In a changing retail world, franchisees should consider an integrated, omni-channel model, says Eyal Levy
The world of retail is changing, and changing rapidly. The economics of opening a brick and mortar store are not what they used to be 10 years ago, as online sales get a bigger piece of the pie every single year. Many retailers now face the unpleasant reality of having non-exclusive items viewed in their show room which are subsequently ordered online with a big e-commerce website.
Bigger retailers also understand that having a solely online presence is not enough, either. While sometimes consumers like to read about a product online, they also want to ‘feel’ and ‘test’ it in an actual location, to see it in action! The perfect example for this is Amazon, which has for years been focused solely on e-commerce. Only in the past couple of years has it been made the strategic move into physical locations, with the online giant’s surprising acquisition of Wholefoods.
In the franchise world, as in the general retail one, franchisees are thinking twice before opening another consumer goods franchise store. Increasingly, they are looking instead into food franchise opportunities. However, in some areas this market is just as saturated! And we all know the long, the busy days of running a food joint are not for everybody. It’s hard work! So let’s get back to the consumer products world and think about our friend Joe Shmoe, who put his life savings into opening a franchise of, let’s have a cool example, TOYS.
Joe opens the store every day and takes huge pleasure in demonstrating the great products that he has. While his demonstrations amaze his customers, they don’t stop them stepping out of the store and looking for better deals on their smartphones. To them, Joe is nice, but he’s not so nice that they’d pass up a great bargain. Joe has worked hard, yet somebody else gets to enjoy the fruits of his work!
If this story doesn’t sound familiar to you, I can guarantee you that it sounds familiar to many retailers that have had to make significant changes because of this unfortunate reality. The consumer goods franchise world needs to change and adapt to this reality otherwise its existence is in jeopardy. Like Ben Franklin said: “When you finish changing, you’re finished”
The only way that franchisors and franchisees can happily co-exist in this physical-digital marriage is to work with an omni-channel model. This is where franchisees in their own market or territory can enjoy revenues from both the physical and digital world, having diverse models in each one! In this model, the franchisee would have a physical location but would also enjoy the online sales in that territory.
In this situation they won’t have to fear losing the fruits of their hard labor in the physical location to monstrous online sellers they have no control over. And it doesn’t stop with online/brick and mortar sales either! There are other revenue streams that franchisees can enjoy such as wholesale (if applicable), outside sales, events sales and more!
I experienced that when I had to open a distribution to my line in a foreign country. We thought of licensing our products only to stores in order to take control of the online sales, but when the distributor in that country said “but what if a customer sees the product and goes online instead?”, it made total sense. As a firm believer in win-win models, the omni-channel franchise model seemed to be the only way to do it!
If you’re in the consumer goods industry, say goodbye to multi-franchise. This is the era of the omni-franchise. It’s not enough to have several stores, as with the multi-franchise. In order to survive and thrive, you need to have more channels so you can enjoy the entire pie…otherwise the piece that you’ll be getting served might not have a cherry on it.
3 keys to a successful omni-franchise model
* Exclusivity to line of products in your territory.
* Reaching out to customers by different, varied channels: online, physical stores, outside sales and more.
* Backed-up by a great e-commerce support: if customers choose to go online, they get the same great experience!
ABOUT THE AUTHOR
Eyal Levy is the Founder of CEO of Yogibo, who manufacture, retail and franchise new generation of beanbags and other contemporary comfort and lifestyle products in North America and Asia.