Licence to pivot

Aside from the disruptions that the pandemic brought in to their businesses, pop-culture merchandise brands struggled as movie and TV show launches took a back seat. College students and young professionals form the core demographic of these brands that offer a range of merchandise around characters and themes from popular movies and shows. “Merchandise sales are based on whatever the flavour of the season is. In 2020, we did not see a lot of new content other than TV shows,” notes Jatin Varma, founder, Comic Con India. This meant fewer opportunities for large-scale sales in the past year.

After offering deep discounts and drawing revenue by launching products like masks and PPE kits, companies such as The Souled Store, Bewakoof and EFG Store are now looking at offline expansion and broadening their product portfolios in 2021.

Merchandise and more

According to Licensing International, global sales revenue generated by licensed merchandise and services in 2019 was $292.8 billion. India’s licensing industry is a fraction of that — about Rs 4,000 crore.

Redwolf, a leading online store for international IP-based merchandise saw a spike in the sale of t-shirts as most professionals worked from home in 2020. Ameya Thakur, co-founder, Redwolf, says the company introduced 200 SKUs for face masks in response to the pandemic. The Souled Store added shorts and joggers to cater to the demand for athleisure wear.

Bewakoof’s founder Prabhkiran Singh chose to diversify into products such as earphones, chargers, sneakers, Indian fusion wear and sleep wear to ride out the pandemic. The company, which earned Rs 208 crore in FY20, began selling on marketplaces just a few months ago.

Meanwhile, EFG Store, a brand that makes a range of products — from notebooks to key rings for fans of Hogwarts and Asgard alike — used to earn 80% of its annual revenue from offline sales at multi-brand stores. “Since the pandemic, we have shifted focus to online and are working on improving our pan-India distribution,” says Tanisha Fagwani, founder and CEO, EFG Store. The company’s plan to launch exclusive kiosks in malls in 2020 has been deferred.

The Souled Store is adopting an omnichannel model to rake in Rs 1,000 crore over the next four years. The company’s first store, launched in 2019, was initially a marketing ploy to add tangibility to an online brand. The brand has three exclusive outlets in Mumbai, and is hoping to add 40 more over the next three years. “The stores are meant to improve brand recall and aid offline marketing in addition to being a revenue channel,” says Vedang Patel, its co-founder. For now, 90% of The Souled Store’s revenue comes from its own website.

Niche appeal

Even though merchandising is a crucial part of a film or show’s marketing plan, the pop-culture products category itself is yet to flourish in India, say industry watchers. Jaineel Aga, founder, Planet Superheroes, says there is still a dearth of dedicated brands that purely focus on pop-culture merchandise. Planet Superheroes has about 20 exclusive offline stores in malls. Until 2020, 80% of its revenue came from offline sales; this has now declined to 50%.

Homegrown start-ups have made pop-culture merchandise affordable to Indians: a basic Marvel t-shirt costs Rs 500. Despite making products accessible, the challenge with going offline for these companies is that “currently they appeal to a small niche of millennial customers,” says Anand Ramanathan, partner, Deloitte India.

Typically, offline customer acquisition cost in high footfall locations such as malls or airports is five to 10 times more expensive than online customer acquisition. This makes offline retail a marketing investment until the brand can become profitable.

International IPs attract the majority of pop-culture merchandise sales in India. Companies like The Souled Store and Bewakoof have forged tie-ups with Indian content creators, OTT platforms and sports leagues to expand the scope of the products they sell. For instance, The Souled Store is the official merchandising partner for IPL teams Chennai Super Kings and Mumbai Indians.

Aga points out that merchandise based on Indian IPs are short-lived; those related to stand-up comedy specials or Indian OTT shows are no match for superhero characters that have built an ardent fan base. Even the Game of Thrones merchandise did poorly after the final season failed to impress fans.

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