Brands, Retail and Franchises: the 5 secrets of success.
By Massimo Scattarreggia
By Massimo Scattarreggia
Our digital era, the era of high tech, shared economy and experiential shopping, is dominated by brands. Successful brands are synonyms of value and convenience, they are relevant for the identity and values that represent them, they are attractive for the innovation, experience and engagement they offer to users and consumers.
Branded products dominate world trade and franchising in retail – which represents the empire of brands – contributes to 70% of sales and employment in countries such as the United States or leading sectors such as Food and Beverages.
Mexico is a country with good knowledge of the model and with very good acceptance of the concept of “franchise”. However, franchising has yet to grow; Food and Beverage franchises account for 30% of the sector’s trade, less than half that of the US. Hence, during 2020 a growth of 10% of the Mexican franchising system is expected.
These statistics do not mean that the franchise model is capable of guaranteeing success, since many fail and those that survive as a “brand” can close many points of sale.
This leads us to reflect on the critical success factors (CSF) of a franchise, those that allow us to consider investing in it. The most important are these 5 that constitute the secret of his eventual triumph:
1. The business model
2. The retail concept
3. The positioning
4. The brand identity
5. The design of the physical and digital space
Not having enough space to comment on each one, I will limit myself to talking about design and the physical and digital space where the franchise lives and sells its products and services.
Designing a space in the time of the experiential economy means not only defining a physical environment, but also designing intangible elements such as scenery, rituals, interactions, activities, etc. These experiential initiatives – which have to be integrated into the marketing plan and the company’s modus operandi – must be defined before the design, since it must be able to accommodate them harmoniously. Both conceptual and spatial design must communicate the following values: relevance and desirability; feasibility and functionality; attraction and innovation; experience and engagement. All this both at the environment and process level; both internally and, above all, by the reference public.
Excellence in design is measured based on the intensity of the emotional connection that it creates between the brand and the “people” for whom and with whom it is designed in “co-creation” – consumers and users -, in addition to the creativity and originality incorporated in the solutions that the design proposes.
Technology is always the main protagonist of design thinking and design process, since in the digital age it is the most powerful tool for generating engagement. However, technology is a means, not an end, and must be an integral part of solutions that maximize experience.
If both the design and the other critical success factors are well resolved, the chance of failure is minimized. Selecting a franchise that offers a value proposition that responds with effective solutions to CSFs is a better guarantee of success than choosing a franchise just because it is successful in other geographic or social contexts. Informed and sophisticated buyers of the digital age see product, service and process as a continuum and want invention, discovery, action and linkage.
In conclusion, before choosing a franchise, it is necessary to analyze how it interprets and provides solutions to CSFs and not hesitate as an aspiring franchisee or as a franchisor brand to use professionals to select or evolve a franchise towards success.
Article originally published in “FORBES”