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Oct, 16 2012


While the retail sector in India has been witnessing unprecedented growth in the recent years, it is its bonhomie with franchising that has resulted in the sector's steady climb to popularity in the market, even as the sector offers remarkable business op

IN the 1990s, India embarked on the path of economic reforms and in the process initiated a process of opening up its market for attracting investments, both from domestic players and international investors. These reforms, though forced upon the country that was then reeling under economic crisis, paved the way for the integration of India's economy with the global market. The ushering in of liberalisation in India has gone a long way in winning investor confidence in a country that boasts of a young workforce raring to fire on all cylinders. The resurgent Indian economy riding on the success of economic reforms had and continues to have a positive impact on almost all sectors of economy. The retail sector is one of the beneficiaries, though it has taken some time for the sector to gain investor confidence.

In the last few years, the retail landscape in India has become more fertile. There are several reasons which have led to its richness and growth. Of all the reasons giving a boost to the sector's upturn, franchising apparently counts as the one to have played a significant role, especially in making the retail sector organised.  With sectors such as clothing, luxury, specialty and F&B embracing the franchise model, it has emerged as the harbinger of a successful business for each of the retail sectors.

As of now, investors perceive a great potential in India's retail market. Due to so much potential across the country, the retail investment market in India has become the favourite destination, for it also finds a place in the top five global retail destinations. Though across the globe and in India as well service-related franchises take the lead, retail franchises have also witnessed a sea change, as there are many sectors and brands in retail which have made retail franchising a more preferred sector.

Making the right retail choice

When we talk about retail franchising, the first business idea to strike one's mind pertains to F&B retail, followed by fashion and lifestyle and then specialty retail. According to a recent TFW survey regarding the preferences in retail franchising, it has come to light that about 65% potential entrepreneurs preferred F&B franchise, followed by apparel, clothing and accessories, then came specialty retail. Currently, there are 1,500 franchisors in India, and of them the F&B industry has a share of about 25% of the industry pie.

To be honest, when talking about retail franchising, one often thinks of F&B franchises, as that's where the ‘world’ of franchising begins. Even today, for local and international franchisors alike, the market segments considered to be highly lucrative sectors are the F& B concepts, fashion and lifestyle retail. The fashion industry is responsible for being the frontrunner in organising the retail industry in India.  The fashion industry is not limited to big brands only; it has even moulded the total retail market. The total retail market encompasses brands in clothing, accessories, jewellery, home furnishings, fashion accessories, which are the major attractions for malls and high streets.

Key to a successful retail franchise

After a lot of research, if one finally settles for running a retail franchise business, the foremost thing to look for is an appropriate location and area for opening the franchise after one picks the brand of one's choice.  Hunting for a business location is no cake walk considering the escalating real estate costs in India. Therefore, one needs to negotiate hard while striking a real estate deal. Moreover, the emphasis on location is all the more owing to the fact that a retail franchise is driven by consistent traffic. It underlines the need for choosing the right location keeping in mind the target consumers of the business. Also, the potential franchisee would do well to choose a retail franchise concept that would fit his interest and pocket, and with a keen eye on market trend and forecast for the same. After the brand pick, choosing a location that drives traffic matters a great deal from the perspective of business success for the franchisee. One can also ill-afford to become oblivious of the HR factor in running a retail franchise.  In view of HR's important part in any business, more so in this form, it is pertinent to hire, train and retain employees very carefully. Retail stores require building, maintenance, inventory management and updating from time to time. So, it is prudent to beware of all these factors.  Besides, one ought not to forget about the permits, insurance and all other legalities.

To know more about retail brands and there franchise models, read our special features in the ensuing pages.

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