IN a world dominated by big retailers, starting an independent retail business is a bit like struggling with giants.
IN a world dominated by big retailers, starting an independent retail business is a bit like struggling with giants. Today, with more and more malls coming up, big companies are franchising the kiosk format business that can do wonders in retail segment. The pressure on malls and shopping centres to bring exciting and new products for their customers has, besides benefiting specialty retail industry, created also a wealth of opportunity for enterprising individuals to step into kiosk format businesses. If you enter any mall or high street, you will find kiosks all around, selling food items, cosmetics, electronic gadgets, candies and what-not.
Sectors in kiosk model
The kiosk model is largely taken up by the food and beverage sector. But sectors like artificial jewellery, candies, ice cream, brownies, gifts and flowers are also finding the model to be useful and profitable. Some prominent companies operating kiosks across the country are Hindustan Lever Ltd, Ferns 'N' Petals, Candico, Mr. Orange, Brownie Cottage, Big Time, Trenz, Wimpy and Sweet World.
Choosing a location really comes down to taking care of one key element. Arguably, the most prominent factor in a kiosk's success is, of course, the place where it is set up. The most popular site for a kiosk is a busy mall atrium, but many entrepreneurs are also finding success in airports and other transportation facilities, high streets, sporting events and at other creative venues. Kiosks are often horseshoe-shaped or L-shaped and their sizes are quite limited. Depending on location, the rental of a mall varies. In addition to rental, some malls might even ask for a percentage of the earnings. Some companies also have tie ups with mall developers. Guiding the franchisee in selecting good location, Madhav Gupta, MD, Candico, says, "We work with the franchisees in getting good locations as we have tie ups with the mall developers for multiple locations and we also get better rates from the mall developers, so initially the franchisee has to pay less in terms of rent and gets a good location in a mall where he can convert maximum footfalls into sales." Supporting him, Vivek Mehtani, co-promoter Bigtime, states, "We give franchisee the option to have a location of his choice and negotiate with the mall owners as that city is his expertise, but we also have tie ups with property management consultants (like Trammel Crow Meghraj) who happen to give us any new location as and when it arises, they keep us informed and we offer franchisee the facility of identifying a suitable location for them, we gladly do it as a value addition if they want us to do that." When asked about the best location for Kwality Walls ice cream, Mohit Dhanjal, Business Manager - Retail and OOH, Hindustan Lever says, "Our product being of highly impulse nature, we prefer atrium or the entrance at ground floor where maximum crowd is available, other than the mall, market in residential area is also an ideal location where people visit frequently and the kiosk largely has a higher rate of success at these locations because you do not have to attract crowd, it is already around you."
Advantages of kiosk
There are a number of advantages associated with the kiosk format. These are listed below.
Recognition to brand
Advantages of having a kiosk format business are many. It is the very first place the potential customer is exposed to and is what attracts them to your business. Running a kiosk does not require prior retail or business experience as companies provide training to the prospective franchisee and their staff. Highlighting kiosk benefits, Garry Matta, CEO, Mr Orange, says, "A shop takes more time to get itself registered in the eyes of people whereas a kiosk is registered immediately. Kiosk is instant business as it is visible and in reach of everybody because of its location, it is also a better mode of advertising, we consider kiosk as hoardings which pay to the company." Kiosks are highly functional, efficient, durable, attractive and as safe as possible. Telling more about kiosk format business, Sandeep Sharma, Director, Trenz adds, "At kiosk, footfall conversion is more as compared to a shop as it has good visibility and attracts a customer showcasing different unique items. The customer can purchase a product while waiting or just moving around. It is totally a safe and secure model as far as business is concerned."It is a user-friendly format, which is gaining popularity with each passing day. " It is easy to set-up, easy to maintain, requires less space, less manpower and less investment, it has more dynamic designs, can be set up in high footfall areas like atriums and can be shifted to any other location as and when needed and also helps in reducing the payback period," explains Vrinda Rajgarhia, Director, Sweet World.
While the cost of establishing a permanent retail location can be exorbitant, you may spend up to Rs 50 lakh or more, but a kiosk format can be an easy way to get a foot in the door with less investment. The investment for a kiosk ranges from just Rs 2 lakh to 10 lakh, where most of the times, the infrastructure and equipments are provided by franchisors. When asked about the investment required from a franchisee, Rajgarhia says, "Our franchise model is designed in such a manner that the total initial investment required is around Rs 4 lakh, in which the company provides all the necessary furniture, fixtures and other equipment to start the business." Ashim Gupta, GM, Operations, Wimpy adds, "In the total investment of about Rs 20 lakh, we provide frozen food items, packing material, the software and the franchisee has to purchase furniture and fixtures as per the company specifications."
Flexibility is another advantage in staying small. Licence agreements for kiosks are shorter and can be renewed every one to two years depending on the location. Hence, entrepreneurs can start a business, try it out for a year, and shift to a new product line or close up shop and move to a new location if it does not work. Adding to it, Dhanjal explains, "There is flexibility of rental, you don't need to pay huge amount to require a space and you can have flexible arrangements such as revenue sharing with the property owner and if the business is not good at one particular location, you can dismantle the kiosk and relocate to other location."
It is hard for a small format business to sustain risk because of the small scale of operations. A thorough research of the field should be carried out before starting a kiosk business. The area of activity should be such where returns come fast. There should not be any credit period. Immediate billing businesses like F&B, retail and service can be best for kiosk format business. Franchising minimises risk because every risk and its consequence are calculated. Negating the risk factor Gupta said, "If the kiosk does not work out for the franchisee, we buy back the kiosk, but the selection being so strong there are less chances of failure and the risk factor is very-very low for a franchisee." "Risk depends on the kind of mall and the franchise deal that a person is able to negotiate through a prospective location. The rent in any good mall is very high and has to be negotiated, as the amount of money in terms of rent is very crucial," says Pawan Gadia VP, Ferns 'N' Petals.
Franchising in kiosk business
Franchising in kiosk format helps mitigate the risks as it has well defined method of operation, offers a product or service that has been selling successfully. Franchising provides a uniform system of operation, so that consumers receive the same quality efficiently and cost-effectively. Franchisors identify the franchisee's strengths, augment his or her efforts with branding and marketing support, site location and training. A franchisee can have two to three locations to gain maximum benefits. All the companies provide the set up and design to every franchisee to have a uniform structure, which gives recognition to the brand. With a franchise, you can be a business owner with a built-in support system.
If profits from the kiosk business are undeniable, so are the challenges too. There are many challenges involved in a kiosk format business, the primary being sustainability, securing a good location and recruiting effective sales staff. According to Mehtani, "The challenge includes educating the franchisee on the numerics of kiosk, which is not a wide spread format." Understanding the product and offering it in a fashionable manner is another challenge. Stressing more on this aspect, Raghav Goel, Director, Ra Excellent Confections says, "The franchisee has to market and promote the product very ardently and has to give proper attention to the customer's demands, maintain quality of the product and have efficient delivery system."
To sum up
Kiosks not only offer huge benefits to consumers, but also provide a massive opportunity for the entrepreneur. Anyone looking to get involved in the booming retail industry would do well to consider the kiosk format, as there is much more room to find a decent location, lower overheads, less staff numbers and yet attract a high number of customers with complete backup from the franchisor. Kiosk sales have gained significant ground in recent years and this business model is bound to catch up in future because of the increasing number of malls coming up across the country. If you like the idea of a brick-and-mortar store, but prefer a more fluid and affordable option, a kiosk franchise might be just right for you.