The Power of Licensing #5: Ivanka Trump Folds Her Tent: A Licensing Case Study

July 25, 2018 | By: Michael Stone, Co-founder and Chairman, Beanstalk

The Ivanka Trump fashion line of clothing and accessories is an entirely licensed line of products that lived by the sword and now, apparently, has died by the sword. 

Ivanka Trump was never a real designer, one who slowly rose through the ranks with a pencil and a pad sketching original designs or a designer who shot to fame due to her great talent.  She was (and is) a celebrity, a famous personality, a New Yorker traveling in high society circles who attached her name to first a line of expensive jewelry and then to affordable clothing and accessories for working women (not a bad strategy).  She had a vision and a good story to tell.  She represented luxury, sophistication and wealth.  She seemingly made a serious commitment of time.  She was famous as the daughter of then famous real estate developer and TV personality Donald Trump (whose money financed the start of her business).  The stars were aligned for success.  In fact, she demonstrated many of the elements critical to making a “celebrity” licensed line of products successful.  Many celebrities attach their name to product (much of it licensed, as was the case with Ivanka Trump) which expresses their point of view and tells a story.  Consider Jennifer Lopez, Gwen Stefani, Adam Levine, Sean Combs, Kanye West, and many more.  Yet, from the moment that Donald Trump came down the escalator in Trump Tower on June 16, 2015 to announce his candidacy for President of the United States, the Ivanka Trump “brand” was doomed.  Yesterday, Ms. Trump, graciously thanking her team and “partners”, and wishing them well, announced that she was shuttering her business, claiming that she wanted to devote her time to “policy” in Washington, D.C. and her role as senior advisor to the President (conveniently, her father).

But was it really just a shift in interest and focus?  As I said, the Ivanka Trump line of products was doomed since that day in June 2015.  The once successful brand, full of promise and opportunity, which was born of the Trump moniker, died by the Trump moniker.  It simply couldn’t survive all of the controversy that has surrounded it over the past two years.  Indeed, no brand could survive that much controversy, and there was a lot of it.

With President Trump promoting Made in America to boost domestic manufacturing and job creation, Ivanka Trump products were made almost entirely in overseas factories, in China, India, Vietnam, Bangladesh, and other foreign lands.  All of her products - - clothes, handbags, shoes - -  were made by other companies under license and she exercised less control than she could have exercised about where and how the products were made.  Her vision for her fashion line was about products for working women, but what about the women who worked in these overseas factories?  Again, she was late in insisting on working condition standards in the factories used to manufacture her licensed products.  Consumers and the media took notice of these issues with her supply chain, some avoidable and some not so much.  It’s not easy for any brand to be a “socially responsible” brand when it’s not being socially responsible.

Then there are the alleged ethical issues surrounding the fashion line and the blurring of her fashion business and her official work for the Trump administration.  Critics have complained, almost from the start of the Trump presidency, that Ms. Trump and other government officials were using her position (and that of her father) to promote her business.  Last January, the Office of Government Ethics opened an investigation into whether or not ethics rules have been violated.  Government employees are prohibited from endorsing products that benefit them financially.  Although Ivanka Trump separated herself from the business two years ago, she remains the owner (through a trust which maintained some of her authority) and makes a fair amount of money (according to recent disclosure documents, $5 million last year).  She often wears her fashion line in public and at official occasions and is covered by the fashion and style press. And who can forget Kellyanne Conway, a top Trump advisor, telling a reporter on Fox News that although she hates shopping, she’s going to go out and buy some Ivanka Trump fashion products and everybody else should too.  Alleged lapses in ethics regulations and laws angered consumers. Complying with ethics requirements also stunted the line’s growth.

There was controversy about Ms. Trump’s seemingly fast-tracked awards of trademark registrations in China (also, perhaps, an ethical violation). Those registrations quickly and suspiciously followed on the heels of President Trump announcing that he would help the multi-billion dollar Chinese telecom giant, ZTE, get back on its feet after violating U.S. laws. And there were claims that Ivanka Trump was getting favorable treatment on costs of manufacturing in China, helping her to compete on price back home. Conversely and ironically, the Trump Administration’s threatened tariffs on Chinese goods, including apparel, would likely affect Ms. Trump’s fashion line.

As I said at the start, you live by the sword, you die by the sword.  The Trump name made Ivanka Trump famous and gave her a start in the fashion business.  But Donald Trump turned out to be an extremely divisive and partisan president.  For the majority of women who disapprove of the Trump presidency, the Trump name is absolutely toxic.  That toxicity infects the entire Ivanka Trump fashion line. Indeed, opponents of the Trump administration called for boycotts of her products.  The minority of women in the United States who approve of the Trump presidency, who want some of the Ivanka Trump fairy dust sprinkled on them, but who also have lots of fashion choices at retail, are simply not a large enough group of consumers to fuel the growth of this “brand.” Indeed, some of them won’t buy the Ivanka Trump products because they don’t want to announce their support or be too closely identified with the Trump name. Just too controversial.

Despite all the negative publicity and headaches for Ms. Trump that all of this entails, this stew of heated debate about the Ivanka Trump fashion brand has also caused its performance to decline quickly.  This once successful and on-the-rise celebrity-based licensed fashion line is no longer succeeding at retail.  Sales have fallen.  Retailers have dropped the line not only for political reasons but because sales are weak (such as Nordstrom’s, Marshall’s, T.J. Maxx and, just this month, Hudson’s Bay, Canada’s largest department store).  According to a July 24th report in The Wall Street Journal (citing a research study by Rakuten Intelligence) sales on Amazon and at Macy’s, Bloomingdale’s, and Zappos have declined 55% since mid-2017.  No business can survive that kind of decline in sales.

When Ivanka Trump started her fashion business, she had many of the elements for success that are required for a celebrity line of licensed products - - fame, story, vision, commitment, filling a retail gap, staying power and credibility.  But the fame that got her started eventually did her in.  She just couldn’t overcome so much controversy, so much criticism, so many obstacles.  In fact, I’m surprised that she lasted as long as she did, under the circumstances.  This is a case study of what can go right and what can then go so horribly wrong for a celebrity engaged in developing a collection of licensed products. Fame can be a good thing, but it can easily become your enemy.

This article originally appeared on Forbes.