Missing intellectual property opportunities
Having worked on IP valuations to support a number of CVAs in the last 12 months, we’ve seen many poor examples of retail businesses which are rich in IP assets (brands, store formats, online IP collateral, product partnerships etc.) that are contributing to revenue generation, yet the IP assets are still not being fully exploited.
We have also seen great examples of retailers who recognise the power of their brands and data in different scenarios such as:
- The specialist retailer who sold customer data through partnerships but couldn’t control how the data was used and by whom. Following the right advice, they use simple software to host the data and generate user licenses for partners, controlling their use of the data, capturing the analytics and creating a new asset in the form of a SaaS revenue stream around customer data, now being properly managed.
- The tech retailer which separated platform IP (corporate brand, loyalty programme and e-commerce functionality) from the operating company to better understand the IP valuation of and dedicated revenues being generated by those IP assets through a new internal licensing & royalty rate structure.
- A home goods retailer analysing the contribution of valuable product brands by looking at how competitors are developing their brands through licensing overseas. They identified new brand-related revenues through (1) exploring the sale of overseas TMs no longer being exploited by the business following revenue declines and a business restructure and (2) using a consultant to explore brand licensing opportunities to 3rd parties in overseas markets and territories where demand exists, generating new, low risk income streams for the retail business in the process.
Starting the intellectual property valuation
Often this begins with identifying key brands across a retail product portfolio, valuing them to identify the ROI on each brand (using brand related revenue streams and costs) to identify the really brand-rich / reliant products within the overall product / sales mix, to inform better investment or cost management decisions in relation to each brand.
Getting a proper intellectual property valuation is at the heart of all these strategies for retail and only by doing the analysis will retailers be properly analysing EBITDA margins and brand / product contribution to those margins as suggested by Clare. Furthermore, this analysis will help RETAILERS properly analyse and then positively impact an omnichannel shopping experience leveraging the value of their IP assets through different structures and different channels.