Supermarket chain Tesco announced in early 2023 that it had bought the brand and related intellectual property of stationery shop Paperchase, after the latter went into administration.
The purchase shows how a brand can retain its value even after the demise of the business it is associated with. In this case, Paperchase’s 106 shops in the UK and Ireland are expected to close within the next few weeks.
In a statement, Tesco Managing Director of Home and Clothing Jan Marchant said:
“Paperchase is a well-loved brand by so many, and we’re proud to bring it to Tesco stores across the UK. We have been building out plans to bring more brands and inspiration to the ranges we currently offer, and this will help us to take those plans further. We look forward to sharing more with our customers in due course.”
Tesco did not reveal how much it had paid for the brand and IP rights.
Branding opportunities
While it remains to be seen what Tesco will do with the Paperchase brand, it would make sense to use it to sell stationery and similar products, building on customer familiarity and loyalty. Tesco may also look to extend the brand to other products or services in stores or online.
Adding more brands has become something of a trend among supermarkets recently. Tesco’s rival Sainsbury’s, for example, offers home and garden goods by Argos and Habitat, which are both owned by the same company.
Meanwhile, Marks & Spencer has acquired several fashion brands in the past few years, including Jaeger in 2021. In October 2021 it bought 25% of Nobody’s Child and in November 2022 it acquired the intellectual property, source code and algorithms of personalised fashion marketplace Thread. The Jaeger and Thread acquisitions both followed insolvency processes.
Some stores have also explored co-branding with other companies: for example, Sainsbury’s hosts branches of Lloyds pharmacies in some of its branches, though it recently announced that this partnership would come to an end soon.
Proceed with caution
Acquiring established and popular brands is a smart marketing strategy, as they are likely to bring loyal customers, making them more cost-effective than launching new brands from scratch. If they can be acquired following insolvency, they may also be available at a discounted price.
However, thorough due diligence must always be carried out on the IP portfolio. This should take account of the extent of IP protection and any potential conflicts, particularly if the brand is planned to be extended to different goods or services, as well as the impact that the insolvency process might have had on the IP portfolio and any issues arising from shared ownership or licensing of IP rights.
Given the economic outlook, sadly there may be more insolvencies on the horizon. That may present an opportunity for anyone looking to acquire established brands or other IP, but it is always best to proceed with caution. Do contact us if you would like to find out more about the kinds of IP issues to address in brand acquisitions.
To find out more about the issues raised in this blog contact Rosie Burbidge, Intellectual Property Partner at Gunnercooke LLP in London - rosie.burbidge@gunnercooke.com