Wednesday 11 March 2009

Leveraging The Sharper Image Mark after Bankruptcy

In my previous post, I discussed the acquisition of certain names and brands from Mervyns following the bankruptcy of the West Coast company. In particular, I mused about whether brands and names could survive a bankruptcy by being successfully picked up and renewed.

Against that backdrop, I am grateful to have had my attention drawn to a brief item that was reported in the March 5 on-line issue of Global License! regarding a licensing deal involving The Smarter Image mark with respect to blenders, coffee-makers, cookers and other kitchen appliances. According to the report, the mark has been licensed to Emson USA, which is described as a "small kitchen manufacturer and infomercial marketer".

The Sharper Image company was a one-time successful retailer of high end electronic products and gifts that went into bankruptcy in 2008 and liquidated its brick and mortar operations, reportedly leaving it with a direct-to-retail business. As reported on March 3 by another online service (PRNewswire), The Sharper Image was purchased in 2008 as a three-way joint venture, with the intent of distributing its branded products through three-party retailers such as Macy's, J.C. Penney and OfficeMax.

The strategy in the license with Emson was expressed by its CEO (Ed Mishan), as follows:
" The Sharper Image is a coveted brand with high consumer recognition. The brand can now be extended to kitchenware products that blend technology with great designs. Our direct response TV advertising will foster increased brand awareness, as well as educate the consumer on our products' features and benefits."
If I understand this correctly, under the license, the licensee will create a new line of kitchen products under The Sharper Image mark and market them by a combination of direct response television advertising by Emson and by placing the products in selected stores. The underlying assumption appears to be that The Sharper Image brand has sufficient residual goodwill that can be redirected to distribution by third party channels (Emson and bricks and mortar retailers), instead of the same-store focus of the defunct company.

Brand leverage, piece by piece

This is certainly a challenging strategy, especially given the decline of retail generally in the U.S. market. I seem to recall that The Sharper Image ads were regular fare on the SkyMall airplane magazine and I assume that the pre-bankruptcy brand sought to reach out to its perceived upscale purchasers in other ways as well. I imagine that the brand acquired goodwill with this group (though not enough to maintain its bricks and mortar operation when the economy turned south in 2008).

Still, I wonder how the new licensing strategy will be able to successfully leverage the presumed residual goodwill in the brand and name with viewers of direct response television and customers of stores such as Macy's and J.C. Penney, especially given the focus of the license on kitchen appliances. I am led to believe that The Smarter Image has entered, or will enter, other licenses for the sale of its products via third parties. If so, it is encouraging that such efforts to revive brands out of bankruptcy continue, despite the dismal economic news. One small step for Keynes' "animal spirits", even in this most trying of times.

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