Harry Potter was one of the major licences when we covered the sector back in October 2001, with the schoolboy wizard appearing on anything from mobile phones and stickers to a range of confectionery from Mars (now Masterfoods). And all this was in advance of the first Harry Potter film, which was due for release the following month.

Other key films on the horizon were Spider-Man, Star Wars 2, Monsters Inc and Lord of the Rings: The Fellowship of the Ring, all of which proved to be very successful licences when they were released.

Using instantly recognisable characters was becoming increasingly popular, as Carl Richardson, marketing director at Mr Lucky Bags said. Up until 2001 the company's bestselling lines used characters that were its own creations, including Dick Turtle and Trixie, but Richardson said that they were under pressure from more well-known characters.

"Dick Turtle started our business but the way the market is going it is fast being eroded. We are coming up against other characters and if we don't have them we don't get in."

Richard Hollis, head of licensing at BBC Worldwide, also stressed the importance of getting the right character, adding that only the best-known characters would survive.

"There are fewer retailers to approach and you have to get listings with those retailers. We can't get away with a licensing portfolio of 20 or 30 characters. Only the three strongest will make it on to shelf."

The retailers themselves were banking on the most popular licences for success.

Safeway was concentrating on Winnie the Pooh, Tigger and Eeyore, as well as Bob the Builder, Harry Potter and The Tweenies while Sainsbury's was also betting on Harry Potter for success by stocking Quidditch and Owl Messenger cookie kits.

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