License to Thrill
Products connected to highly recognizable personalities, organizations and even cartoon characters can generate excitement and drive profits in the pet store.
Cesar Millan may “whisper” to dogs in order to get their attention, but licenses like Millan’s Dog Whisperer are shouting out to retailers that licensed pet products are becoming increasingly viable avenues of income.
The Dog Whisperer, whose licensed products include toys and orthopedic bedding, is just one of a growing assemblage of A-list personalities and entities putting their names–and reputations–on pet products. There’s also Rachel Ray, Nickelodeon, Animal Planet, The American Kennel Club (AKC), Purina and the ASPCA, to name a few. Heck, even the good ‘ole boys of NASCAR have plenty of licensed pet products headed down the back straightaway to store shelves, aimed at its worldwide following of 70 million fans–or just someone who likes Dale Jr.
Licenses are currently adhered to dog food, toys, treats, collars, leashes, aquariums, housing, apparel, supplements and shampoos. That’s just an appetizer of pet licenses on the market, not the whole meal. The menu is getting increasingly extensive. Grant Adkins, vice president of pet marketing for Jakks Pets, which has licenses for Animal Planet, AKC and the Cat Fanciers Association, says licensed products will continue to grow because they give the consumer confidence regarding what’s being offered to their pets.
“It’ll continue to trend upward because the consumer is more and more conscious about where their dollar is going,” says Adkins. “With the economy where it is, they’d rather spend $15 and know that a product will last for two months than spend $12 and have it destroyed in a minute. They’re going to look for brands they trust, that they know they can depend on, and know [the product is] going to give them their money’s worth. People are always going to look for the best for the pet because the pet is the child. What do you want to give your child? You want to give them the best.”
NASCAR is also expanding on its pet licensed business, according to Blake Davidson, the organization’s managing director of licensed products. Dog-related items like NASCAR jerseys, bandanas, pet bowls, toys, collars and harnesses have been the primary focus until now; but aquarium products are a future possibility. And, since the races are ovaling around a track, why not put this popular license on something that’s also going around and around? “You could do a whole little NASCAR-themed hamster environment with the wheel, the track and all of that kind of stuff,” says Davidson. “Who knows where it ends but we know there’s a lot of opportunities out there.”
As NASCAR (and others) drive forward in the category, it is hoped the apprehensions some pet store owners may have about carrying licensed pet products will become dust in their business’ rearview mirrors. “Independent pet retailers in the past have been hesitant, in some cases, to readily take on licenses,” says Merritt Schoch, chief marketing officer/chief operating officer for R2P Pet (Stellar Pet), which has the license for Dog Whisperer toys. “It would be beneficial for them to overcome the stigma that these products are too expensive because there’s a licensing fee and because they’re overpriced, so nobody’s going to buy them. It’s an incorrect assumption that they’re going to lose margin because they’re going to have to price the product higher.
“They’re generating excitement,” adds Schoch. “They’re generating incremental sales. They’re reaching new consumer demographics. They are also allowing the consumer to make the decision to buy the more upscale product. You can have an assortment. They can still have their value-add items and you can still have your reasonably priced license. Part of the challenge for independent pet retailers is that they’re still trying to figure out where licenses fit in.”
Driven by Dependability
One definite benefit to licensed pet products is in the implied quality of these items. One has to believe that Rachel Ray, Cesar Millan, The American Kennel Club, et al. would not allow their names to be associated with anything inferior. Image is important, as has been said many times, and industry executives say the upper-end quality image associated with licensed pet products makes them highly attractive to consumers.
“Authoritative licenses” is a term used by Adkins and others. Adkins reasons that an authority brand works well because it exudes consumer confidence in the product’s safety, durability and testing. It’s important when buyers are conscious about how they spend their dollars in these recessionary times.
“What we have tried to focus on in the last few years is authoritative licenses,” says Adkins. “Who are the pet parent’s major influences? Number one is always the veterinarian, for what they do for their pet–whether it is food, medication or even playing. You’re not going to go to your vet every time [you’re looking for a product recommendation], so you’re looking for other influencers. Having a license such as American Kennel Club, which has been around for over 100 years and is the authority on dogs, has given us credibility in the marketplace by saying this a product that’s safe for my pet and I can feel good about giving it to my pet. If I’m going to spend money, I’ll spend it on this license because it’s just not a generic product.”
Schoch agrees with this premise. “You want a selection that’s best in class,” she says. “By authoritative, I mean this is a brand that has some long-term viability and is meaningful to the pet consumer. You want it to be something that can be part of the everyday product mix and assortment for a retailer.”
A Premium Proposition
Strong licenses not only equate into the possibility of better sales, but also better profit margins on those sales. The strength of the name equates into the strength of better potential results at the cash register. People can be creatures of comfort, and a license’s name recognition can certainly create comfort.
“Generally, the licensed product is going on a premium product, and on a premium product the retailer is trying to get higher margins,” says Adkins. “That helps justify the license and pays for the license. You’re not going to find an open price point license in many cases.”
However, in order to generate the sales that lead to taking advantage of the higher margins, pet retailers must merchandise the licensed products properly. Ivan Fielman, vice president of national accounts for Penn Plax, Inc., says that one way retailers can take advantage of his company’s Dora/Diego license is to buy a Dora blanket or towel, make a flag out of it, and run it up a flagpole.
That, in essence, is the fundamental foundation for selling licensed pet products in your stores. You raise the flag that you have them, and you raise the awareness of them. Like Fielman says, it’s all in the presentation, like so many things in retailing.
There are two schools of thought about merchandising licensed pet products, with one being more dominant. Some retail experts recommend having licensed products mixed in with regular products, in order to set up a good/better/best assortment.
However, the stronger merchandising philosophy trends toward block selling: having all the same branded licensed products together in one section or on one endcap. “The most impactful way to merchandise a licensed product is to exercise brand blocking,” says Schoch. “I don’t think you’ll achieve the most impact with the brand unless you’re willing to devote some space to it.
“I recommend creating a section that’s easily shoppable and instantly recognizable to the consumer. The packaging, coupled with the comprehensive grouping of product, will be a banner that provides a display where your consumer can instantly see the product is Cesar Millan, for example. They enter the store and recognize there’s great product and great packaging from an authoritative brand that they trust.”
“You need to let people know it’s a unique and different product that’s there,” says Davidson. “I wouldn’t just put the NASCAR leashes with all the other leashes or harnesses that are out there. I’d look for ways to display many or all of these products together so people can see there’s an entire line of products. Because they’re unique and novel, you almost want to create a store-within-a-store concept.
“We’ve always had the most success when [retailers] do not have to rely on people walking around the entire store,” continues Davidson. “If you can bring the NASCAR products together in one place, you’re going to increase the likelihood that customers are going to buy more than one of those products because you’ve made it easy for them. They can see the products all together. It heightens the interest level overall.”
Making a Splash
While each school of thought relating to merchandising licensed products has its proponents, Fielman suggests that the best selling strategy will combine both. “I’d merchandise it in two sections,” says Fielman. “I’d have the right items in the corresponding department, but I’d also have a Nickelodeon (his company’s license for aquarium-themed products) section.”
The key to success, says Fielman, is making a splash with the store’s licensed product displays. “I’m of the old school, “ he says. “My motto when I was at Petland used to ‘be the best free show in town.’ If I can create a spot that is so exciting and so eye catching and impulsive, that’s the name of the game.
“If I were a retailer and I was selling SpongeBob toys, I would go to my closest mass merchant, a WalMart or Target–someplace that sells SpongeBob posters and big stuffed animals–and I would make a licensed display in my store. The goal is to raise the consumer awareness, especially a parent with a child. They’re going to walk into my shop and see this big SpongeBob sign or a big stuffed animal and the little child’s eyes will go right to it. Right next to the poster will be all the SpongeBob and related items that I’m selling. You can get pillows. You can get so many things to decorate a department and elevate the awareness. That’s what you need to do.”
Pet retailers carrying NASCAR products can take advantage of their association with the racing organization during its 10-month season, particularly when a race is coming to their area. After all, NASCAR fans are known to travel 300 to 400 miles to see an event, according to Davidson. He says that retailers can have a race-oriented theme in their store, including checkered flags and an overall racing motif.
Davidson and others say their companies can help pet stores promote licensed products. “We’re interested in working with retailers to create promotions around NASCAR to help them drive more business,” says Davidson. “If we can create opportunities to drive the sales of more licensed products for them and get people to come into their stores because of NASCAR. we’re certainly open and interested in coming up with ways to do that.”
Signage, like banners, can help draw attention to a display of licensed pet products, say industry executives. Advertising in circulars and PennySavers can also create traffic. Social media like Facebook are new outlets to promote licensed products, and mailing lists alert customers that a new toy is in stock.
No matter when or how a pet retailer promotes licensed pet products, industry executives suggest that success will hinge on stocking the correct licensed products. It’s not just the authoritative nature of the license, as mentioned earlier in this story, it’s also the longevity and sustainability of the license. The license has to make sense. “It has to be the right license,” says Fielman. “It can’t be a short-lived movie. A license like SpongeBob is a proven entity.”
In fact, there are a number of proven licenses in the pet product market, which creates optimism for the future of the category. “Licensing has been applied to numerous categories in the pet industry for many years,” says Schoch. “From toys to food to bowls to leashes to games, strategic licensing will continue to expand and forge its place within the pet industry.”