City should license – not sell – its brands

Toronto City Councillor Mary-Margaret McMahon (Ward 27) wants the city to open up a souvenir shop in City Hall – selling Toronto-branded memorabilia for tourists and residents alike. She has put forward a motion that will be considered next week by the Government Management Committee.

McMahon wants staff to explore “the feasibility of creating a City of Toronto Store within City Hall which sells City of Toronto and TTC branded goods as well as the best locally produced and/or themed products.”  McMahon is onto a good thing here – it just needs some subtle refinement.

Toronto sorely lacks any coherent strategize to manage, protect, promote and/or monetize its own iconic brands.  Instead, it allows third-party organizations and corporations to poach its intellectual property for their own profit., for example, has created a brilliant line of TTC-themed "subway" buttons that are highly popular.  It also sells a Bombardier-branded toy model of a TTC streetcar. How much of the profit from the sales of these buttons goes to the TTC?  Nothing.

Toronto should hire a licensing agency with a mandate to generate revenue from its iconic brands

Visitors arriving or departing from any London airport would be hard-pressed to miss the myriad of "Underground" and "London" branded merchandise on sale at airport gift and duty free shops – and throughout the city.  So much merchandise, in fact, that Transport for London runs its own shops.  Likewise, New York City takes an active role in managing its brands to the financial betterment of the city and its residents (and has its own store as well.)  It's about time Toronto did something similar.  But, Toronto shouldn't start with a store – it should start by managing and licensing its brands.  Baby steps.

Toronto owns valuable iconic brands

Toronto has many iconic brands that would lend themselves well to branded merchandise: the TTC and its iconic (though evil) streetcars, subway stations, etc.; the Toronto Police, Fire and Paramedic services; Toronto Public Library; Toronto Parking Authority's "Green P" logo; Casa Loma and the city's other museums, parks and zoos, etc.; and finally, the City itself has an ugly logo, flag and the new TORONTO sign in Nathan Phillips Square;  All of these lend themselves to branded merchandise.

While I worked in the Mayor's Office in Toronto, part of my challenge was to explore new ways of raising revenues that did not simply add to the city's tax burden.  One of the ideas I continually tried to interest city staff in, was that of licensing city brands for official merchandise.  City staff and TTC management rebuffed every overture.

A store is the wrong approach

The city should not open its own store.  There is no "entrepreneurial DNA" in civil servant blood and the city shouldn't try to run its own retail operation.  Opening shop means market research, developing and producing products, retail sales, etc. – all of which are outside the city's core competencies.  All of which require a risky up-front investment.

What the city should do is conduct a competitive search, then hire a licensing agency with a mandate to engage with product manufacturers and retail partners to produce high-quality, profitable branded merchandise based not he city's iconic brands and images.  This would allow manufacturers to manufacture; distributors to distribute; retailers to sell – all things they do much better than the city ever could.

Each of them makes a profit – and the city gets a cut of everything sold.  The businesses take the risk of producing merchandise that doesn't sell – not the city.  But, its a risk they are best equipped to manage; they're the experts on what people will buy, and how much they'll pay.

As the portfolio of city-branded merchandise grows over the next few years, there will come a time when a "City Store" in Nathan Phillips Square and other tourist hot spots could be a viable business – but leave it to the business people to decide, when and where.  The city gets its cut on the licensing side and, potentially, as a landlord if a business chooses to locate on or in city-owned property.

This is not a get-rich quick scheme for the city, but it could begin to generate a tidy stream of licensing revenues in a few years.  McMahon is quite right about that.