What to Look for in Retail Franchise Opportunities
Simon Beaty| Managing Director | Snooze
Whilst there are many elements that have been previously been addressed in our articles about what to look for in a franchisor, in this article career retailer Simon Beaty, Managing Director of Snooze, provides us with his perspective on contemporary retail franchise opportunities.
Simon brought his strong retail experience to Snooze, one of Australia’s longest running franchises, in 2008, and continues to nurture the company’s growth potential in the retail bedding sector. Below, he discusses what to look for in retail franchise opportunities, given the tremendous amount of change that has taken place in the retail industry over the past decade.
Retailers need to continue to evolve and develop. What worked successfully 10 years ago will not necessarily work today, and the pace of change seems to increase each year as communications and marketing technologies continue to evolve.
The internet has given rise to more competition than ever. In this competition filled environment retail franchises must efficiently and effectively tailor their marketing strategies, stocking strategies and consumer experience to reach and satisfy the modern consumer.
Prospective franchisees who are interested in retail sector franchise opportunities should investigate whether a franchisor’s business model and marketing plan has been able to adapt in the past, succeed in today’s changing business environment, and whether it will be adaptable enough to take advantage of future trends.
"In today's environment it is crucial that franchisors conduct effective market research on a regular basis. With the rapid pace of change in the contemporary marketplace, retailing strategies that work today may fall short tomorrow."
- Does the franchisor have a multi-channel strategy?
- The Internet has been the game changer in the retail space. Franchisors will be left behind if they do not have an effective strategy to assist geographically dispersed networks of franchisees take advantage of the consumer online experience while still maintaining a strong presence with respect to individual retail outlets. Business plans should address issues relating to traditional bricks-and-mortar retailing as well as the potential risks and rewards associated with e-commerce.
- What is the length of the sales cycle?
- If you are reviewing a retail franchise opportunity where the business has a long sales cycle, it is even more important to ensure that the franchisor focuses on making its customers’ experiences with the retail brand so positive that they will buy. If you do not get it right initially, you may not get another chance in as many as 10 years. Everything matters.
- What is the average stock turn and what stocking levels for my merchandise should I maintain to keep my customers satisfied?
Having the right stock levels for your merchandise is very important in considering franchise opportunities from a capital management point of view, but it is also critical in making sure that your product is available appropriately for customers who are ready to buy. In today’s world of e-commerce, the competition is rarely further than a mouse click away when a retailer fails to meet a customer’s needs!
- Does the franchisor continually research the customer market to stay on top of emerging trends and changes in customer behaviour?
In today’s environment it is crucial that franchisors conduct effective market research on a regular basis. With the rapid pace of change in the contemporary marketplace, retailing strategies that work today may fall short tomorrow. Franchisors must have accurate and timely information regarding their customers’ behaviour in order to succeed over the long term.
The Bottom Line
The bottom line is that you must consider how present and future changes in the retail business sector will impact the profitability of retail franchise opportunities. Potential franchisees who keep this principle in mind are the most likely to be successful in their franchise businesses.