Today in Russia, shoe franchises account for only 6-7% of the total number of franchise offers. According to experts, this segment of retail is still underdeveloped, but has excellent growth prospects, despite the general stagnation of the market. What companies are ready to offer their franchisees, given the economic instability, and how they see the future of this business - the leading market players argue.
The national rating agency in its report "Retail trade in Russia: modest prospects for 2014" noted that the share of non-food products in the commodity structure of sales decreased from 53,4% (2012) to 53% (2013). Yes, the drop is insignificant, but we must not forget that these are indicators of a stable 2013. But in the first half of 2014, the decline in sales continued. In such conditions, according to the leading market players, the only possible way for shoe companies wishing to maintain and strengthen their positions in the market is to significantly increase their efficiency. In moments of crisis, natural selection occurs and weak players start leaving the industry. The first to feel the brunt of economic stagnation are companies with low business margins, which profit exclusively from turnover. Stagnation causes a sharp decline in consumer activity, so traffic in the largest shopping centers has already decreased by 6% on average. In addition, the buyer becomes more discerning and begins to save. If two years ago, according to opinion polls, more than 40% of consumers were ready to spend significant sums on updating their wardrobe, then by the end of 2013 their share had almost halved. But the most important thing is that the shoe buyer is becoming more and more demanding not only for the quality of the products themselves, but also for the services associated with the purchase. And it becomes important for the company not only to sell the product, but to SELL it! Therefore, against the background of the disappearance of weak players from the market, the winners are companies that have established themselves as high quality, both goods and services! “A systematically organized high-quality shoe store always has a perspective and good financial performance,” comments Alexey Safonov, CEO of Milana. “Judging by our results, I can safely say that the shoe market is not monopolized at all and is very fragmented, there are many niches and price groups in it, so there is always room for work!”
Reaching For: Growth Catalysts
In 2013, the volume of the Russian footwear market exceeded $ 30 billion and is likely to decrease slightly in 2014, mainly due to the withdrawal from the market of firms selling "no name" goods. Players in the “middle +” and “premium” segments are confident that focusing on glamorous consumer behavior is more viable than most others and will help them maintain their positions or even strengthen them. “The retail price of footwear in the“ middle ”and“ below average ”price segment continues to grow, as a result of which the price list of“ no name ”models begins to approach the price list of models from world-famous manufacturers. It is easy to guess what the client would prefer to choose. That is why we are confident that European footwear franchises will actively develop in the near future, regardless of all the nuances of the current economic situation, ”comments Alexander Ponomarev, Commercial Director of Just Couture.
“Despite the tougher competition and expansion of federal chains, the clear positioning of their store allows the franchisee to win back their“ place in the sun ”. Now there is a great demand among buyers for stores that are focused (from concept and design to a specific collection) on a clear target audience. The consumer has a demand for stores where such brands and collections are collected exactly in accordance with his taste, his expectations, and then the buyer is ready to return there, "adds Sergey Donskoy, CEO of Just Couture (brands Ash, United Nude, Just Couture, etc. .).
“The footwear market will expand. As a result of this process, small chains and individual stores will find it increasingly difficult to survive. This will inevitably lead to an increase in demand for well-detailed and cost-effective franchises, ”comments Vitaly Stepin, director of development at Baden.
“Franchising remains the simplest and most affordable way to organize your own business. This is not the case when we talk about innovation, high risk and new products. It is, as a rule, a scalable, standardized business for providing services to the consumer, - comments Mikhail Landyshev, commercial director of TMHF Group. - Due to the fact that there is a recession in the economy and new growth drivers are not yet visible, this business will develop following the dynamics of consumer spending and the growth of consumer culture. Currently, we do not observe an increase in the income of the population, but there are internal reserves of the industry - an increase in the segment of the civilized form of retail sales, the liquidation of markets, an increase in the number of shopping centers in large and medium-sized cities. We are confident that domestic industrial production, which the state plans to stimulate in the future, will also lead to the creation of new jobs and an increase in the income of the population. "
Be in the format: mono-or multi-brand stores
As for the choice of a specific shoe franchise, there is an eternal dispute between supporters of mono-brands and multi-brands, both in the West and in our country. Now monobrands are more popular among businessmen. And this is understandable from a business point of view, since this approach allows the most complete presentation of the collection, convey to customers the value of the brand and corporate service standards. According to experts, the development of the market in Russia has created an ideal environment for building brands, and therefore monoformats will clearly work for their target audience, quickly forming a circle of loyal customers around the mono-brand store. “Our own experience in chain development proves the viability of a single-brand store,” says Sergei Donskoy.
On the other hand, “multi-format” has its advantages, especially when working in distant regions. “We give our clients the opportunity to use a ready-made business concept, which includes the entire group of manufacturers not only from Italy, but also from Spain and France,” Tatyana Modassova, General Director of Villa Reale Fashion Group, advocates for the multi-brand. “And most importantly, having information on the market, following trends and monitoring the price situation, we can always offer our franchisees some new brands that can replace the previous, less popular buyers.”
In our opinion, there are no winners or losers in the dispute between mono-format and multi-format: numerous polls of consumer preferences prove that the consumer, first of all, is looking for a high-quality product and high-quality service, and this is what supporters of both concepts are ready to offer. In any case, according to experts, the choice of a franchise should be preceded by a great deal of work to identify potential consumers of goods in this retail segment, the need to open an appropriate store in the desired location and assess the development potential for your business in the selected region.
In close contact: franchise benefits
If a couple of years ago shoe franchises were not considered the most loyal in the market, now the situation has changed dramatically and partners can count on very favorable conditions for cooperation.
1. Lack of pashua contribution and royalties... The fact is that these very weighty "extortions" caused the main criticism of potential franchisees. But now, most shoe franchises have waived any down payment. “In its purest form, franchising is when a supplier offers a ready-made turnkey business, not only a product, but also a management organization system - IT, management system, advertising, personnel ... A business consists not only of the product itself, but of a whole complex services accompanying him. Historically, in the shoe business, franchising has always been characterized by a limited supply in terms of internal management - advertising support, software customization, work with personnel. Any additional fees must be offset by a special package of services. If the franchisor is not ready to offer this to the client, he should not even charge additional fees, ”comments Sergei Donskoy.
2. The original concept. As the analysis of the situation on the footwear market of the last few years shows, large shopping centers are interested in tenants with a well-thought-out concept and an excellent history. Choosing a franchise of a well-known, well-established brand in the market, you get carte blanche for profitable cooperation with retail outlets in your region. “This makes it easier to get the best locations in shopping centers and leads to an increase in customer loyalty,” comments Alexey Safonov.
3. Sorting collections during the season. Now the bulk of the franchisors are ready to supply goods that are in special demand throughout the season. And some franchisor companies, given the need to ensure sales growth, are ready to provide weekly (!) Sizeable sorting based on sales results. As you know, this has a very positive effect on the turnover of the store!
4. Installment payments. Given the difficult global economic situation today, even the most conservative-minded franchisors are ready to meet partners and offer step-by-step payment for the manufacture of commercial equipment.
5. Marketing and promotion (reimbursement of advertising costs). Realizing that the commercial success of the franchisee is the basis for the success of the franchisor company, the latter assumes compensation for up to 50% of the franchisee's advertising budget. Or they provide assistance in promotion - they organize marketing campaigns, promoting the brand on their own in all social networks and through online stores.
6. Staff training and free training. There are a large number of offers, depending on the capabilities of the franchisor company and the needs of the franchisee. One needs familiarization seminars for employees, at which they will be told about the brand, about the company's values and will be taught to communicate this information and the company's mission to customers without hesitation. For other franchisees, regular training of store employees to maximize their professional qualities is important.
7. Sale of residues. “The specificity of the shoe business is that no matter how great you work, your retail store still has a balance of about 20% at the end of the season. And in case of an unsuccessful season, this figure can reach up to 50%, ”comments Sergey Donskoy. However, the franchisee can also solve this problem. Thus, some of the companies are ready to offer a unique service - “buy-out of residues”. For example, Milana promises a 100% return on seasonal unsold products. The Ash brand franchise also provides a refund for the rest. “Apart from the network of our own retail stores, we also have a network of outlets and discounters. The latter do not work for profit, but in order to convert the leftovers of shoes into cash and use the released money supply into circulation - to buy new collections. In the contract we stipulate with the partner that our partner will be able to return a certain percentage with a certain discount to us on account of mutual settlements, ”says Sergey Donskoy.
What do franchisors expect from a client
Understanding the specifics of the business in the first place. “Of course, it is always more convenient to work with clients who have experience in fashion retail, but you should always remember that a“ beautiful ”business, first of all, is a business. We have a strong team and we are ready to work, explain the subtleties of working in fashion retail to investors who come from other areas, and we are always happy to help and are ready to listen to professional participants in our market with valuable experience, says Mikhail Landyshev. - We are comfortable working with qualified investors who have experience in calculating investment projects, who do not need to explain that investments will not pay off in six months. Of course, it is always more convenient to work with clients who have experience in fashion retail, but you should always remember that a “beautiful” business, first of all, is a business ”.
Franchisee Requirements... The franchisor company does not have strict conditions for the partner (the population of the city, the traffic of the shopping center, the rental area of the retail outlet). It is much more important that the partner has a clear understanding of the brand's consumer image. Ash's buyer is a consumer with an above-average income (from 40 thousand rubles for each family member). These designer shoes are chosen by people who understand fashion trends, travel a lot, have great taste and try to choose things that emphasize their individuality. If the franchisee is able to provide the necessary pool of buyers, then cooperation develops without problems, because an audience loyal to the Ash brand exists in any city of the country!
Yes, it is a little easier to promote designer footwear in large cities than in small ones, but since now there is a tendency towards an increase in the cost of shoes even in the middle segment, the price is no longer the determining factor for purchase. Other values come to the fore - the European origin of the brand. His history, the subculture that surrounds him.
Feature of the concept. Ash is an Italian brand with a long history, unique collections created in collaboration with leading European designers, for example, the brand is currently collaborating with Gevorg Kilejian, a talented French fashion designer. The popularity of high-quality mono-brand concepts on the Russian market will only grow in the coming years. Moreover, this trend is already clearly visible. “Now there is a great demand among buyers for stores that are focused (from concept and design to a specific collection) on a clear target audience. The consumer has a demand for stores where brands and collections are collected that exactly match his taste, his expectations. Only in this case, the buyer is ready to return there again and again ", - comments Sergey Donskoy. Today the brand is represented in 26 countries of the world, in Italy the number of brand stores is approaching a hundred. The brand has an army of millions of fans, including many Russians. The successful development of its own mono-brand network allows the company to boldly declare the growth of interest in the brand in our country. Ash is always at the forefront of fashion, his collections are unique and successful.
Benefits and unique offers. When buying a franchise Ash franchisee gets a lot of advantages.
First of all, these are unique collections that have established themselves in the brand market, as well as the brand concept thought out to the smallest detail.
A huge plus of the Ash franchise is the same retail price for shoes for the whole world! The spread of prices around the world is no more than 5%. At the same time, the franchisor provides a fairly high margin of 2,3–2,5, which can be increased due to additional discounts. Thus, you are offering a competitive product on the market that is little dependent on fluctuations in demand.
In addition, realizing the volatility of demand for shoes in different seasons, Ash brand created a full-fledged clothing line this year. Thus, the Ash franchisor reduces risks not by attracting other brands in a different price segment or excellent design, but by offering customers a line of designer clothes. This year, the first full-fledged collection of clothes was published, and the first sales showed high consumer interest in a new product: store traffic grew, as did the average check.
Thanks to a well-built management and logistics system, the collection can be sorted in separate pairs during the season. The company is ready to offer its client full support at all stages of the business.
The company provides partners with the right to partial redemption of unsold goods. Thanks to the well-established work of their own network of outlets and discounters, the franchisee gets the opportunity to realize the balances so that the money supply can be put into circulation for the purchase of new collections in a timely manner.
Clarks single brand and Soho multi-brand shoe concept
Franchisee requirements. A city with a population of more than 300 thousand people, a shopping center with a recognizable and similar pool of presented brands and an area for opening a salon from 80 square meters in the right gallery. When assessing space in street retail, we pay attention to the status of the street in the city, traffic, the condition of the premises and technical nuances: ceiling height, presence of windows, entrance lobby, etc. “The cost of the franchise includes investments in commercial equipment from authorized suppliers of maintenance located in the Russian Federation, due to which the production time, cost and delivery time and turnkey assembly of commercial equipment have been significantly reduced,” comments Mikhail Landyshev. - We also lay the initial investment in the purchase of goods, which strongly depends on the date and season of the store opening. The calculation of the project takes into account the average deposit for rent, rent payments and premises renovation. The concepts and stores implemented by TMHF Group have clearly proved to our colleagues from Clarks that authorization of branded production is possible and worthy in Russia at the level of European production, and much more democratic in cost compared to the European original. We have something to compare with, we guarantee the quality of a franchise project with an extremely affordable entry in the fashion premium / middle + segment. "
Feature of concepts... The company presents franchise projects on the market that combine products of the world's most famous brands, both excellent in quality and design, both in the Soho multibrand or Clarks monobrand, and in the Sox Box corners format. “The Clarks franchise represents a successful combination of experience and traditions of a Western company in the global market and trust in the experience of the actively developing TMHF Group in the Russian market. The conditions are quite flexible, the brand's potential has not been revealed earlier on the Russian market, all the constituent parts of the product and its essence perfectly match the tastes of Russian consumers, - comments Mikhail Landyshev. - We try to find an interesting solution for each client, providing the best service for starting, dynamic development and confident growth. The main advantage for our customers is an understandable product that has proven itself in the market, recognizable by the consumer in every city of our country.
Benefits and unique offers. No royalties or flat fees. Accompanying the client at all stages of the project: from finding suitable premises to providing a personal manager supervising a partner on all issues of interaction with the company. Assistance in the development and implementation of a marketing plan with a possible reimbursement of costs 50/50, subject to compliance with the rules and obligations. A real individual approach to each client, taking into account the peculiarities of his region, project, which often determines the presence of non-standard offers and conditions for a partner. “We enable our client to get the result in the shortest possible time, bypassing the period of promotion of the project's recognition. At the service of our own retail network and our partners in the regions: global brands, federal marketing campaigns, the experience of successful partners and our own stores, "says Mikhail Landyshev in conclusion.
Franchisee requirements. The contract stipulates that the potential partner has its own or leased areas from 60 to 130 sq. M. and proven financial resources. The company also imposes requirements on the location of the partner's store: it must be located in a city with a high population density, at a point with high customer traffic in a building no higher than the second floor, adjacent to operators with similar formats and pricing policies. Also, a prerequisite is the presence of large display windows for placing a corporate sign with the logo of the company - the CORSOCOMO franchisee.
Feature of the concept. The presence of our own production facilities allows the company to constantly expand its range by creating shoes on new blocks. Each season, the company attracts the best European designers of shoes and accessories to collaborate. So, for the women's line of shoes and bags of the brand, the chief designer of the line of shoes and accessories of the Alexander McQueen fashion house, Gaetano Perrone, is responsible. And the men's collection is being developed by designer Max Verre, who has earned a vocation as the art director of the Tom Ford fashion house shoe line. The design of the concept stores CORSOCOMO Concept Store was designed by the outstanding Italian architect Vincenzo De Cotiis. The design uses materials that are attractive for their simplicity: stainless steel, linen, processed wood, glass.
Benefits and unique offers. The brand’s product has an effective trade margin, which allows for a wide range of promotional events and SALE-MIX. The franchisor company assumes the analysis and selection of the trading premises, a guide on merchandising and assistance on issues of pre-ordering the collection. A partner can count on staff training and education (internships for franchisee managers - inclusive). The company operates a unified system of discount cards. They pay quite a lot of attention to the marketing strategy of brand promotion in the market; it includes direct (ATL) and indirect (BTL) brand promotion, PR-actions and event-marketing. A partner can count on qualified support from the franchisor in all matters relating to successful business and marketing.
Franchisee requirements. A city with a population of at least 500 thousand people. At least 60% of the total assortment of the store should be occupied by BADEN brand shoes in the store. The company exercises strict control over compliance with pricing rules and company standards, requiring franchisees to submit weekly sales reports in the prescribed form. Experience in managing a retail store is required.
When opening a store on the territory of a shopping complex, you must choose a class "A" shopping center, with a point located not higher than the 2nd floor of the shopping gallery. The presence of federal network operators in shopping centers and stores with product groups: shoes and accessories in the neighborhood is required. The total area of the store is not less than 80-100 m2
Concept feature... Baden is a large company with extensive experience in the Russian market. In developing collections, the brand's designers and designers always take into account the peculiarities of the Russian climate, as well as the specifics of the Russian leg, this allows creating a unique product. “The bulk of our clients are companies that already have shoe stores. This is due to the fact that many partners want to create a strong portfolio of brands that will allow them to develop within their region and avoid expansion into neighboring regions. Development within their region allows our partners to optimize marketing and advertising costs by evenly distributing them to all stores operating in the region. The presence of 3-4 strong franchises, in different price segments, allows a partner to open up to 15 stores in the city, ”comments Vitaly Stepin.
Benefits and unique offers... “We do our best to assist the partner in the selection of premises, drawing up a balanced order and opening a store. We are always close to the opening partners to provide them with timely assistance and advice, - comments Vitaly Stepin. - The main advantage of our franchise is its detailed study and support of the franchisee at all stages of work. Soft financial conditions minimize the amount of initial capital required for filling the store with goods. Low cost of opening, good profitability and high turnover of goods, allow you to return your investment in a short period of time. " Branded stores receive a maximum discount of 13% in the fall-winter season and 10% in the spring-summer season. They are also granted a three-month grace period for the goods delivered, with weekly payment as the goods are sold. The company audits legal documentation (lease agreements, agreements of intent) and undertakes the development of the store's design project (the design cost is 50000 rubles and is paid by the opening party). The franchisee can count on providing layouts and instructions for seasonal promotions and outdoor advertisements.
Franchisee requirements. The contract stipulates that the potential partner has its own or leased space from 80 to 150 sq. M. (depending on the population of the city) and confirmed financial resources. At the same time, the franchisor company provides conditions for the franchise to be highly profitable: the most sought-after product offer, modern business technologies, a deep understanding of business in Russia and operational support. But the company pays special attention to the structure of investments at the start and in the first six months of work: after all, the proposals that require the minimum starting investment and the use of the already received income to increase further capital in circulation are the most attractive.
Feature of the concept. The assortment of Antonio Biaggi stores is represented by four style directions (Fashion, Classic, Comfort, Sport). Such a product concept of the company allows making additional orders for the most popular models of the season, increasing the assortment and changing the size range taking into account the characteristics of the region. As for investments, the franchisees at the start invest approximately up to 40% of the total project cost. The rest of the resources are already attracted from the revenue side. This scheme minimizes risks and gives an entrepreneur the opportunity to get a rather costly project for moderate initial funds.
Benefits and unique offers... “Having appeared on the Russian market in 2012, the European brand of stylish footwear and accessories Antonio Biaggi quickly took the leading offer among fashion franchises in the“ middle plus ”price segment, the most attractive from the point of view of the competitive environment,” comments Svetlana Bazarova, representative of Antonio Biaggi ... “The main components of success, in addition to an integrated investment approach, are clear and demanded Italian design, quality due to production at leading European factories, and a systematic approach to the rules of business conduct and management”.
Antonio Biaggi offers its franchisees full support at all stages of cooperation, but the main advantage among competitors is active and authoritative assistance in the selection of premises and individual calculation of the business: experts go to the site to assess the location of the future store, draw up an individual business plan, provide an architectural design project and advertising materials. The well-developed business processes of the company fully apply to the activities of partners: modern principles of managing goods movement, pricing and sales, up-to-date recruiting techniques, media planning and PR in the regions. “There is one more important advantage,” says Svetlana Bazarova, a company representative. - only 2 months - and you are the owner of an effective fashion business! " According to the company's management, the payback period for a mono-brand Antonio Biaggi store with an area of 100–150 sq. M. m is about 16 months.
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