British Retail Consortium – International Retailing 2014
Modes to Market- Panel discussion including:
Mark Smith – Sweaty Betty
Sohail Shaikh – Mothercare
Duncan Grant – The Entertainer
Franchising can be very time consuming as essentially your franchisee wants you to clone your business for them – in order to do this successfully you need to have your best, most trusted people working on the project. Within the premium fashion sector, the need to protect brand is key for some but for Sweaty Betty the product of fashion and performance works.
Things to consider. What does the brand stand for? e.g. unique product innovation or scale to deliver better value. Quality control for merchandising, service and standards is often a big issue for franchisee businesses.
Sohail Shaikh shared his views on franchising being a long process of due diligence and explained that when franchising, Mothercare extensively profile the right partner. If they cannot find the right partner they’ll wait. The talent pool is quite limited within their franchise model so it holds a big risk. Consequently, training and being hands on is key to delivering success but it can be time consuming. Because essentially you are trusting others with your brand, you need to make sure you’re investing in the right opportunities.
When you are bringing in great talented partners it is possible to have a symbiotic relationship where you can learn from each other. Joint ventures are often in combination with licensing and franchise model. As day to day running is held by the JV partner, there is need to put in the same quality control as franchise. If you can do it in the UK you can replicate it elsewhere.
Mothercare has Franchises in China and India, where the market is very complicated. They took 30% stakes in both and in China they were suppliers to Sweaty Betty. In India they had property developers who really knew the business of retailing.
Sweaty Betty ensures they have a full time person within each of their businesses to help them grow. Having an equity stake originally gave value (especially within private equity backed business) but now investors are looking for simple models and the franchise one is preferred. But in large countries it is hard to find franchisees that have the investment potential to grow across the whole region. It is a very market specific model.
Concessions, a shop in shop and pay percentage of sales the debate is around staffing to have one’s own, when you may only have a few staff in one country, or host store staff and not have same dedication or knowledge.
Franchising can cost a lot of money and you can lose a lot of money and for a business with a strong brand where you want to control the experience, it can be difficult. Appearing in a major department store can give brand profile – it might be a good way to test a new market. Start small.
Multi-channel, can give an indication of where there is a new market. Sweaty Betty first trialled with e-commerce and catalogue then three stores and on the back of this success will seek funding to roll out. When first in the US They adopted the same marketing strategy as they used in the UK but developed a US focused catalogue which generated a good response online and gave them the confidence required to open stores there.
To compete with Amazon one needs to offer better service as you cannot compete on price or range. So affordable same day delivery is one way of doing that but you also have to work hard to make it profitable.
Mothercare don’t want to compete with franchises through on line so share the cost as they need to maintain the same quality experience online and in-store whatever the territory.
To identify a good a partner with a portfolio of brands that complements, not competes, with yours, use UKTI and your own network, but we’re sure you’ll find nothing beats getting on a plane and walking the shopping malls yourself.
A fantastic discussion, with useful & insightful debate.
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