It pains me to even reference it, but there’s no doubt that the pandemic has significantly changed the way we live and how we do business. I’m very fortunate to have traveled internationally on four occasions in 2022, so I’ve been able to see the global impact of the pandemic on business and franchising with my own eyes, and the parallels with Australia are very similar.
Out of the pandemic have emerged six trends in Australia, and these have influenced the industry sectors to watch.
Everything about how we work, where we work and even whether we work has changed.
Workplace shutdowns and working from home became commonplace over the past two years, and people have gotten used to working remotely. Not only is there a reluctance to return to workplaces, but people have demonstrated that work can be completed from almost anywhere.
This means employers need to adapt their practices, to meet the expectations of employees as to what the workplace of the 2020s looks like. The best employers need to adapt to meet the market and conform to what has become the new norm.
One of the biggest issues associated with people now is finding them. We know that nearly 600,000 temporary visa holders left Australia during the pandemic and for the first time since WW1, our population shrunk. The net effect is fewer people available for employment, and now with the lowest unemployment rate in over 40 years, finding team members is like catching fish in a swimming pool.
The pandemic and its impact on the economy and household income have negatively impacted consumer confidence, and this, in turn, has influenced our second trend.
Although not a traditional definition of a two-speed economy, our economy does indeed have two speeds. It’s proved it can certainly shift when it comes to the need to pivot, as businesses need to react to new markets and move quickly before the economy causes them financial distress.
The ‘Great Resignation’ has been talked about throughout the pandemic, but the reality is this is a furphy. It might be the case that more people are thinking about a career change – and if you look at the numerous global statistics, anywhere between 30-40 per cent of employees are ready to leave their current job – but the reality is no one is really leaving. Ask anyone who is advertising for a job right now how many applicants are they getting – the answer will be not many.
In franchising we’re seeing a significant increase in inquiries, suggesting credence to the ‘Great Resignation’ theory, and people are certainly looking into changing their careers, but what we’re also observing across the 30 brands that we recruit for is a slow-speed in decision making.
People want change, but after going through the greatest period of upheaval in their lives during the past two years, along with the uncertainty that accompanies it, they’re acting cautiously and making key employment decisions more slowly.
Global supply chain shortages, excessively high oil prices and a slowing global economy have driven raw material prices up by as much as 30 per cent. Coupled with decreased sales due to continued lockdowns and lower take-home wages, we’re now seeing reduced consumer spending.
The impact this has on franchising is two-fold – customers aren’t spending, and retailers’ expenses are increasing. This is putting pressure on retailers – do they increase prices or decrease quality to maintain margin? The best retailers have maintained quality and focussed on experience to ensure the customers receive value. Customers want quality – and they will pay for it – but providing them with a cheaper option as well as the premium offering is just good business.
What worked well pre-pandemic won’t necessarily cut it in a post-pandemic world and every business has been forced to reinvent itself and its business model in some way. As I always say about franchising: “Don’t fall in love with the idea of the business, fall in love with the business model.”
Ensure your business’s products or services are in demand and are clearly differentiated from your competitors. The best and most resilient brands have done this, moving online when customers couldn’t visit in person. Look to the hospitality sector for ways in which to pivot to online delivery platforms and a range of new business models, like the Ghost and Host Kitchen model. And this leads us nicely to the fifth trend.
How often do we hear location, location, location? Never has it been more relevant than in this changing marketplace. There’s nothing sadder than seeing a ‘For Lease’ sign hanging in a window – this means someone’s dream or livelihood has been quashed. Walking around the streets of Manhattan at Christmas, historically a hive of retail activity, I was shellshocked by the number of closures and empty stores in what had previously been one of the busiest retail strips in the world.
We’re seeing glimpses of this in the Australian marketplace, but good government intervention and support of business have enabled many to continue trading through difficult times. As the COVID support program ends we’ll see more vacancies and opportunities arise. The market will correct itself in time, and the rents will come back to some degree, so there may never be a better time than now to get into the right location.
What the pandemic has shown is a reliance on traditional retailing, although the concept of brick-and-mortar has changed forever. Moving forward, part of the retail landscape will be on alternative income streams – online trading is one, or as the hospitality sector has demonstrated, a move to a different delivery methodology. For example, in the case of Ghost and Host kitchens, F&B brands pivoted to create an alternative model with a reduced menu offering, a more productive workforce and a deeper penetration into households, leading to an increased frequency of purchase
6) Subscription models
We were already seeing this as an emerging trend pre-COVID, and then the pandemic accelerated it. More and more businesses are identifying opportunities to entice and handcuff customers through discounted subscription models, whether it be wine, toilet rolls, gyms and online fitness programs, education, beauty products, or salons.
The common factor behind trends
The trigger for all these trends is change. Everything has changed and if a business doesn’t adapt and change its model, like many of the retailers on Fifth Avenue in New York, it won’t stick around.
Now, if you’re looking at entering a franchise business in Australia, you need to identify in what ways that franchisor has adapted and changed. Not that they’re just on-trend, but actually ahead of the game and progressive in how they’re leading their business and brand into the next stage of consumerism.
Doug Downer is The Franchise Guy and principal of Franchise Ready, which has launched and supported over 90 franchise brands in Australia. Doug currently owns four franchises and three franchise systems