Licensing’s Moving Target

May 31, 2008  by in UnCategorized   

By Home Furnishings Business in Furniture Retailing on June 2008 It’s long been an axiom in the furniture industry that without good product, even the most famous of names can’t translate into retail sales for the many licensed collections that have popped up over the years.

Sometimes even a quality product isn’t enough if the furniture doesn’t fit a store’s price points, or the prices retailers and consumers expect too much from the vendor in question. Just ask Doug Bassett.

Bassett, executive vice president of Vaughan-Bassett Furniture remembers the hoopla surrounding the case goods manufacturer’s pairing a few years ago with an American icon, Elvis Presley.

In 2002, Vaughan-Bassett introduced its Elvis Presley line of licensed furniture to great fanfare. While the program garnered big media coverage and a lot of initial retail commitment, the furniture, though tied to a true American icon, didn’t fly on retail showroom floors.

“We describe that whole experience as a ‘glorious failure,’” Bassett said. “It was a failure in that the furniture didn’t retail and didn’t have the life cycle we expected. It was glorious in that it gave us the attention a company our size normally doesn’t receive, and it did bring people into our (dealers’) stores.”

“When we introduced it in High Point, we had 400 to 500 extra retailers in the showroom that normally didn’t shop us who didn’t buy Elvis but bought something.”

So what was the problem with the Elvis license? Product wasn’t the problem, Bassett recalled—it was price point.

The Presley collection elevated Vaughan-Bassett’s presence in the marketplace, as well.

“It was priced at retail above the comfort level of the key Elvis demographic that we targeted,” Bassett said. It also was at the top of Vaughan-Bassett’s own price range, too high for some of its retailers’ key price points with the manufacturer.

“What’s funny is that some of the most over-the-top pieces were the best sellers,” he added, noting that the “Burning Love” mirror, heart-shaped and decorated with musical notes, moved well at retail.

Despite the Presley collection’s demise, Vaughan-Bassett Executive Vice President Doug Bassett says that in retrospect, the company still would do it all over again, but with some adjustments. The key lesson for Vaughan-Bassett out of the Elvis Presley experience was to hit the company’s pricing sweet spot, and the company’s putting that to work in its new collaboration with Alexander Julian, who moved his license from Manchester to Vaughan-Bassett a couple of years after terminating a long run at Universal.

“We recognized the importance from a price standpoint of corresponding to the comfort level of our dealers and their customers,” Bassett said. “The advantage we have working with Alex is that we’re working with a designer, not just a famous name. We’re very good at manufacturing and logistics, while Alex and Meg (Julian’s wife) bring value to the table that’s very different from what we do well.”

“Alexander Julian Authentically American is priced smack in the middle of Vaughan-Bassett’s offerings.

“Unlike Elvis, this is in the heart of our existing lineup,” Bassett said. “We have 3,000 customers in our dealer base who can be comfortable with where we’re positioning Alexander Julian’s line.”

Making the Connection

Pricing isn’t the only factor beyond strong product that can make or break a license. Some licenses just don’t reflect the subject’s image enough in the mind of consumers whose interest might initially gravitate toward the name in question.

“The major mistake the factory makes with those collections is that a lot of the time, when you look at it you don’t really see a connection with (the license name), said Gerard Kvasnovsky, partner and buyer with Danker Furniture in Gaithersburg, Md., a middle to upper-end retailer with five locations. “When I think of (a celebrity) I have a picture in my mind, and I’m not convinced the factory always makes furniture with the person in mind.”

Collections such as Tommy Bahama and Nautica have done a good job making that link, Kvasnovsky said.

“Usually a consumer reacts to the visual appeal of a the collection, and if they have a name attached to it, that can attract some sales,” he continued. “Martha Stewart and her organization obviously get involved with what’s done with her collection (at Bernhardt). The advantage there is that she’s all about the home.”

Sometimes a license that works one place isn’t the right fit for another store. One that didn’t work out for Danker Furniture was the Eddie Bauer line from Lane.

“The name was good, but I found the collection very simplistic, and it didn’t fit in our store, our quality level,” Kvasnovsky recalled. “We’ve ended up buying very few (licensed collections). They often don’t work for the simple reason that the value isn’t there.”

Ken Loring remains unconvinced that a famous name really makes that much difference to consumers. Loring is president of Boston Interiors in Stoughton, Mass., which has six stores in the Boston area.

“We’ve traditionally overlooked opportunities for licensed collections,” he said. “The home furnishings consumer identifies more with the store than another name. Either they like it our they don’t.”

Loring did note that Kathy Ireland’s furniture collections have done well at Boston Interiors, but he doesn’t believe the name has all that much to do with its success at the store.

“It’s good value, good furniture, and that’s why our customers like it,” he said. “We’ve really had no big mistakes with licenses because we really don’t try to sell off a name.”

The Ideal Couple

Sometimes a long-running furniture license is as much a matter of good “philosophical” chemistry between vendor and licensor. Think Stickley and Colonial Williamsburg, or E.J. Victor and Newport.

“I think the issue is when the personality picks the wrong manufacturer, someone who doesn’t really fit the price level that’s appropriate for (the licensor),” said Chris Pelcher, vice president of Levin Furniture, a 12-store operation based in Smithton, Pa., that does well over $140 million in business a year. “I’ve seen some marriages that don’t work for the majority of people working in a traditional furniture store.”

And with the huge variety of price, design and market models at furniture retail, licensing isn’t a one-size-fits-all proposition.

“I know one thing that didn’t work out here was Antiques Road Show,” Pelcher said. “That was before my time here, but from what I’m told, it had good advertising support but just didn’t connect with our general public. On the flip side, one thing that’s working out very well is Better Homes and Gardens from Universal. It’s got great values and a lot of features and benefits, and the retails aren’t crazy for us on a four-piece bedroom or dining collection (under $3,000). There’s a lot of visible value like function and dovetailing. Some of the others are overpriced for the value.”

How does a license fit a store’s overall advertising strategy?

“We’re very intrigued by things like the Cindy Crawford line—our belief is that it’s good product and good value, and television advertising is why it works,” Pelcher said. “We’re thinking of whether we’re able to mix that into our advertising strategy. The Build-A-Bear youth program is doing well from what we’ve heard from other people. That’s a natural fit with the category.”

Finding the right vendor took a lot of time at Hearst Castle. Dallas Saunders is licensing representative for Hearst Castle Collection and is developing a variety of home furnishings categories tied to the California home of legendary publishing magnate William Randolph Hearst. A new furniture collection debuted at the April High Point Market with Habersham.

Second Marriages

It’s not Hearst Castle’s first foray into furniture. Retailers might remember around 10 years ago when Lane introduced a huge, but short-lived license with Hearst Castle. She wasn’t around for that group, and therefore didn’t want to comment much on it. Saunders likes the new collection’s chances because of a higher-end focus and an emphasis on adaptations of architectural and design themes throughout the property rather than near-reproductions of the furniture there.

“Lane was a mid-market product, and that level of design isn’t something that really relates to the property,” she said. “I chose to position (the new collection) very differently in the market. When you see a product line that’s successful now, like Kathy Ireland, it’s promoting a lifestyle. She’s been very successful at the mid-market.”

Saunders feared that taking a license such as Hearst to middle price points was the wrong move, and felt a smaller high-end manufacturer would give the program the attention it deserved.

“I felt that the mid-market wasn’t the right area,” she said. “I was afraid it would have a life of a couple of seasons. I looked at the furniture market, and it seemed the high-end was more stable for something like Hearst Castle. I chose to work with smaller manufacturers who’d take their time with us and design with quality so it would have a real impact for them as well.”

Habersham, not a huge vendor volume-wise in industry terms, is Hearst Castle’s largest company among home furnishings licenses.

Biltmore For Your Home, the home furnishings licensing arm of Biltmore Estate, the Asheville, N.C., mansion of George Vanderbilt, also had multiple marriages with furniture manufacturers. In the early 1990s, Drexel Heritage had a line with the estate. The license later moved to Craftique before working with a high-end collection through Habersham and a middle-price collection at Magnussen Home that debuted in 2004.

Tim Rosebrock, vice president and general manager of Biltmore for Your Home, said those earlier efforts failed through a combination of debuting early in Biltmore’s learning curve in developing licensed goods, but also from external factors.

“There were some similarities between what we did with Drexel and Craftique,” Rosebrock said. “Both launched at the tail end of a bull market, and for both companies, Biltmore was the most expensive line they’d ever made. With Craftique (a domestic producer), at the time we went to market with them, it was the same when Asian production and quality were on the rise. It was poor timing.”



Keeping It Real

Licensors look to authenticity, telling a story for successful furniture collections.

By Powell Slaughter

Sometimes finding your soul mate can take a couple of tries, and the same holds true for furniture licensors looking for the right manufacturing partner. As in marriage, licensing success demands ongoing adjustment and careful attention to both partners’ needs—maintaining authenticity for the licensor, and marketability for the licensee’s retail customers.

Biltmore Estate learned some tough lessons moving through vendor partners for its furniture line before teaming with Habersham at the high end and Magnussen Home at middle price points. And the work continues, said Tim Rosebrock, vice president and general manager of Biltmore For Your Home, the home furnishings licensing arm of Biltmore Estate, the Asheville, N.C., mansion of George Vanderbilt, and America’s largest private home.

External economic factors and industry devlopments played a role in the end of arlier collaborations with Drexel Heritage in the early 1990s and Craftique in 2000, but Rosebrock said part of the blame went to Biltmore itself.

“We’ve found that when a retailer has the tools provided to them for telling the story, and the expertise a licensor brings to that, can add upscale sales and higher-margin sales,” he said. “When a retailer has those things in hand it works.”

Biltmore could have done a better job in that regard—and still can when it comes to the furniture line. Rosebrock said the first Magnussen collection with Biltmore, Chateau (since replaced by Seven Oaks) is an example.

“Our relationship with Magnussen is evolving,” he said. “In 2004 we failed to create those tools for selling the brand like sales training and creating a presence in the store. As a result some of the independent retailers carrying the line did well, but some struggled. Right now we’re still evaluating those tools.”

The Biltmore brand has evidence of strong potential at retail, and its overall licensing business has grown 25 percent the past three years, Rosebrock said.

“We’ve recognized other consumer products where our brand is powerful,” he said. “We’re selling 160,000 cases of Biltmore wine every year in a highly competitive marketplace. Also, our direct-to-retail licenses with Belk department stores has done extremely well. (2 yo bedding, bath, tabletop, high performance cookware and cutlery) Our brand is their top tier private label. In our second year with them, we’ve already hit year-four projections.”

Biltmore’s applying those lessons in its furniture efforts.

“We’re changing our whole approach to furniture in the middle market,” Rosebrock noted. “We’ll add more tools for the retailer for sales support and merchandising,” adding in mid-May, “We’re with in three months of having an announcement of those changes. The model works, and we’re tweaking it.”

Hearst Castle, the California home of legendary publishing magnate William Randolph Hearst, unveiled a new high-end collection with Habersham at April High Point Market. A little more than 10 years ago, a collection at Lane, a mid-market vendor, didn’t last long, and this time there’s a better vendor fit in terms of price points, said Dallas Saunders, licensing representative for Hearst Castle Collection. She’s is developing a broad range of home furnishings categories for the estate. The key to the new furniture line is a focus on authentic adaptations of architectural and design elements found at Hearst Castle versus a lot of straight reproductions, or nearly identical recreations of the furniture.

“I’m an art director and have a fine arts background, and Hearst Castle is an amazing resource for furniture design interpretations,” she said.

Saunders noted that the film “Citizen Kane,” the late Orson Welles’ fictional take on William Randolph Hearst created an image of a bizarre collector who acquired things just for the sake of having them. The reality was that he worked hand in hand with Julia Morgan, the castle’s architect and designer.

“The truth is that he was a phenomenal art collector who really knew what he was doing,” she said. “He found a third-century bust that was a Roman road marker. Julia Morgan used it for lamp stands all over the estate. There are letters back and forth between Heart and Morgan discussing this type of thing.”

Habersham is producing the line the same way, she added. Breakfronts in the new collection, for example incorporate window frames from Hearst Castle.

“We wanted to work with people who want to go to the estate, see an element and turn it into something else,” Saunders said. “There isn’t a celebrity around to market this themselves, so there’s a need to keep the integrity of the collection in terms of what’s at the estate. The way we promote it is to educate the public about what’s there.”

At Biltmore, Rosebrock said he’s pleased with progress on the high-end segment of its furniture line.

“Our Habersham business will expand in October with a major collection that could include upholstery. That’s still in the works,” he said, noting, “The days when you could license out a name and just let the manufacturer run with it, and have it be sustainable, are over.”