In any other year, forecasting sales is fairly routine – if fraught with the uncertainty of anything forward looking.

But coming off a year like no other there are few roadmaps. How quickly will global economies bounce back from the pandemic? When will the logistics log jam ease? And will retailers – those still in business — buy in a predictable pattern?

Agility in a rapidly shifting landscape
Last August, Target COO John Mulligan blithely conceded that “When we write down a forecast, the only thing we know is that it is wrong. So how we adjust… as we see the data coming in is the most important thing. Mostly this is about conversations (with vendors) and then having the agility and flexibility” to make changes because everything is “moving very rapidly.”

For the most part in 2021, caution is the watchword for at least the first half, with second half sales and supply forecasts still more art than science. Some factories in China remained open this month during the Chinese New Year holiday, but five major ports have reported a 30% increase in backlogged cargo and delays are “everywhere,” according to a China Container Update report from the International Housewares Association’s Chief Officers Reaching Excellence (CORE) group.

Earlier orders
Some licensees say retailers are placing their orders 3-4 weeks earlier than they did last year, due to largely to logistics challenges from factory floor to retail store and the potential for a business boom in the second half.  Gloria Vanderbilt licensee Sasha Handbags moved to complete manufacturing prior to the start of the Chinese New Year holidays to insure it had adequate supply, says Brand Liaison Founder Steven Heller, whose firm represents the Gloria Vanderbilt brand.

“Retailers know there are major delays at factories (due to social distancing and less production because of COVID) and shipping, so they are booking earlier,” agrees Uncanny Brands CEO Matthew Hoffman, whose company sells waffle and popcorn makers under Marvel, Star Wars, Dragon Ball Z and other licensed brands.

In terms of forecasting, “We think 2020 is a good benchmark for 2021,” he says, “Our forecasting is higher, but I am not sure that is across the board but rather in ‘COVID friendly’ categories” that have benefitted from sales to homebound consumers.

On the retail side, Walmart, whose stores were deemed essential and remained open during the pandemic, struck a cautious tone in releasing year-end earnings late last week.  Walmart forecast a 4% increase in 2021 revenue. While Walmart “feels very good” about “underlying business,” the chain is facing “COVID-related challenges,” an executive said last week.

Lots of variables
“How do we even forecast for this year since the range of [potential] variables is so extreme?” says Heller. “Almost more important than forecasting revenue this year is controlling expenses. There could be a fall off” in sales in some categories later this year “because people may be out of the home more and spending money on other things like travel and entertainment.”

In categories such as apparel that struggled with sales during the pandemic, some agreements are being or will be revised to reflect the changes wrought by COVID-19. For example, Christopher Knight’s homegoods line (accent and outdoor furniture and bedding) is focusing on ecommerce and home shopping networks this year, rather than on brick-and-mortar stores. The change led bedding licensee Melange Home to revise its agreement to combine this year’s sales with those in 2022 in calculating the MG, says Heller.

For companies in the event and location-based entertainment business, forecasting is even more difficult. For example, Creation Entertainment, which develops licensed fan conventions, in-person gatherings, which haven’t happened since last March and aren’t expected to resume before July at the earliest, says Erin Ferries, SVP of Development. The annual Star Trek convention in Las Vegas is currently an in-person event scheduled for Aug. 11-15.

Creation had earned out its MGs pre-pandemic and with no events, wasn’t required to pay royalties, says Ferries. It has had a handful or virtual fan events, including one for Supernatural that’s slated for March 5-7. For forecasting, Creation has relied on its revenue history with in-person events for negotiating agreements, says Ferries. The in-person events typically draw 2,000-3,000 fans, while virtual versions attract “in the high hundreds” for panel discussions and celebrity meet and greets, says Ferries.

“We can’t really forecast,” says Ferries. “You look at what’s left on your calendar and project that ‘this is what we can generate if we do run the events and this is what it will be if we don’t’. Everything we have under license has a good history against it and we know what the earning potential is so we use those numbers.”

That potential has led some licensees to push out project launches to the second half. Artistory, which former Alfilo executive Yizan He formed with Natasha Dyson earlier this year with a focus on developing touring museum exhibitions, is planning an exhibit for late this year in China and Singapore, two countries where the pandemic has been brought under control, before moving to North America or Europe.

“The exhibition will be in-person starting in Asia where people are allowed out of their homes and will be supported by videos linking back to the museum and showing the artifact or painting in its position in the museum gallery digital and be combined with merchandise,” says Dyson.