The Force is with retailers
Sales of licensed items reached $107 billion last year, and could be more in 2015.
There’s no doubt that Hollywood is making an increasing amount of money on merchandise sales these days with the proliferation of blockbuster movies like “Frozen” and “Guardians of the Galaxy.”
Trade group Licensing Industry Merchandisers Assn., known as LIMA, has for the first time tallied how big that business is on a global scale: $107 billion in retail sales last year. The amount of money spent in 2014 on clothing, toys and other merchandise reached $47.5 billion in the U.S. and Canada alone.
And industry experts think that could be even bigger in 2015 once Walt Disney Co. reboots the “Star Wars” franchise.
“There’s an excellent slate of movies this year across the board,” said Richard Barry, the chief merchandising officer for retailer Toys R Us.
Characters such as Luke Skywalker and Mickey and Minnie Mouse have long been profit drivers for movie studios looking to fill up retail shelves with their consumer products. Those classic characters have been joined in recent years by the Minions, the rambunctious supervillain sidekicks from “Despicable Me,” and a string of superheroes from the “Avengers” and “X-Men” franchises.
But LIMA executive Marty Brochstein points to “Frozen” as the biggest per- former on retail shelves. “Frozen” hit theaters in late 2013 and grossed more than $1.27 billion in ticket sales around the world. Besides the ubiquitous songs, fans clamored for dolls, dresses and games inspired by the animated film.
“It was a strong year on a global basis,” Brochstein said. “’Frozen’ was the biggest story of the year, and overwhelmed everything else.”
It certainly helped boost Disney’s consumer products business. The Burbank entertainment giant reported nearly $4 billion in sales from the unit in fiscal 2014, up 12% from the previous year.
Character- and entertainment-related products account for the biggest chunk of the licensed merchandise business. The category generated 44% of glob- al sales for the entire merchandising sector in 2014, according to LIMA.
Total licensing sales — which also include products based on sports, colleges and corporate logos — were $241.5 billion, the group said.
Looking to this year, U.S. toy and clothing retailers are keeping an extra-close eye on the box office, with “Jurassic World,” “Avengers: Age of Ultron” and “The SpongeBob Movie” already driving big sales, according to industry experts.
But the licensing industry is most anticipating September, when products related to “Star Wars: The Force Awakens” hit the shelves ahead of the film’s December release. The space opera and others such as Pixar’s “Inside Out” and Universal Pictures’ “Despicable Me” spinoff “Minions” could also boost the industry.
The goggle-wearing Minions have appeared on diverse products such as board games, backpacks and Tic Tacs, and have even inspired a new Pantone color. E-commerce giant Amazon last month began shipping some customer orders in bright yellow, Minionsbranded boxes as part of a marketing deal with Universal and Illumination Entertainment.
Still, even blockbusters come with risks for retailers. Brochstein cautioned that stores face the challenge of not getting caught up in the hype and buying too much inventory.
“There’s a risk of flooding the market,” he said.