A New Wave of Retail Branding
October 19, 2009-- Home Textiles Today,
The news that Linens 'n Things will become a retail specific brand in the Canadian market through a licensing deal with Home Outfitters marks another step along the road of new wave brand management.
Consider this: Hilco and Gordon Brothers paid a mere $1 million for LNT's intellectual property. They were able to contract rather quickly with a web retailing operator to reconstitute the brand as an online retailer. Presumably, Hilco and Gordon Brothers are taking royalties and/or a portion of the sales. At Home Outfitters, they expect LNT-branded products to generate retail sales of more than $100 million over the first six years of the agreement, from which they will derive additional income. There is talk of other licensing deals in other international venues.
At the end of the day, Linens 'n Things as an entity or series of entities doesn't have to be an 800-store, multi-billion dollar retail chain to be a success for its owners. It only needs to repay Hilco and Gordon Brothers' relatively modest investment, in spades.
The Home Outfitters announcement surfaced on the same day Liz Claiborne Inc. announced that J.C. Penney will become the exclusive venue for its signature Liz Claiborne and Claiborne brands. Across multiple categories, including home, Claiborne's team will work with Penney on design and development, while Penney's sourcing group will handle manufacturing and distribution.
The apparel company is also doing a similar deal with QVC for the Liz Claiborne New York brand designed by Isaac Mizrahi, which will also expand into home.
Claiborne expects to lose $400 million in wholesale revenue by outsourcing its brands to the retailers. But it also expects the arrangement to swing the corporate P&L from “a significant loss” into profitability.
During a conference call to outline the deal, Claiborne ceo Bill McComb became a bit impatient when an analyst asked him if he ever thought he'd see the day when Claiborne was no longer a department store brand. That view, he asserted, demonstrates thinking in an outmoded “little analyst box.” Then he noted that JCP is, in fact, a department store and has been in the business a lot longer than several other department stores.
The Claiborne deals stand as further proof that traditional brand management as practiced in many consumer product categories is nearly dead. The LNT deal — along with similar licensing agreements struck over the past year for the now-defunct The Sharper Image and The Bombay Company retail chains — suggests a new wave of retail branding (literally) is upon us.
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