Apocalypse! Twilight zone! Back to the future! Call it by whichever metaphor you want! The COVID-19 pandemic is considered as the most crucial global health calamity of the century and the greatest challenge that the world has faced since the 2nd World War. So far, the virus has affected over 15.7 Mn people globally and killed more than half a million people in more than 200 countries throughout the world. In order to save lives and stem the virus, many countries chose to lock-down movement of its citizens since early/mid-March and the economies of many countries were consequently impacted and continue to be impacted in varying degrees. As the number of cases keeps climbing, governments are faced with the dilemma of deciding between lives and livelihoods. Here in India, while the virus hasn’t spread as wildly as other countries (inspite of our large population), the economy has never the less taken a beating and the retail industry which was projected to grow to $ 1.1 trillion by 2020 was probably the largest casualty of the multiple lockdowns after aviation and travel & tourism. Except for essential goods, all retail outlets including modern trade centres like malls and other single brand stores were ordered to remain shut and corporate offices were asked to encourage employees to work from home. While there was a reasonable amount of panic among employees as the lockdown kept getting extended, companies large and small started exploring other ways to extend a helping hand through this unprecedented crisis. Another unnerving statistic doing the rounds on news channels was that for each month there will be an approximate loss of 2% points in annual GDP growth. We decided to get beyond the doomsday WhatsApp messages and get a feel for what the Indian licensing industry had to say. So, we circulated a brief questionnaire to a few key executives in the licensing business about how they have been coping with the Covid-19 pandemic and are managing to stay afloat during these trying times.
We are thankful to Akhil Jain Executive Director – Jain Amar Clothing Private Limited, Samir Jain, Chief Operating Officer, Green Gold Studios, Susmita SinghDeo GM – Dream Theatre India Pvt. Ltd., Shipra Dubey – GM – Brand Licensing, Bradford License India and Bhavik Vora, Founder & CEO, Black White Orange Brands Private Limited, for sharing their perspectives with us. We are still awaiting responses from a few more and will append the same in due course.
Q1: Given the ambivalence over the retail landscape and the lockdown relaxation getting pushed back repeatedly, what does your company’s game-plan look like?
Akhil Jain feels there is no confusion, but the situation looks far from predictable. Retail sales across brick and mortar has been hit to the tune of 70%, while e-commerce hasn’t compensated a significantly against depleted offline sales. As a licensor, JACPL are not looking at brand extensions for next 3 quarters. As a licensee, they have negotiated with the licensors to defer the royalties to 2021 along with extensions in the licensing period.
Sameer Jain shares this sentiment. with the slowdown in retail sales , Green Gold Studio’s approach will be to support the licensees and stand by them, help them in surviving this tough period.
Bhavik Vora believes everything right now is dynamic, fluid and evolving on a daily basis so it’s very difficult to plan especially if major launches are in the pipeline. BWO are currently focusing on e-commerce to reach out to the fans and service those demands. Outside of that, they are currently working with their partners and licensees to ramp up distribution in parts of India which are less affected and probably have similar demand for the merchandise. This is opening up new avenues, customers and distribution points for their brands.
Shipra expresses her deep concern for all those companies who’s balance sheets are cracking under the weight of the virus. She also adds while they are all gradually adjusting to the new version of ‘normal,’ Bradford is beyond grateful to be providing calls, Webinars, Emails, any assistance to the global brand licensing industry, so that their partners are able to continue their business operations from their homes despite the worldwide call to action to flatten the COVID-19 infection rate curve. Hence their focus has been going more and more digital. Their core business is a traditional business of meet and greet which has not completely shifted to being an online version of it. They are now focusing on their ecommerce partners more. They have signed an EMOJI apparel Deal with Myntra during this tenure and few more and they are planning to continue with the same strategy.
Sushmita Singh adds for Dream Theatre, the licensing representation business is a big challenge currently, as barring necessities like food, beverage and personal products, the other licensed categories are dormant with retail being in shut down mode. While they wait for the return of the representation business Dream Theatre to get restarted, their focus was on addressing the needs of the hour and intersecting it with a relevant licensed brand in their stable. They tied up with one of their licensors, Smiley, to launch high quality N95 masks that are available on all major platforms online and offline . (More info at spreadthesmiles.in) They linked it to a cause whereby a percentage of sales went to an NGO supporting the underprivileged affected by the pandemic and have collected INR 431,320 (USD 6000/- approx.) for the cause. They are focusing on Liverpool Football Club which were crowned EPL Champions 2020 and are the biggest football club in Europe with a massive fan following. They are signing up licensees and working on roll outs. The roll outs may take time but the intent of licensees is big basis the club’s performance .
Our second focus is more direct to consumer models via online platforms, both via our own brands and licensed brands.
And finally, their content vertical is stable with content being played across Disney, Amazon Prime and Netflix.
Q2: Has there been any shift in the business model?
“No” says Akhil Jain, but it is skewing more towards E-commerce and Omni-channel sales. As lesser customers want to physically “flock to the markets”, the retailers are trying to reach the consumer in every way possible.
According to Samir Jain their focus is now on Licencing essential and health care products, the traditional kids categories have taken a back seat till situation is back to normal.
Bhavik Vora feels the business model has shifted in a way that other verticals at BWO have started contributing more than L&M at this point, which used to be their key driver. Factors like retail and movie releases have had an impact on the product business but they are hopeful things will come back to pre-covid levels. Having said that, they have been able to concentrate on their other business verticals which have been growing since the last couple of years and will have a significant contribution on their business this year. This period has given them time to think of innovations and various strategies to grow their company as well as the L&M business in India.
Shipra adds While the modus operandi remains the same its more digital now. Zoom and Microsoft meetings are a rage these days. Earlier Skype was the only medium used, and honestly, we at Bradford relied more on the face to face meetings. But now the everyday morning huddles are on zoom. From the serious discussions on numbers and revenue to meeting each other pets Video calls have been our savior.
Q3: What is driving that shift?
Akhil Jain clearly puts it down to 3 key factors.
- Fear among consumers on the health front
- Change in consumer preference (in almost every category)
- Change in aspirations (though for a short-term)
Samir Jain has a different perspective. He believes as a brand it’s their responsibility to contribute towards educating children and parents towards the dos and don’ts to handle COVID , this is driving the shift. Further he notes that It’s a moral responsibility of any brand to stand up and contribute to the society in times of crisis.
Bhavik Vora is of the opinion that the shift is being primarily driven by the consumers. The mindset of all businesses as well as customers has changed over the past few months as a result of the pandemic. There is a large majority that has seen a shift in spending dynamics, compassion in helping the community and the idea of being open to new innovations.
Shipra is of the opinion that fear to sustain is the greatest drive. She is sure this is a phase where the deepest concern that all of us have is the sales, the revenue. Since we can’t do much about it, it is better we use the time to prepare a plan instead. While the licensee can plan how to ramp up the 3rd quarter the brand can plan its marketing, social media, branding activities, etc.
Q4: What do you think agencies, & or licensors should be doing?
Akhil Jain is emphatic in his response. He would like licensors to extend assistance to licensees for extension of periods in agreements.
Samir Jain recommends focussing on using innovative methods of communication through their brands to fight the pandemic.
Bhavik Vora is already in action mode. He informs us that most of their licensors and them, have jointly decided to, give their full support to licensees and work with them closely to ensure they have multiple plans in place for different scenarios with regards to liquidity, working capital & inventory impact on the business. He believes this is a time to come together and plan the best possible outcome to benefit the business.
Shipra has a more pragmatic view the Licensees should refrain from sending out a request for seeking relief from MGs that are due in the 3rd or 4th quarters. Understand that along with you the brand is also struggling with the business. So instead of thinking about Oct/ Dec MGs its better we focus now. Likewise, if the payments are due in July / Sept the Licensors should be more flexible to postpone this and regroup for the business discussion by Aug again.
The agencies, should definitely try to bridge the gap to amicably resolve
Q5: If you have a Point of View who do you think is getting it right, who’s getting it wrong?
Samir Jain observes literally everyone is back to the drawing board and each one should device their own strategy to ensure survival of the brand and business.
Bhavik Vora is upfront in his assessment. He believes there is no right or wrong that anyone is doing right now, everyone is trying to hustle and get the wheel moving by trying new things/models or pivoting into new businesses. He explains goes on to explain – some obvious categories have emerged out of this crisis and a lot of action is happening in that space, but this pandemic has changed a lot of things for the long term and it is important that businesses think about that too, along with keeping the business afloat in the short term.
Shipra believes everyone in their own way is trying hard to sustain and grow. In these difficult times where even the most distributed companies- are all trying to manage the work situation.
She observes it’s great to see how people with different cultures, spread out around the globe, are joining together to collaborate for a shared business Goal.
She concludes Bradford has pitched and are discussing deals that are way different from Licensing, collaboration, Events, Celeb promotion to name a few. Hence difficult times have given everyone food for thought to plan respective plan B and pivot quickly.
As the world waits for a speedy end to this pandemic and a return to normalcy, we wish our entrepreneurs holding forte all the best. They are truly an embodiment of the American witticism – When the going gets tough, the tough get going! Kudos & much respect!