The key to build a successful retail network using the franchising model is in picking the right franchisee. Read to know more about strengthening your retail chain via franchising.
Fuelled by an economic upswing, India continues to show tremendous potential for retail franchising. Today, we have a thriving consumer market across the country given the increasing purchasing power of the middle class, the increase in consumption and willingness to spend, growing aspirations, increased global exposure and consequently the growing preference for branded and quality products. It is no surprise that international and Indian retailers complement their expansion strategies with the franchising model to cost effectively tap into both emerging and existing markets.
So how does it work?
Simply put, franchising is an asset light model that enables easy expansion for retailers. This allows the management of a large network of stores spread across geographies both efficiently and effectively. Add to this the benefits of tying up with a local resource that brings in local community knowledge, consumer insights and learning that enables improvements in merchandise planning and product development, store policies, practices and more. This continuity in store management helps build lasting relationships with consumers, retain staff and sustain improvement in overall operations.
Titan Company Limited is a pioneer in franchising having opened their first franchisee store, 'World of Titan' in 1989. Today, the Titan family includes over 300 franchisees many of which have multiple stores across varied formats - World of Titan, Tanishq, Titan Eye Plus, Helios, Fastrack, Mia and Gold Plus. The ability to create franchising models and make them work effectively over time is a capability that helps expand all our retail formats to newer markets. It also enables newer formats, more specialized formats like Mia, Helios and Fastrack scale up quickly.
Today, we have established a formidable retail network across the country with a strong presence in metros as well as in tier II cities. What has worked for us is a good retail strategy that uses a combination of our own establishments and capable franchisees. There is no stringent formula to follow for a particular town class. Instead each decision is based on whether we are able to find the right local partner to do complete justice to our varied retail formats. While many a time the preference is to go with a strong local partner who brings valuable local insight and experience to the table, we operate our own company stores for Flagship outlets, key locations and projects.
Our overall strategy is location specific. The approach is different for each of our formats given their uniqueness of target consumer profile and appeal. It is about increasing access to our brands and products across all town classes, and using retail to build a larger than life image for each of our brands in key markets.
Choosing the right franchisee
The key to building a successful retail network using the franchising model is in picking the right franchisee. We look for good retailers that have a customer centric approach and a long term outlook. It is important that they know the local market well, invest in good people, follow processes and go the extra mile to elevate customer experience at every touch point. They should be willing to invest time and effort to effectively understand and run the business. Investors seeking short term returns and minimum guarantees do not do our brands justice. These requisites remain the same irrespective of the type of town we are targeting.
Consumers are changing at a dizzying pace, especially in middle India. Small towns may be small in area and population, but definitely not small in their aspirations. They are well informed, aware and are absorbing bigger town developments much faster. Retail penetration in these towns is increasing and we see tremendous opportunity to expand our reach. However, we are doing so in a measured way keeping in mind the costs of retail versus commensurate returns. There is a science of choosing locations and towns, based on relatable and surrogate consumer spending data that estimates viability.
When it comes to smaller towns, it goes without saying that strong local insight gives retailers an advantage and helps better shape their expansion strategy. For instance, as a retailer with various brands and products, and multiple formats we aim to do two things; fuel demand and create desire for premium offerings, as well as feed existing desire by creating access. There is a need to have a finger on the pulse of the local market and be one step ahead of what the consumers are looking for. This enables us to effectively create aspiration across all our categories. Strong local insight and market knowledge plays a key role for an expansion strategy of this nature. The future holds interesting possibilities in categories such as ours where consumption is driven by aspiration, access and affluence. We see all these happening at the same time and hope the pace quickens as the economy improves.
Author is CEO Watches and Accessories Division & EVP Corporate Communications of Titan Company Limited