Power point presentation on enterprise performance management
Franchising Retail
1. The Indian Retail Sector The Indian Retail Sector Franchising A Model for sustainable growth in organized retailing Ravi Kumar Suman
2. Retail Industry – Current Scenario Organized retail still a laggard, 8% of all retail Big Brands; Big Money = But no right model yet Same Store growth Vs New Store Growth – The Suspect story of Growth Few Chains closing down; some bankrupt; some going slow; foreign retailers still “cat-on-the-wall” The Indian Retail Story is still – an emerging story
21. A Fresh Look at retailing Customer Service is a complicated science Impossible to come up with a “right formula”; “right code of conduct & service levels” Needs authority / responsibility right at the front end Requires “ownership” mindset at the front end Create “ownership Culture” or Franchise?
22. Franchising Facts Some key facts that point to the growth of the Franchising sector in India are as follows: There are over 1200 active franchisors in the country. There are over 1,00,000 franchisees (across sectors) in India today. The total investments put in by these franchisees in setting up their individual franchised businesses is over Rs.40,000 crores. The total annual turnover achieved by franchised businesses in India is in the region of Rs.8000-10,000 crores. The total manpower directly employed by these franchised businesses is around 300,000. All these facts & figures point clearly to the extent to which Franchising has been accepted in India as a way of doing business. There are an increasing number of businesses that are exploring the Franchising route to business expansion.
23. How Franchising Works? 1. Franchising essentially works by replicating a successful and proven business model across multiple locations through a network of entrepreneurs. 2.The person who develops the business format, known as the franchisor, grants access to his business name, goodwill and business model to another person, known as the franchisee. 3.This ensures that the franchisor can extend his reach without having to invest substantial amount of money in new markets. 4.The franchisee on the other hand profits by having a readymade business model with access to backup facilities like training, marketing tools, technology etc. He hence benefits from the security provided by a tried and tested business model. 5.Many variations of franchising model exist within the sector. Some of the more popular ones include Master Franchisee, Area Development Rights and Unit Franchise. India has seen the emergence of other models also like Joint Venture cum franchise agreement, Management Contract etc.
25. Benefits to Franchisor (Retailer) Store Employee Salary / Number of Employees Reduction Only back end operation Control Rent /No Rent If No Minimum Purchase Electricity Stock Loss Pilferage/Theft Capital Investment /Interest Cost Other Miss Exp Expansion without Investment IT Cost Title Controls One Point Sale Ware House Out Source One Time franchisee Fee Maximum Promotion of Private label
26. Benefits to Franchisee Centralized purchase & the single-point delivery of all products! Opportunity of Multi Store Ownership Proven & never-ending business! Readymade & ever-growing customer base! Groceries, food products and vegetables at challenge prices in the industry! No investment risk in the inventory! Remarkable payback period - Just 1 years Low on investment, high on returns! Advisory for site selection, store design and visual merchandising! Reliable recruitment and training support. Very high success in delivery! Strong Customer Loyalty! Very high success in delivery! An established brand! Great vendor base! Excellent relationships! Exclusive Rights Initial Start up Training Proven Support Systems! Aggressive brand-promotion, advertising and marketing campaign! Mega Launch!
27. 14 REI 6 Ten Retail Ltd. a pioneer in more ways than one Successfully Running more then 300 Franchised outlets Pan India. Franchised 300 + outlets with in 300 Days Customers acceptance of REI 6 Ten Retail Ltd. as a Must have brand – known for F&V, Private Label ,Grocery Established quality standards for products A well established network of channel partners/ franchisees An Indigenous model REI 6 Ten Retail Ltd. should keep creating new paradigms & seizing new service opportunities
49. Consumers feel that Store. has an efficient supply mechanism to maintain the freshness of highly perishable products such as breads, curd, milk, cream, paneer etc.
55. Possible Action Areas Possible product category expansion option: Ayurvedic Skin acre Wellness Bakery Organic Dairy Products Exclusive Hand Made Products Travel & Tourism kiosk (shop In Shop) Home Rental Consultation kiosk (Shop In Shop)
56. Retailers should aim to: Bringing down Real estate costs Renegotiating Real estate costs Entering into revenue sharing model as against fixed rental Leveraging Information Technology Manpower training Real Estate Management Supply chain visibility Store operations Logistics management Reevaluating store viability and expansion plans Efficient store management It’s the time of Private Labeling Venture into under penetrated markets: Rural Retailing
66. Word of mouthLead management Marketing Lead Generation Recruitment Reaching the dedicated investors registered in franchise Connect database through different mediums of marketing Letter of interest signed. Agreement Process Final conversion and lead goes to operations for processing Basic Information provided to interested investors Expression of Interest generated Site visits/franchisee details collected Weekly progress sheet submitted to Moti Mahal Franchise Meetings , conference call , to be organized with the qualified prospects
