Franchises one way to weather the retail storm
THE latest Westpac Melbourne Institute index of consumer sentiment showed a drop in confidence from the previous period and found Australians are less optimistic about their financial position over the coming year. This means the purse strings aren't likely to loosen any time soon.
THE latest Westpac Melbourne Institute index of consumer sentiment showed a drop in confidence from the previous period and found Australians are less optimistic about their financial position over the coming year. This means the purse strings aren't likely to loosen any time soon.Interestingly, the picture painted by ABS figures on retail conditions this year isn't quite so bleak, so someone must be doing OK.Franchises do well in an economic downturn. They continue to grow, opening new outlets at a time when few would consider starting a business, because they offer prospective franchisees the safety of a well-known brand and a proven formula.At Bedshed, we find many are attracted to the idea of being their own boss with the support of an experienced team and a strong network of franchisees. The combined power of a franchisor with three decades of experience and franchisees who are highly motivated to achieve personal success are major reasons why Bedshed is defying the odds.For those considering buying a franchise, take a close look at the store network and check the focus isn't too heavily on expansion at the risk of cannibalising existing franchisees' market share.Many businesses look to cut costs when times get tough and one of the first things to go is often the marketing budget. We are maintaining marketing activity and increasing media spend to attract customers and reach new audiences. PR and advertising are critical to achieving growth in a depressed market.Bricks-and-mortar retailers are not only facing customers with tighter budgets and higher living costs but also battling greater competition from their online counterparts. Some sectors are more exposed than others.We have a major advantage in the bedding industry, because customers rely on expert on-the-ground advice and would rarely purchase a bed without lying on it first. By contrast, electrical retailers face intense pricing competition from online, and with slimmer margins they have to sell more product to earn the same profit revenue.To stay competitive with online retailers, it is essential to focus marketing efforts on the well-known brands your business stocks. After-sales support is another advantage. Consumers only have to be burnt once trying to return something to an online vendor before the price savings become far less significant.It's easy to write off retailers with all the doom and gloom we've been hearing lately, yet with the right approach it is possible to weather this severe retail storm.Gavin Culmsee is chief operating officer of Bedshed.