It might be three years away and the excitement has yet to get going, but the London Olympics will be a goldmine for retailers. Charlotte Hardie explains why they need to think about it now.

The mere mention of retailers’ involvement in London 2012 is stirring little excitement so far. After all, it’s three years away, money is tight and the last thing businesses want to think about is forking out for some extravaganza when their bottom line is falling away before their eyes. But don’t be deceived. With just over 1,000 days to go, retailers need to start thinking now about how to capitalise on this sporting spectacular, which Capital Economics forecasts will generate an extra £521m for the sector.

It is no coincidence that organisations such as the New West End Company and Walpole British Luxury are already holding events devoted to the London event. At a briefing held by the latter earlier this month, the London Organising Committee of the Olympic Games (Locog) commercial director Chris Townsend said: “The reason people are buying into these Olympics is because they understand this recession will end. They want to be a part of it and when the recession turns a corner they want to be taking on market leadership in their sectors.”

Moreover, deadlines are already looming. Locog is launching the jewellery licensing category in the next three months and the fashion category before the end of this year. Retailers need to approach Locog now if they wish to get involved – more on this later.

Walpole British Luxury deputy chairman Guy Salter says: “I can totally understand why retailers might question the need to think about the Olympics now, but that view is misguided. Even now there isn’t all that much time left to influence things.”

Importantly, Olympic involvement is not restricted to those large companies with proportionately large budgets that can afford to become official sponsors. Gieves & Hawkes managing director Mark Henderson says: “It doesn’t have to be all about Adidas and Coca Cola. It’s about the chance of a lifetime in terms of the spotlight being on Britain.”

Sandie Dawe, VisitBritain deputy chief executive and 2012 games strategy director, agrees: “It’s nothing to do with whether you’ve got the Olympic branding or logo, it’s about collaborating with the right people and organisations.” To help them do that, retailers should task someone in their marketing team with an Olympic champion role.

A word of warning, though – the Olympics is a legal minefield (see box), and care needs to be taken to avoid what could be perceived as ambush marketing or commercial exploitation.

Sponsorship and licensing

Realistically, sponsorship is probably way outside the realms of most retailers’ capabilities. Aside from nine worldwide sponsors such as Coca Cola and Visa, there are 50 national sponsors whose involvement is tiered. Tier one would set a company back £40m, tier two by £20m and even tier three by £10m. Nevertheless, it has been done – one example being Canadian jewellery retailer Birks, which is an official sponsor for the Vancouver Winter Olympics (see box).

Notably, though, Birks is also an official licensee. The licensing and merchandising programmes for the Olympic Games are a viable option for much smaller businesses.

Dan Kratchovil, divisional vice-president of product development for Birks & Mayors, which owns the Birks chain, says the benefit to the brand has been significant. “It’s receiving great exposure within Canada and at an international level and it has helped Birks build and strengthen numerous relationships within the sponsor family, translating into increased sales.”

As a licensee, a royalty payment is negotiated and settled on for all sales made on licensed products. Kratchovil says that sales of its licensed products will help fund Birk’s sponsorship of the Winter Olympics.

To hit target, about £500m of merchandise must be sold over the next three years. Townsend says Locog “can’t rely on sponsorship and ticketing; we need to maximise licensing opportunities. Licensing could be co-exclusive if companies are happy to do that and this way there are more opportunities”.

Licensing is also lucrative. Karen Webb, director at Vero Campaigning Communications and former vice-president of image and marketing communications for the International Olympic Committee, says licensing at the Sydney and Athens games accounted for between 26 and 32 per cent of the revenue. “Done well it’s a positive way to touch consumers and bring the Olympic brand to life,” she says.

And while retailers usually associate branded merchandise with caps and t-shirts, at Sydney there were 3,000 products ranging from toys to collectables. Locog is already talking to retailers about product distribution and further information regarding the opportunities can be found at its website, Competefor.com.

But, Townsend warns: “Every deal we’ve done has been managed around a legally binding document. These aren’t Mickey Mouse deals where companies may or may not pay.”

Another way in which retailers can give their brand exposure is athlete endorsement. Again, though, a business must be an official sponsor to use any form of Olympic branding as part of that endorsement. However, that does not mean retailers cannot sponsor athletes that will be taking part in the Olympics. Pick your athletes wisely though – too low a profile and it might not be worth it.

Broader opportunities

During the games, host cities are awash with wealthy visitors in need of entertainment and retailers don’t need to be an official sponsor to take advantage of this influx.

Corporate hospitality is big business and this is the perfect time to start building relationships with the sponsors’ destination management companies in charge of events, activities and tours. IMG sponsorship consultant Lee Gibbons says: “London is famous for fashion, shopping and craftsmanship. How do you get on people’s packed agendas? You need to look at ways to make your store a destination.”

Henderson points out that Gieves & Hawkes’ flagship store is at No 1 Savile Row. “That’s a winning address because organisers will want great reception revenues. For the right group of people it’s an interesting place to come.”

Dawe adds that sponsors will already be looking at potential partners for their “activation programmes” – those they can collaborate with to spread the word and increase awareness of their support for the games. This might include anything from in-store displays to window displays. “This means retailers could have branding in their stores,” she says.

Nearer the time, retailers should think about PR opportunities. Henderson says: “Over the 12-month period leading up to the Olympics there will be a lot of interest in London and England. You need to make sure your PR companies are ready and that journalists are writing about shopping in England.”

Given the anticipated extra sales and increased footfall, retailers will also need to consider increasing stock and staffing closer to the event itself. However, they will be working against a backdrop of major business disruption. From an operational point of view, actually surviving the games requires detailed planning. The Sydney games resulted in major changes to retailers’ operations because of disruptions to delivery schedules and road closures.

The New West End Company is keen to highlight this potential problem. Spokesman Jace Tyrell says the Queen’s Jubilee, the Olympic Games and the subsequent Paralympics means that
for about 100 days central London will not operate as usual. “There are 100,000 retail staff working in the West End. Transport routes will be altered – you need to think about how people are going to get to work. A lot of stock needs to come through and you have to think about how that will affect suppliers and deliveries.”

Lastly, retailers need to avoid the misconception that the Olympics is a London-specific event. It is not. There are 35 competition venues up and down the country, and any tourism opportunities will be just as important outside the capital.

Aside from brand awareness and financial gains, involvement can provide a lift to the workforce. Howard Davies, partner at Deloitte – a tier two sponsor of the Olympics – says the uplift in morale must not be underestimated – regardless of whether you are an official sponsor or not. But, he warns: “It doesn’t work if it’s just senior management behind the association.”

When 2012 comes around, Salter points out this will be “the biggest event to have happened in this country for a very long time.” As Townsend says: “20 million people and the eyes and ears of the world will be focused on London and how we deliver it.” Miss the boat and retailers will miss out not only on cash and publicity, but also on a much-needed excuse for celebration.

London Olympics in figures

  • 9 million tickets
  • 20,000 press and media
  • 70,000 volunteers
  • 200,000 workforce
  • 5 billion global TV audience
  • 35 competition venues from Glasgow to Weymouth

Case study birks and the Vancouver 2010 Winter Olympics

Luxury Canadian jeweller Birks, which has about 70 stores across Canada and the US, has first-hand experience of involvement in licensing opportunities.

In February 2007 it signed up to a six-year partnership to become an official supplier to the 2010 Winter Olympics and an exclusive licensee for 2010-branded fine jewellery. It also has sponsorship rights for the Canadian teams participating at Vancouver 2010 and the London 2012 Olympic Games. Its investment falls into the tier three sponsorship category – which costs between $3m and Story text5m (£1.9m and £9.6m) – and its range of branded goods includes 25 (£144) sterling silver cufflinks, Story text25 (£80) business card cases and Story text85 (£118) dollar bracelets. It will also be an official sponsor of Canada’s Olympic teams throughout the 2012 games in London.

Because Birks is not only a licensee but also a sponsor, it can therefore market its brand in connection with the Olympics. Birks & Mayors divisional vice-president of product development Dan Kratchovil says: “As both, it gives retailers the right to market their brand and take advantage of the incredible visibility that this world class event can bring.”

Kratchovil points out other factors that licensees need to consider:

  • All factories selected to manufacture licensed products must pass a sustainability factory audit
  • All products must carry a serialised hologram authenticating the product as an “Official Licensed Product”
  • All licensed products must be approved by the host Olympic Committee throughout the development cycle, in terms of design, prototypes and pre-production samples before the product reaches the sales floor

Westfield Stratford

In terms of Olympic retail destinations, they don’t come much closer to the action than Westfield Stratford. The developer estimates that 70 per cent of all visitors to the Olympic site will pass through the centre.

Westfield general manager for marketing Nicky Fuller says that during the Sydney games the city experienced a 60 per cent uplift in tourism. “We were a destination and we’re hoping for a similar uplift not just at Stratford but also at White City.”

Showcasing the development is a top priority and Westfield is planning to run various events both in the lead up to and during the games – the perfect PR opportunity for retailers.

“Everything we do is around showcasing our retailers and maximising sales. It’s about making sure we run and publicise those events,” says Fuller. “We want to make sure visitors have a fantastic experience, not just around sporting activities. We’re determined for the centre to have cultural relevance too.”


Westfield Stratford

What the restrictions cover

Restrictions on the use of Olympic rights are extensive, so beware. David Brooks, senior associate at law firm Taylor Wessing, says: “The bottom line is if you’re looking to make any kind of association with the Olympic Games you’re likely to be treading on very dangerous ground.”

London has given a commitment to the International Olympic Committee (IOC) to take measures to prevent the unauthorised commercial exploitation of the Olympic rights and to combat ambush marketing. The IOC, British Olympics Association and the London Organising Committee of the Olympic Games own a number of trademark registrations, which include:

  • Olympic/Olympics/Olympic Games
  • The Olympic Games symbol
  • London 2010 and the London 2012 logos 2012
  • Team GB
  • The 1995 Olympic Symbol (Protection) Act also prohibits the use of:
  • The Olympic motto
  • The Olympic rings symbol
  • The words “Olympic(s)”, “Olympian” and “Olympiad”

In other words, these legislations impose restrictions on unauthorised commercial association with the games.Locog and the British Olympic Association have published guides providing information on what is considered to be the acceptable use of the various Olympic rights.

Source: Taylor Wessing