Retail: fast becoming the franchising giant
Packed full of retail franchises, from luxury fashion, jewellery, homeware, restaurants, bars and cafés, shopping centres are fast becoming the popular platform for franchises
At MAPIC 2012, the leading international retail, real estate show held in Cannes, France, each November, saw over 8,200 participants over three days to select the best development sites in shopping centres, town centres, and shopping locations alike. This year was one of the biggest and best yet with 2,430 retailers and impressively over 400 new retail brands coming to the market. With in excess of 730 exhibiting companies from over 70 countries around the world, it proves retail is a booming market and shows endless amounts of opportunity for the retail franchisor to grow their brand in these up and coming locations
Based on discussions at MAPIC this year the European market, and, more importantly, the UK, are still set to be the most attractive to retail franchisors. With more than 100 international franchise brands targeting the UK and, in particular, the new and majorly popular London shopping centre Westfield Stratford. This proved to be very attractive to globetrotters coming to the UK for the London 2012 Olympic and Paralympic games. It is now being referred to as the permanent retail franchise exhibition here in the UK.
France also sees major potential for expansion with over 60 brands planning to open either company-owned or franchise owned locations. The enormously successful three-day ‘Paris Franchise Expo,’ attracting brands from all over the world, keeps proving France is the flagship location for the whole of Europe.
Investors are also attracted to the Netherlands, Poland, Italy and also Russia, since they have an ever-growing number of serious investors willing to accept the challenging consumer marketing. The franchise brand retailers are now becoming more selective in relation to whom they award their Master or Area Development Rights to.
Russia was one of the buzz words at MAPIC 2012 and one of the major players in the retail, real estate business is Tashir. Their Vice-President, Artak Evoyan, said that various shopping mall owners and developers have big plans for further development and that Moscow is a highly liquidated retail market.
He went on to say that since the financial crisis, only the best developers have been able to progress their projects in Moscow, which means that the quality of schemes being constructed has improved and the number has reduced, which makes it a very attractive destination for investment and retail brands to succeed.
Russia is still at the stage where it is a high development country offering many opportunities for foreign brand retailers as well as investors. He continued to say that MAPIC was the ideal platform to showcase what is happening in Russia to participants all around the world.
Many retail companies choose to expand their brand internationally through franchising, even if they prefer to open company-owned stores in their own country. The UK-based children’s retailer Mothercare, which does not franchise its stores in the UK, has successfully expanded internationally through franchising and its overseas franchise business currently operates from around 360 stores in over 45 countries, primarily in Europe, the Middle East and the Far East.
Retail brands are often keen to expand internationally using the franchise model, as it allows them to achieve steady growth without the major financial commitment that opening company-owned stores would demand.
The fact that there is such a wide range of retail franchises available means that potential franchise owners should be able to find one that will suit their budget, skills, experience and interest easily. Throughout this magazine and its websites there are a number of retail brands that offer franchises from different countries, all of which are looking to expand internationally.
The Advantages & Disadvantages
Unlike franchises in other sectors, the business is always operated from a store, concession stand or the increasingly popular pop-up shop. The major advantage of a retail franchise is that franchise owners are able to attract potential customers through their store’s branding and the fact the customer can physically see the product on the shelf should speak for itself.
However, with a retail store, a franchise owner must take into account that operating from an outlet will require a larger number of overheads, such as hiring and paying staff. For those that own the Master Franchise Rights for a retail franchise, then employing reliable staff will be essential to successfully operating a network of stores.
While many franchisors still view franchise development with caution, there is now every reason to suggest that serious shopping centre owners, developers and franchise development organisations are now starting to search the world for retail brands that will deliver profits for the future. This coming year is not likely to be a significant year for expansion, but it seems to be the year upon which certain foundations will be laid for serious growth potential from 2014 onwards
Written by Jenna Leeds