With audiences going gaga over various sports and leagues, is the popularity translating into merchandise sales as well?
With the explosion of leagues across cricket, football, badminton, tennis, hockey, kabaddi, etc, sports is in the limelight in India like never before. Monetisation via sponsorships has reached a substantial level, but a big revenue stream which remains untapped is licensing and merchandising (L&M). Already a huge addition to the revenue kitty for the clubs/associations in the West, we have barely scratched the surface in India.
Pointing out the potential, Jiggy George, founder and CEO, Dream Theatre and India head for Licensing Industry Merchandisers Association (LIMA) says, “Globally, the sports licensing market at the retail level is estimated to be at $25.3 billion, contributing 9.6% to the total licensing pie, as per LIMA’s 2016 annual report. The Indian licensing business is estimated to be $1,200 million in terms of retail sales. Sports should be at least $300 million.”
While the building blocks for sports licensing are being put in place in India, increasing purchase power is also seeing sports lovers spending lavishly on authentic licensed merchandise. But what is the true potential of this segment?
The game gets serious
Pointing towards a huge market, Casey Collins, EVP, consumer products, WWE says, “Branded consumer products is a significant part of the overall WWE brand experience. Licensing is a $1 billion business for WWE globally with significant growth year-on-year.”
Now consider the FIFA U-17 World Cup hosted by India, wherein the licensing partner Dream Theatre took the merchandise to fans directly and also through sponsors. In fact, one of its many initiatives was to have authentic merchandise stalls in stadia across all venues.
Joy Bhattacharjya, project director, FIFA U-17 World Cup mentions, “In urban India, football is emerging as the primary sport due to the exposure to La Liga, EPL, etc.” There is a strong purchasing power amongst these audiences and international brand licenses like Real Madrid and FC Barcelona are seeing an opportunity. “Earlier, India was just a partner for them where they would sell certain SKUs but over the last few years things have changed,” he adds.
At almost 90%, cricket and football are the only significant contributors to the licensing industry, feel experts; and basketball, tennis and kabaddi contribute the rest. Interestingly, NBA (American basketball league) is building a strong licensing programme in India. Yannick Colaco, VP and MD, NBA India says, “A handful of fans get to watch the matches live, so this is a great means of engagement. In India, sales are growing at 50-70% every year, with higher density and purchasing power in metros.”
A case in point: NBA’s recent association with Jack & Jones, wherein it launched a capsule collection offering contemporary styles with functional sporty vibes. The brand further invited famous basketball player Kenneth Faried to one of its flagship stores in Gurgaon to interact with fans. The merchandise included jeans with patchwork and badges, shirts with vintage chain stitch detail, crew neck tees, sweatshirts, knit shorts, pyjamas, socks and boxers.
“T- shirts performed the best in terms of sales,” reveals Vineet Gautam, country head and CEO, Bestseller (marketers of Jack & Jones), adding, “The popularity of the team also had a consequence on the preference of the merchandise. So styles attributed to Chicago Bulls were successful owing to its popularity.”
The growth of e-commerce in India is helping make authentic merchandise available to fans not being serviced by traditional retail. Not only sports leagues, but even sports stars like Sachin Tendulkar, Virat Kohli and Yuvraj Singh among others, are licensing their brands now.
Getting past the hurdles
While L&M is growing, piracy continues to be the biggest challenge with cheap knock offs dominating the market much before a scheduled match. Another challenge for sports L&M is the pricing of the merchandise and duration of the sporting event, as it sees no takers once a league or match is over. “Indian retail is still fragmented with around 10% classified as organised,” highlights Collins.
It is thus, important to have partners who have a robust distribution network across all online and offline channels. Bhattacharjya mentions, “When I was associated with Kolkata Knight Riders, the challenge was that the price points were high and sponsorships too came in pretty late. So, partners like Reebok and adidas were struggling to get the merchandise to fans on time.”
L&M is a very mature form of engagement, thus it is pertinent to build a brand first because many times people try to monetise too early. Sports licensing is a well thought out strategy in mature markets. Sponsors and top team players are consistent and the clubs supersede players. In India, it is the opposite as the star player supersedes the team, making it a challenge. Similarly, while NBA is an elite sport, live basketball streams air early in the morning making it difficult to build a mass market in India.
It is easier for WWE though, since its content is present throughout the year with more than 500 live events annually, unlike other sports merchandise that sells at the time of key matches or seasons.
One size does not fit all and while the product categories are similar to many markets, pricing and distribution processes need to be localised. WWE’s India shop has the Superstar Authentic Apparel locally printed with prices starting from Rs 499, for example.
Taking FIFA’s case study as an example, the 2014 World Cup saw an 8-10 city retail footprint with Lifestyle, Pantaloons and Central stores; it has now grown to tie-ups with over 10 retailers with product availability spreading to 20-25 cities apart from e-commerce platforms. From a three-category product play, it has signed deals across seven to eight categories with more contracts in process for the 2018 World Cup.
Having the right partner to build L&M is key for all players. So while Royal Challengers Bangalore has signed Black White Orange Brands as its global licensing partner to expand the merchandise into figurines, mobile covers, back-to-school product range and more; brands like Jack & Jones have in the past associated with Mumbai Indians and globally with F1 Grand Prix.
Others like NBA and WWE have adopted the e-commerce route. To service the huge local fan base, WWE launched a dedicated e-commerce platform earlier this year bringing the Authentic Superstar gear (apparel and accessories) to India for the first time. Colaco states that NBA’s e-commerce store with Jabong reaches out to 730 cities across the country. Identifying the need to go beyond apparel, NBA is exploring partnerships in newer categories including caps/hats to expand the range of products at various price points.
Apparel remains the biggest category and forms around 40% of the product mix within sports, globally. “In India too, we are seeing apparel being the largest category, accounting for close to 50% of the L&M pie,” says George.