By Mark Seavy

Amid tighter consumer spending across Europe, licensed goods suppliers are investing more deeply in discount and grocery chains, according to industry executives.

This shift in strategy comes as economic downturns—the U.K. economy is forecast to grow 0.8% this year after entering a recession last fall—push consumers to focus on retailers that provide quality products at lower prices.

B&M Bargains, for example, offers products at discounts of 15% or more. The retailer, which has more than 700 stores in the U.K., sees room for as many as 1,200 locations and recently launched its Simply private label brand, CEO Alex Russo said. Grocery chains like Lidl and Aldi, meanwhile, are becoming increasingly aggressive on price.

And while, in the past, licensors may have been reluctant to sell products to discount chains, these retailers now represent significant opportunities moving forward.

The key to succeeding in these locations is licensees delivering products of the same quality as other distribution channels but designing them to hit a 20-30% lower price, industry executives said.

“The winners will be those who can get product in there without having to sacrifice quality,” said Sye Austin, Senior Brand Manager at Creative Artists Agency. “Five years ago, you couldn’t go into that channel [with licensed goods]. It is okay not to engage the discounters if it is one or two percent of the consumer base, because that does not make a difference. But when it is growing and very significant in terms of brand affinity, you must be there.”

For brands entering these retail spaces for the first time, a key to connecting with consumers could be the development of in-store experiences.

Primark, for example, launched a new Hello Kitty collection of home goods, travel accessories, and cosmetics and is readying a Hello Kitty Cafe. And HMV, which was rescued from bankruptcy five years ago, is refashioning itself as a pop culture store that still features vinyl records and other items but also hosts community-oriented events by local bands and artists. It also has expansion plans for Europe this year after reopening its flagship location in London last November.

Licensing plays an important role in creating a memorable in-store experience. At Informa and Licensing International’s recent Licensing for Retail Day event, nearly a quarter of 60 retailers surveyed said licensed goods accounted for between 26-50% of sales.

Despite the growth in discount, this year has seen a slow start for retail and teams are operating with caution because there is still a sense of uncertainty in terms of where 2024 will end, according to Sabrina Segalov, International Licensing Director at Toikido. The company’s IPs include Roblox game Pinata Smashlings and the animated series PeaKeeboo.

“Today’s consumers prioritize not just cost efficiency but also meaningful value in their purchases,” Segalov said. “This heightened awareness is reshaping the retail space, compelling us to elevate the shopping experience beyond mere transactions. It’s about curating an environment that offers something unique — an immersive experience that online platforms simply can’t replicate. Retailers that can bridge this gap, offering exceptional value through engaging, experiential shopping, will distinguish themselves in a crowded market and resonate more deeply with consumers.”

Part of that differentiation also means carrying a broad range of categories to ensure that consumers feel there is significant value associated with these discount retailers. Many of the singularly focused chains are mid-tier retailers, which are not seeing the same recent growth that discount chains have experienced. The Body Shop, for example, announced it was closing its U.S. operation, liquidating 33 locations in Canada, and closing 89 stores in the U.K.

“Revenue growth right now is very hard and any retailer with a single category of product is going to really struggle,” a licensing executive said. “The market for mid-tier retailers is shrinking and much of that business is being taken by discounters, grocers, and mass.”