The value of a brand’s name, its reputation, its associations, often built up painstakingly over decades, seems more relevant than ever as online retailers struggle in a crowded space to find distinction, but in a world in which building them is more difficult than ever, some firms are buying them in.
That value is being increasingly recognized, says Retail Dive, as many physical stores face a reckoning, both from the coronavirus pandemic fallout, and from the seemingly unending growth of online commerce.
The market for retail brand names is thriving, reports Retail Dive, citing Pier1’s IP and e-commerce site selling for $31 million this year as just one example of names being snapped up.
The buyer was Retail Ecommerce Ventures, founded by digital marketing specialists, which also bought Modell’s brand property last August out of liquidation for $3.6 million – even taking ownership of the 131-year-old sportswear retailer’s well known “Gotta go to Mo’s” jingle. Last Autumn the same company also bought women’s clothing retailer DressBarn’s IP for an undisclosed sum.
Others are also actively buying up IP bargains in a year that could see record levels of businesses going under, Retail Dive reports.
“The idea that a brand has a value separate from an enterprise is not especially new, but nor is it very old,” says David Peress, executive vice president of Hilco Streambank, which specialises in IP sales. The concept “really started to take hold in the prior economic cycle, in the run-up to the Great Recession”, he says.
“Today, you can very quickly spin up an e-commerce site that has all you need to engage in commerce,” Peress says. “Even a year ago that was much more difficult than it is today. It's given digital marketers the ability to get to the market more quickly, and more effectively.”
But building a brand is hard, time-consuming, and expensive in today’s crowded market. Buying one that’s already widely recognised is an obvious shortcut.
But Greg Portell, lead partner in the global consumer practice of consulting firm Kearney, warns that “The collection of brands simply to have a logo on a webpage is very short-sighted.”
“If I'm planning on monetizing that brand and bringing new life to it, then it becomes incredibly valuable. Because building that brand up is really hard,” he adds.
But the value of an IP purchase lies not only in the reputation of a name, there is also, crucially, data, in the form of a customer database, which can be invaluable.
“It's that data that is so powerful to these advanced modern digital marketers,” Peress said.
“The more data they have, the more understanding of what you buy, where you buy it, at what promotional level you are incented to buy — the more they have, the more effective they can be to get you to buy stuff.”
What’s more, he says, a database doesn’t generally tend to shed many customers when an IP is sold on, so long as it’s well managed.
Sourced from Retail Dive