant. Tinybop creates kids’ educational apps and has 12 titles on the market, all for the iOS. Many of its apps, which allow kids to “create stuff, try it out, see if it works, and share,” according to COO Youngna Park, face creative challenges due to the restrictions of the Children’s Online Privacy Protection Act (COPPA).
There is a videogame creator, for example, where users have made thousands of games. Initially they weren’t able to share what they had spent dozens of hours putting together, because COPPA doesn’t allow them to reveal their names, post user profiles, or look at other users’ details. A cumbersome email system was set up to enable some sharing under parental and company supervision. “Kids love that they can share, but it’s clunky for the kids and for us,” Park says.
The fact that the app can’t include in-app purchases has business implications, and there are limited possibilities for engagement through relatively rudimentary tools such as stickers and iMessage. Kids can play games, as long as their parents maintain control.
“Creativity and sharing means community, and that runs against COPPA,” says Park.
Children need a meaningful reason to use a fitness device. UNICEF Kid Power launched a wearable device that, like other fitness bands, records steps taken. The difference is that each time users reach a certain milestone of activity, a food packet is given to a severely malnourished child. Online content, with celebrity involvement, gives the kids evidence of the accomplishments that have occurred due to their efforts.
The initiative addresses two issues: 1) that one in four kids in the U.S. is inactive, and 2) that one in four kids worldwide is malnourished.
The result: Kid Power is the world’s most used wearable device for kids, with 200,000 Kid Power team members on board as active users, 1 million expected in 18 months, and the brand ranking as the number-two wearable brand at Target (competing against the likes of Samsung and Apple). Users are 55% more active on an average day and spend 44% more days achieving their fitness goals than kids using wearable devices without the charitable purpose, and they stick to the device over time. Meanwhile, 5.2 million food packets have been delivered, saving the lives of 30,000 severely malnourished kids.
“We’re not a tech company,” says Rajesh Anandan, SVP of UNICEF Ventures, which oversees Kid Power. “We’re in the meaning and purpose business.” Anecdotal evidence of the importance of the mission: In user feedback, three different children made the comment, “Every time my band vibrates, I feel like a superhero.”
You have to experience it to believe it. Virtual reality is an intuitive technology for kids, and the best way to introduce them to it is in a social setting, according to Dan Ferguson, EVP of digital interactive strategy at digital and experiential agency Groove Jones.
He reports that there are 3,000 VR arcades in China, and mall-based experiences are starting to appear in the U.S., including at Chuck E. Cheese and, soon, at Dave and Buster’s. “VR is much more fun when you have two or more people inside with you,” he says. “So we turn it into competition.” An e-sports game that allows users to play in VR mode, where people can watch, will be rolled out at e-sports competitions this summer.
“Kids instantly get VR,” Ferguson says. “There’s no learning curve.” He explains that when kids first try the technology, they want to tell people what they’ve experienced and have other kids as spectators while they play. As they explore, they look everywhere and examine every detail. That contrasts to adults, who tend to simply look forward when they’re in a VR space.
The Digital Kids Conference is sponsored by Digital Kids Media.
Conference Conflict: Decision Time for Artists and Agents
This is an extended version of the August 22, 2016 edition of RaugustReports.
August 22, 2016: Next year’s earlier dates for Licensing Expo—May 23-25, compared to mid-June in previous years—creates a conundrum for artists and art agents that exhibit at both Licensing Expo and Surtex. The two shows will overlap in 2017, with Surtex taking place from May 21-23, its traditional timeframe.
“Finding suitable trade show dates and venue availability is challenging, especially when the trade show cuts across 15-plus product categories, as Licensing Expo does,” says Jessica Blue, senior vice president of licensing at show organizer UBM. “The May time slot offers dateline consistency that we had been unable to obtain in June and also places us earlier in the buying cycle, which is something that attendees and exhibitors have requested. It is unfortunate that our new dates overlap with Surtex.”
In the past, a large number of artists and art agents exhibited at both events. But as the years have passed, many have opted to focus on Surtex only. In fact, only about 15 companies had a booth presence at both shows in 2016, representing approximately 3% of Licensing Expo’s total roster and about 7% of Surtex’s, according to a comparison of the two exhibitor lists. Blue reports that eight of the affected companies have confirmed their participation in the 2017 Expo as of mid-August.
One of the options for companies touched by the overlap, especially smaller firms and individuals, is to skip the Expo in 2017. “We won’t be exhibiting at the Licensing Show next year, the first I am missing in 27 years,” says Elise Rosenthal of agency Rosenthal Represents. Although her husband and business partner could theoretically attend one show and she could do the other, “he is not the art person I am and he relies on me,” she says. “We planned to exhibit in both, but those dates don’t cut it.”
Agents whose businesses extend beyond art alone, on the other hand, are more likely to continue exhibiting at each event. “We’re unique in that we have an art licensing business and a consulting business,” says John Haesler, partner at MHS Licensing, who estimates that about 80% of the company’s art-related business done across the two events occurs at Surtex, while almost all of the consulting business takes place at the Expo. “We have to be at both shows.”
The situation is similar for Jewel Branding & Licensing. “Over the past few years, our agency has evolved to representing both artists and brands, which compels us to exhibit at both shows,” says Ilana Wilensky, vice president. “We were shocked and upset when we heard the 2017 dates would be overlapping,”
The smaller the company, the steeper the challenge. Brothers Bob Giordano and Greg Giordano of Giordano Studios/Greg & Co. LLC are tentatively planning on exhibiting at both shows in 2017. “In regard to the Licensing Expo’s change of date, simply put, it stinks!” Bob Giordano says. “Most of the artists are rather small-staffed and the thought of having to do both shows at once creates huge problems for us. Unfortunately, as a small family business we’ll have to split up, with myself manning the booth at Surtex in New York, while my brother will take the helm at Licensing Expo in Las Vegas.
“Over the years we’ve found success at exhibiting at both shows, so the need still rings true for our company,” Giordano continues. “We see more international potential in Las Vegas, as well as West Coast manufacturers, but when you come down to it we’re an art licensing company so Surtex is still our premier event overall.”
Note: Most of the smallest companies and solo artists that exhibited at both shows in 2016 either declined or did not respond to an interview request for this article.
One key concern about the overlap is the cost associated with having two booths running at the same time. Exhibitors must produce duplicate sets of banners, panels, sell sheets, look books, and other booth materials. Another is how to best maintain two booths simultaneously with a limited number of staffers.
Wild Wings LLC is compensating for the additional expense of replicating its booth panels by reducing the size of its booth space in Las Vegas from a width of 20 to 10 feet. “Over the years, both shows have proven to be meaningful to our business; however, more recently, the Licensing Show has been less important to us,” says vice president Sara L. Kohler. “Despite being a small company, we are fortunate to have enough bodies to spread over the two shows. We cannot imagine how frustrating this is for the individual artists that attend the shows.”
MHS typically brings five people to each show, but that won’t be possible with two days of overlap, including set-up and travel. “It hurts our coverage, since we’ll be short staffed at both for a couple of days,” Haesler says. MHS is also considering reducing its booth space at the Expo, from 10 x 15 feet in 2016 to 10 x 10 feet in 2017. “We definitely will exhibit at Surtex, and we’re definitely going to have some kind of presence at Licensing Show.”
The Buffalo Works and Suzanne Cruise Creative Services, which merged in March of this year, plan to do both events. The merger will allow the combined company to have three staffers at the Expo and two at Surtex next year. “We’re managing through it, but we’re not happy about it,” says Joanne Olds, founder of The Buffalo Works. “It will definitely be more expensive for us.”
Olds reports that the 2016 Expo was her best ever, but points out that she has been slowly moving her booth location away from the Art & Design section each year. This trend will continue in 2017, when Olds and Cruise will have a booth that is one aisle farther away from the main Art & Design area than their location in 2016.
Giordano brings up another point about the Expo’s move. “What hasn’t been determined is how does [it] affect attendees who traditionally walk both venues,” he says. “I’ve heard from a number of my greeting card and puzzle licensees that the overlap will create problems for them. [They’re] either skipping Licensing Expo, sending fewer attendees to one or the other, or spending less time ‘shopping’ at Surtex due to the fact they would need to leave mid-show to get out to Las Vegas.”
Addressing the Challenges
Many of the artists and agents interviewed for this piece say they understand the need to move the Expo show dates. “They moved up Licensing Show because the industry asked for it,” notes Haesler.
That said, most stress that they are disappointed with the move, which is in keeping with the common feeling that art has long been something of a “stepchild,” as one put it, at the Expo.
“We can comprehend the logic since we are such a small portion of the larger picture,” says Kohler. But she adds, “It is very frustrating when these types of changes are made with little regard to the consequences.”
“Since art licensing represents less than 10% of the licensing industry, I understand shifting the date in conflict with us,” Giordano admits. “But it doesn’t sit well after supporting that show for over 20 years.”
“Artists matter,” adds Rosenthal. “We may be small potatoes to the big shots at the Licensing Show, but we need exposure at these shows too.”
Despite their frustration, several exhibitors say they appreciate that show organizer UBM has taken steps to address their concerns. Some of those interviewed report that UBM is offering discounted booth prices to dual Surtex/Expo exhibitors to entice them to stay, for example. This will help defray a portion of the additional costs incurred from doing both shows at the same time.
“I think the people at Licensing Expo feel our displeasure and they certainly went out of their way this past show to make us feel the need to come back,” Giordano says.
Olds concurs. “We’re pleased that Advanstar [now part of UBM] has been so cooperative in understanding the problems this move has caused us and how serious the issue is.”
“Since April, we have been working closely with the small number of companies that this directly affects,” says UBM’s Blue. She points out that many Art & Design exhibitors took advantage of the matchmaking service UBM introduced in 2016, as well as a first-time refreshment program and networking mixer dedicated to the Art & Design group. “These new complimentary services were designed to increase the number of high-quality business connections for exhibitors and they were very well received.”
Most of those interviewed for this story say they hope the two shows can work out a mutually beneficial date going forward, with some suggesting the Expo could move by a few days to avoid an overlap and a few noting that it might be time for Surtex to consider an earlier-in-the-year slot. If not, they say they will reevaluate their plans for 2018 after they see how 2017 goes.
“Our hope is that one show or the other modifies their dates so that we can exhibit at both shows as traditionally was the case,” Giordano says. “It’s not good for any of us and perhaps after you add all the pros and cons of the move, both management companies will consider a slight shift for 2018. One can only hope.”