Leeds University Business School Best in Class International Franchising

Transcription

1 Best in Class International Franchising Prof Matthew J. Robson, Dr Kathryn Watson, Dr Vita Kadile, and Prof L. Jeremy Clegg

2 Presentation Overview The Team Project Overview Best in Class International Franchising: Report for the UK Retail Sector Key Points from the Literature A Recipe for Successful Franchising Middle East and Cyprus Study Findings Internationalisation Overview of Key Retailers Managerial Implications for Larger and Smaller Retailers

3 Project Overview Part of the ESRC Retail Sector Initiative, which aims to drive opportunities for economic growth and expansion of the UK retail sector by recommending best practice. The project is a case-study informed by the established international franchise model of a large British Retailer It involves investigation and analysis of data from several overseas countries, including United Arab Emirates, Kuwait, Egypt, and Cyprus. The focus of the research is on optimising the international franchising strategy of the company with its overseas partners, with the outcomes being important for overall UK retail competitiveness.

4 Report for the UK Retail Sector Findings from the large international franchising study Insights from market research and industry experts Suggestions for large and small British retailers

5 THE LITERATURE Franchise performance Single unit operators Brands and brand architecture Mechanisms for control Domestic markets More research needed on Area development International Relationship management

6 Franchising Model: Area Development Franchising Franchise standardisation level is heavily influenced by the partner Fast expansion and rapid market penetration Partners often represent large corporations Minimised risk and investment level

7 LEGAL PERSPECTIVE: A Recipe for Success Growth Opportunities Partnerships Win-Win

8 RESEARCH: Middle East and Cyprus Study Research partnership International with multi-channels UK retailer > 30 territories > 250 stores Area Development Franchising (pull model, exempt of royalties)

9 Research Methodology 46 qualitative semi-structured interviews with: Area development managers Regional HO managers Store managers 5 locations, including standalone countries and geographical regions (Cyprus x 2, UAE, Kuwait and Egypt) 12 interviews with Retailer s Head Office managers in London Data coding and analysis in NVivo 10 software package Initial coding Labelling based on literature and project goals Category development Grouping of the codes Themes Overarching groupings of categories

10 SECTION 3: Study Findings Opportunities for International Growth Franchise Partnership Relations Supply Chain Management

11 STUDY FINDINGS: Opportunities for International Growth Standardisation vs. Localisation Standardise fundamental elements and features of the brand across country markets to build a strong international brand Identify and respond to factors creating different customer needs and preferences in country markets to develop customer loyalty Consider whether customers are treated equally across country markets Create a corporate culture that is flexible and open to new ideas and innovations

12 UAE REGIONAL OFFICE Some of the marketing is too revealing, specifically lingerie for the conservative markets. We see ourselves as the brand ambassadors. It s our responsibility to deliver the same customer experience in terms of marketing, service and product that one would experience when visiting a store in the UK. We have to be mindful of local custom.. In Qatar we can t have mannequins with heads. Saudi is even more extreme, you can t have women s faces on imagery Inside the store we follow the UK Guidelines completely. However, there are times we will tweak things, our seasons are much different here.. We don t have the same holidays there are differences between markets too.

13 STUDY FINDINGS: Opportunities for International Growth Market Knowledge and Organisational Learning Open sharing of knowledge and ideas across franchise partnerships maximises market opportunities Encourage franchisee communities of practice to identify greater opportunities for sales growth and brand development Capitalise on the fact that brand or product history does not exist for consumers in the new market Understand that fundamental differences in retailing and how people shop in different markets around the world can generate new opportunities

14 UAE: GROWTH OPPORTUNITIES People here go out to the malls and they go shopping, it s a form of entertainment. People visit you more frequently than in other markets. In the Middle East the average age is 27 and it s a population that s getting younger. I think there s still growth potential and particularly with Expo 2020 coming to Dubai. We can get beautiful dresses for Eid, which matches the rest of the Middle East. The locals love to spend a lot of money, they are very elegant because when they go and visit relatives during Eid they wanted to look amazing.

15 EGYPT: GROWTH OPPORTUNITIES This is a very rich area and the people are buying expensive properties. The winter is very cold here and you need to wear a jacket and thermals. Coats, thermals, knitwear and long boots are very important. There are 30 million people here, I only need 3 million of them to come to me. We are trying to get permission to expand the store within the mall because of the high traffic and potential

16 STUDY FINDINGS: Franchise Partnership Relations Communication and Trust with Franchisees Distinguish between communication which is operational in nature and communication which is strategic Trust is essential for effective communication leading to good strategic decision making and company/brand growth Communicate important messages that need to be understood or acted upon by a variety of people directly Communicate so that all franchisees feel equally valued and important, even if they are a comparatively small operation Training support is a core component of maintaining good brand knowledge throughout the franchisee operations

17 FRANCHISE PARTNERSHIP It is very important to share best practices with other franchise partners. Some markets operate very differently and it is always interesting to know how they drive sales. We are opening a new store now and I m starting to communicate with the UK on how we should advertise, what images we should use, that sort of thing. And I ll have that support no doubt. Types of support like training should never stop. This is something that should be ongoing, because you want to sustain the brand s integrity in this part of the world.

18 STUDY FINDINGS: Supply Chain Management Supply Chain Management Legacy IT systems led to problems of visibility of the stock in the system, accuracy of data and some instances of incompatibility with the systems of the franchisees Lead times from the product order being placed by the franchisee to it actually being delivered and on the shop floor are critical When product arrives in a specific destination it should be in a format where it can speedily be transferred to the shop floor

19 INTERNATIONALISATION OVERVIEW OF KEY RETAILERS New franchise concepts British Heritage New hot business locations Relocation of distribution centres International retail collaborations

20 MANAGERIAL IMPLICATIONS FOR LARGER RETAILERS Seek area development franchisees in emerging markets Using franchising and other modes on foreign market entry, simultaneously Do not rely too much on contractual provisions, focus on relationship Franchisorsponsored training and extra support Work closely with franchisee partners Seek balance between standardisation and localisation Invest in IT and supply processes Think bigger and longer-term by considering emerging markets Use the full range of communication forms and types

21 MANAGERIAL IMPLICATIONS FOR SMALLER RETAILERS Build from a stable position in the UK market Select emerging markets that do not face very strong head-winds Make sure to select those franchisees that have a good set of resources How well an international franchise partner is going to support you through the process of incremental growth? Strategic consideration as to what it is that you can bring to the international market Strength in particular capability vs. retail product offer Draw on the expertise of a variety of support agencies and international marketing/retailing experts