Franchise Spotlight: Retail
Retail franchises can be a safe haven in a turbulent sector.
Selling goods (as opposed to services) to consumers (rather than businesses), traditional retailers are besieged by online competition, Covid-19 and an ailing economy.
But if this challenging retail environment makes many aspiring store owners nervous, then successful franchise systems – providing would-be franchisees do their due diligence – can serve as relatively safe-havens.
Training and support in finding premises, lease negotiation, store fit-out, marketing and more, along with low wholesale prices, amount to a compelling package.
Retail spending slumped to a 28-year low in 2019, according to a KPMG/Inside Retail report, but many franchises operate in sectors that are resilient or outright immune to the aforementioned threats.
For instance, on-the-go food and beverage retailers like Gloria Jean’s Coffees, Ben & Jerry’s, Tutti Frutti Frozen Yogurt, The Little Cha and DannyBoys were much less affected by Covid-19 than exclusively dine-in establishments.
Grocery store networks like 7-Eleven, SPAR and NightOwl, meanwhile, offer low prices for essential goods.
Fast food franchises , many of which need no introduction, qualify as retailers too and continue to thrive.
Pet retail is another burgeoning segment, with an annual industry growth rate of 5.6%, according to market research firm IBISWorld – good news for a franchise like PETstock. Deloitte statistics show that the impact of Covid-19 has been mixed: retail spending slumped in April, rebounded after restrictions were lifted, then slumped again in states that re-imposed restrictions.
A squeeze on incomes threatened to dampen consumer spending, but fiscal stimulus actually saw household disposable income rise by 2.2% in the second quarter of 2020, according to Deloitte’s analysis.
The sector appeals to those who enjoy and excel at dealing with the public and prefer working daytime hours, but don’t mind working weekends. Previous retail experience is sometimes, but not always, preferred by franchisors, and is rarely essential.