Leveraging Franchisees for Profitable Growth in Retail: Infographic

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Leveraging Franchisees for Profitable Growth in Retail: Infographic

  1. 1. LeveragingFranchiseesforProfitableGrowthinRetailTheIndianretailmarketisconsideredasoneofthemostattractivemarketsintheworldintermsofmarketsizeandpotential.Thisisreflectedinthe`30000CRRetailFranchisingindustryinIndia,whichisgrowingatanannualrateof30%.Howevertherearekinksinthegrowthstory.67%ofthesecompaniesreported lower profits inFY12 compared to thatinFinanciaYear2008-0986%ofIndian Retailersimproved Sales ChangefromFinancialYear2008to2012RetailerswithimprovedProfits33%RetailerswithLowerProfits67%Retailerswithsalesdegrowth14%MostcompaniesreportedgrowthinsalesbuttheincreaseinsalesgrowthisnotreflectedintheprofitsThese21retailcompaniesamounttoacumulativeturnoverofRs21,000croreinFinancialYear2012-13Only33%ofIndianRetailersimprovedprofitsfromFinancialYear2008to2012HowcanRetailCompaniesGrow? Retailcompaniescangrowbyexpandingtheretailfootprintbywayofownstoresandoflate-throughFranchising.FranchisingOwnStoresDecliningProfitTrendMaintainingprofitability=GrowthinretailEstablishedPlayersFranchisingFranchisingFranchisingFranchisingOnly33%ofIndianRetailersimprovedprofitsfromFinancialYear2008to2012Manyestablishedplayersarestilltotakethegrowthrouteforwardinarapidpace,possiblybecauseoftheircurrentdecliningprofittrend.Aprofitabilitypressurehasalwaysbeenareasonforacautiousapproachtowardgrowth.Franchisee appears to be one such optionwheregrowthcancomewithoutincreasingtheoperatingexpenses.IncreasinggrowthDecliningoperatingexpensesFF FFFFOwnStoresMakingthefranchiseemodelprofitableisclosely relatedwithmakingtheretailingprofitableinthefirstplace.Tounderstandwhyretailersarenotonasolidground,letusreiteratethepressuresthatatypicalorganizedretailerfacestodayintheexistingbusiness:FIncreasing competition inhomemarkets,otherretailerslooking to expand,internetretail,and globalretailersenteringIndiaMoredemandingconsumers looking toextractthebestvalueformoney.Limited negotiatingpower to increasemarginwithestablishedbrandsIncreasing operatingcostsduetoinflationarypressuresSlowdown in theIndian Economy,resulting indecreasednumberofconsumers andreduced discretion-Retailersarestrugglingtomakemoney FranchiseetotherescueProblemsofaRetailerReadfullarticle:http://bit.ly/XWlOMMwww.facebook.com/VectorConsultingIndia www.twitter.com/VectorConsultinPoweredby

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