Expansion Challenges & Opportunities 2016 @ International Retail Franchise Summit

This year discussion was enriched by particularly strong contributions from senior representatives of some of the world's leading fashion, food, convenience and toy brands, as well as the hospitality industry.

Focusing on mutual profitability as the life-blood of franchising and healthy business relations, speakers stressed partnership flexibility coupled with consumer understanding as key success factors, occasionally with persuasive reminders of the strains that can be caused when these basics are overlooked.

For Franchisees, a key issue discussed was supply chain and replenishment systems, when kept simple they work best. Evidently there are repeated challenges of product fulfilment whether that be insufficient from the outset or the inability to sufficiently replenish when selling successfully.

Lengthy manuals and training documents that are text heavy, involve a significant time investment for the Franchisor yet are they being utilised productively by Franchisees or are they simply collecting dust? As was memorably explained by one of our panellists, the point is not about ticking boxes sat in a UK office, but to realise the best way of getting the point over and in the case of VM for example, visual images provide the required guidance in a way that saves everyone time and money and delivers a result that will benefit the partnership as a whole.

For Franchisors, the key is still ensuring the brand is represented in a way that is attractive and profitable and, crucially, sticks to brand standards.

While consensus was that local adaptation is crucial to success, the point was also made that what succeeds at home is, more often than not, likely to succeed in a foreign market – raising the question of how to find the right balance between sticking to a proven formula for success by upholding the successful brand as-is and how much flexibility to allow when adapting a brand to regional culture, market tastes, local preferences etc.

Franchisees remain open-minded to fresh ideas about lowering costs and improving margins. Practically speaking, that means when times are tough and performance needs improving a whole new re-brand is less likely to make sense than something that is more focused, less costly, and in purely practical terms more likely to deliver the right outcome.

Another theme that was topical to all discussions was how to meet the challenges of a globalised multi-channel market, especially in areas such as ensuring price consistency, product availability and integrating operating systems and processes in a way that delivers consistent customer experience across all channels and in every country.

Two questions of burning importance for those considering internationalisation of their e-commerce platform were: a) have local partners the expertise and facilities to handle the process from order through to delivery (and returns), and b) what is the best model for sharing the profits of e-commerce - given that many franchisees see the franchisor "takes-all" model as unfair, bearing in mind they usually bear the lion's share of costs for maintaining the shop window that generates many of the sales that are now processed through e-commerce
Whether you stick to the own-store model or prefer to franchise, it will be necessary to plan how to ensure your bricks and mortar business achieve your key goals including: launching with splash, achieving a competitive edge, driving higher footfall, building brand loyalty through the right customer experience, finding the right balance of marketing channels, as well as integrating price, product, promotion, and policies.

Whether you start with e-commerce or bricks and mortar, or a mix of both, you will need to assess the benefits of partnering, for example, with locally established e-commerce platforms who may carry loyal and ready-made customer base, speeding market penetration as well as providing a platform for longer-term growth.

Let it not be forgotten of course, there is always the greatest of all the marketing P's - people! Fundamental to getting this right are the processes for partnership selection and getting the right lawyer to draw up the right agreement i.e. one that hopefully means you won't soon be meeting the litigation team to explain ambiguities arising along the way. The point was here well made, that much due diligence is really common sense at work, for example checking representations made, as well looking at a potential partner's reputation as an employer and whether they have the skills and reputation you require.

Next Year's Event Dates...

Retail Business Technology Expo 19th & 20th April
Retail Design Expo 19th & 20th April
More to follow