Considering a retail franchise? Here’s what you need to know
Thursday, September 21, 2017
While it's true that online shopping has experienced significant growth in recent years, retail shopping in brick-and-mortar stores remains healthy and by far America's preferred way to shop.
According to "The State of Retail 2017," a report produced by TimeTrade.com, consumers still believe there is no substitute for the kind of service and shopping experience that retail stores offer. When asked if the item they wanted to purchase was available both online and in a nearby store, 75 percent of shoppers said they would prefer to purchase the item in the store.
What shoppers like is the ability to see and feel the product before they buy, the in-store promotions and sales, and the interaction with store personnel who can help answer questions and assist with the buying process. Projecting forward through 2017, 84 percent of shoppers surveyed said they planned to shop brick-and-mortar stores as much or more than they did last year.
This certainly reinforces the idea that brick-and-mortar retail is healthy across virtually all sectors, from clothing and hair care to party supply and furniture. For those who smartly weigh the benefits while factoring in the challenges, the opportunities in retail abound. This is particularly true when it comes to retail franchising. When properly managed and executed, the investment in a retail franchise can pay off handsomely.
Household names like Ace Hardware, Fantastic Sams and Fastsigns demonstrate one of the primary strengths of retail franchising — brand name recognition. There is no denying the power of a well-established brand name, but some critical factors need to be considered to ensure future success.
Choose your location wisely
The old adage "location, location, location" remains as true today as it always has. Consistent traffic is the lifeblood of every retail establishment. That means finding real estate where people are inclined to frequent.
A developed site that has competition — but not too much — already in place is a good thing. Their traffic can become your traffic.
While most franchisors offer assistance with site selection, you should also do your own research on your market. If you are located in a cold climate with a short summer, an ice cream franchise may not be the ideal choice. Perhaps a hot sub sandwich concept is a better fit considering your locale.
In addition to location, it's important to have a good grasp of the potential workforce where you plan to operate your business. In the retail world, you will be in a constant cycle of hiring, firing, promoting, training and retraining, so make sure you have access to a workforce that can support your business needs.
Of course, the type of retail franchise you choose dictates the scale of these issues. A quick-serve restaurant is going to be far more employee-dependent than, say, running a Wild Birds Unlimited franchise. You're going to have to deal with employees in both concepts, but the restaurant will be far more demanding of people management skills.
Deliver exceptional customer service
Traditional retail has fended off online momentum by recognizing it needs to continue to differentiate itself. And the key differentiator retail has over the online experience is in-person services — in other words, making the customer feel special.
Face-to-face interaction with a thoughtful, well-informed store employee is a formidable advantage for in-store retail over online. This emphasizes the important role your employee recruitment, training and retention processes will play in your retail business.
Find the right opportunity for you
More than anyone else associated with your business, you will have to be willing to do whatever it takes to ensure its success. Working in a retail environment requires daily people engagement and long work schedules, including nights and weekends. Is this something you are willing to do?
Also, you need to consider your capital situation. Undercapitalization is, by far, the most common cause of business failure. If you don't have ready access to the significant capital typically required for a retail franchise, then you may want to reconsider the appropriateness of a retail franchise as an investment option.
In a competitive landscape — and retail is as competitive as it gets — leveraging your advantages is essential to success. As you continue your exploration to find the retail business that fits you, keep in mind what the consumer wants and make sure the franchise you are considering can help you deliver it.
Retail franchises are popular for a reason — they have proven to be financially rewarding and personally gratifying. For those with entrepreneurial drive and the willingness to invest the time and due diligence necessary to first find the right retail franchise opportunity and then commit fully to making it a success, the returns can be remarkable.
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