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The Future Of Retail?

Amazon’s brick-and-mortar store is, well, interesting… Do its innovations point to the future of the physical retail environment?

Pini Yakuel

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Amazon Books is now open for business in the US city of Seattle. The floor is hardwood and the shelves and displays are weighed down by beautiful, physical books. It looks and smells like any ordinary bookstore.

But make no mistake. It’s anything but.

Amazon’s new store is the digital economy’s coming full circle – flipping the model to tie together online and offline in a whole new way.

Related: Should You Purchase An Existing Franchise?

It’s establishing land-based business on e-commerce prowess, and modelling the methodology of the next generation of retail.

The rise of an online superstore

From the get-go, Amazon never had the privilege of meeting clients on the sales floor, watching first-hand the effect of sales and promotions, rearranging displays according to changing tastes. But it had something so much better: It had data. Big data. Ridiculous amounts of data.

And by turning this data into smart, emotionally intelligent data, Amazon managed to give its customers so much added value that it changed forever the face of global commerce. Because Amazon did what every online business must do: It used customer data to really get to know its customers.

Today, Amazon is effectively the world’s largest e-commerce search engine and the starting point for more consumer searches than Google.

Related: How Risky Is That Franchise?

Amazon is able to achieve this exceptional feat by leveraging data to really understand the wants, needs and hesitations of individual shoppers.

It also harnesses the collective consciousness through personal recommendations, cross recommendations and inter-personal references. The overall shopping experience is informative, personal and empowering.

Bypassing the land-based phase has also enabled Amazon to offer competitive pricing. Without the expanses of store based operations — rising mall rents, distribution costs and personnel salaries — prices of books (and later on of other products too) were cut dramatically.

During the past decade, online competition and the rise of e-books were a major force behind the collapse of some of the world’s largest bookstore chains, including global player Borders and Angus & Robertson, previously Australia’s largest book retailer.

Leveraging online data for offline sales

In Amazon’s case, data and innovation have outdone the traditional benefits of the physical world: Immediacy, personal connection and physical contact. But Amazon knows that people still yearn for the shopping experience, the book right now, the bookseller’s recommendations, the thinking process that occurs in a book store — even more than they yearn for endless variety or for shopping in bed.

Perhaps it’s also no coincidence that this is the first year since the onslaught of digital readers that e-book sales fell dramatically in favour of physical books. A plot twist indeed.

The new Seattle outlet leans on Amazon’s big data algorithms and customer-centric ideology to display to consumers just what they’re looking for in the format they’ve learned to know and love.

In Amazon’s case, this means giving very broad context to books by curating them according to both editorial and popular parameters.

The store showcases books with an online rating of at least four stars, tailored to its Seattle audience according to their documented Amazon reading data. Every spotlighted book also comes with a quote from online readers’ reviews, a review count and a star rating.

A promo for the future of retail

Amazon has come a very long way from its days as an online bookseller.

Books now account for a tiny fraction of its overall sales, and the Seattle store is but a tiny fraction of that. But Amazon is signaling that the counterbalance between online and offline retail is changing in deeper and more meaningful ways than Black Friday deals — and all retailers should be paying attention.

Related: Franchise Or Start-Up?

Data-driven, digital businesses that are taking on the shape of the real thing, bringing with them a wealth of knowledge about their specific customers and taking the guesswork out of selling may just be the inevitable direction of retail.

 

Pini Yakuel, founder and CEO of Optimove, has over a decade of experience in analytics-driven customer marketing, business consulting and sales. His passion for understanding what drives customer behaviour led him to spearhead the development of Optimove. This market-leading customer retention automation software, empowering marketers to maximise their customers’ value, is used by 100-plus online businesses.

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Franchise News

The 7th Annual FNB Franchise Leadership Summit

FNB Business remain committed to helping grow this very important sector and are well positioned to provide solutions supporting franchising as it evolves with these themes.

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The franchising sector has shown steady growth over the past four years, in a tough economy from contributing an estimated 9.7% to the country’s GDP in 2014 to its recent figure of more than 15%, according to the Franchising Association South Africa (“FASA”) 2018 survey. This trend is expected to continue.

The survey further highlights that 78% of franchisors are optimistic about future growth in their businesses. Around 30% of franchises are now owned by previously disadvantaged South Africans, with one in three franchises turning over more than R20m per annum. This together with the fact that on average a franchise employs 18 staff members (the sector employs more than 370 000 people), makes it clear that as a business model, franchising remains critical to the future of South Africa.

Given the FNB Franchise Leadership Summit theme this year – “the future of the franchising sector”- I thought it would be good to reflect on some of the key trends we are noticing in this very dynamic space…

1. More Multi-Unit Owners, and franchisees owning multiple concepts

What happens once you have mastered the tried and true formula franchises have designed for their franchisees? If you’re like many franchise owners, you start opening another location. And then another. By recreating your success in multiple locations, you can quickly grow your revenues and increase your business’ sustainability.

Many franchisee owners are also opening other, non-competing franchise offerings as they grow their businesses in an effort to diversify earnings.

2. Smaller, more cost-effective franchise models

Among the new frontiers in franchising is the food court losing its legacy as the preferred setting for food franchises, as service stations increase in popularity in the industry. Many brands – including Steers, Debonairs and Mugg & Bean On-the-Go outlets – are co-locating with major fuel retailers to create fully-integrated accessible centres. Looking at new, less expensive alternate locations beyond the shopping malls and strip malls to expand into stand-alone kiosks, food trucks, corporate catering, campuses, sporting events, craft markets, is a major trend.

Related: Johnson & Johnson Launches Africa Innovation Challenge 2.0

3. Niche markets

Consumers increasingly prefer local businesses over national brands. Some of the bigger brands are looking for creative ways to tackle this situation by tagging with local businesses and this trend is on the rise. Niche markets are gaining traction. Whether it’s in offering a unique ‘gourmet’ food experience, craft beer or whether it’s in the environmental space of energy saving technology or recycling, these are where many new opportunities are to be found. With the increase in social awareness, social responsibility is a part of any business, small or big.

The current generation of consumer is challenging the role that business plays in society and franchises have wonderful platforms to play a positive role and in so doing win customers.

4. Increased customisation/ personalisation

In a world of increased consumer choice, it is no longer about what you have on the menu, it is now about how your product or service can be tailor-made to what a customer really wants. The success of RocoMamas speaks to this – with 61 franchise outlets their business model clearly responds to the essence of this trend by allowing consumers to create their own burgers, and increasingly consumers want the ability to create their own dining experience.

5. On-demand products/ services

Amazon is a great example of this – same day delivery is becoming the norm in the age of instant gratification – I want it now! Differentiation through delivery remains a big opportunity.

6. The significance of online and social media

Social media is how your customers chose to interact with brands, whether to express anger, inquire or to show appreciation. It is no longer about the question of should a business use social media or not, it is now more about how a business uses social media. Today’s digital-savvy customers are highly choosy about online buying. Some key points to consider:

  • You need A Responsive, Interactive and up to date Website
  • Customers should be able to view your website perfectly on any device
  • Data Analytics is Important – Like it or not, your data is what drives your business
  • Seemless and Safe digital payments are critical.

There is no doubt that franchising not only offers viable business opportunities, but also ensures that franchisees are better equipped to weather the tough economic environment. We at FNB Business remain committed to helping grow this very important sector and are well positioned to provide solutions supporting franchising as it evolves with these themes.

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Franchise News

Be Your Neighbourhood’s Best Buddy

Ubuntu is a treasured part of South Africa’s heritage – but it could be better applied in parts of the country’s business sector, believes Richard Mukheibir, CEO of Cash Converters.

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“Businesses operate most sustainably when they are entrenched in and care about the community that surrounds them,” he says.

“Ubuntu means we are people through our interactions with each other and I firmly believe that a people-centred approach like that should be a strong thread in sound business development.”

Embedding yourself in the community is also good for business – as long as you authentically and truly work at being your neighbourhood’s best buddy, he says.

“Be about helping people get on with life, about making their lives easier,” he advises. “We always encourage new franchisees to take a fresh look at the neighbourhood where they are setting up so that they can be active participants and not just providers or suppliers.”

Corporate social responsibility applies some of this thinking but, says Mukheibir, if it is a “parachute drop”, one-off activation in a community, this is far less convincing than sustained communication and cooperation.

Cash Converters places such emphasis on this that it is a major focus of the strategies implemented by the company’s Local Area Marketing Manager Juan Botha. This approach enables each franchise in the group to be in touch with its neighbourhood through social and other local media challenges, giving them added strengths locally while being supported by the advantages and professionalism of national and international 21st-century business systems.

“All franchises and chains are aware that branches represent the company on the ground,” says Mukheibir. “But Juan opened our eyes to the importance of being good neighbours and not just another store along the street.”

If you are a neighbour buddy by acting as a central, participating and unifying figure in the community, your neighbourhood will in turn work for you. You can build awareness by sponsoring local events such as food festivals, cycling races or trail runs, especially if you can offer part of your own site as a venue, for example.

Related: Cash Converters Franchise Listing

You will establish real, long-term partnerships, though, by working consistently with community gatekeepers, from schools and welfare groups to gyms and conservancies. Adopt a community project and encourage staff to give their time and effort and this will generate goodwill that will be reflected back at you.

Such activities are about a lot more than column inches in community media, says Mukheibir. Building good relationships with communities can enhance your brand’s reputation, he believes. But being your neighbourhood’s best buddy can also make an important contribution to social cohesion.

“Plenty of people hark back to the good old days of mom-and-pop stores when everybody in the neighbourhood looked out for each other,” he says. “It’s not just nostalgia to want to rebuild that in our society – it makes sense.

“We all need to contribute to the safety and stability of our neighbourhoods, whether we are individuals or businesses. The season of goodwill is fast approaching – why not see what difference your business can make in your neighbourhood by then?”

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Franchise News

Clean Out, Clean Up – And Win Big With Cash Converters!

Spring is on the way and Cash Converters is celebrating the season of renewal with a bigger than ever Spring Clean Sale – and this year it gives you two very different opportunities to cash in.

Entrepreneur

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From 24 August to 2 September, you can help Cash Converters spring clean all its stores nationally by snapping up discounted items across all their different product categories. Then in the second phase starting on 3 September, Cash Converters returns the favour by giving away R200 000 over 20 days! A total of 100 customers will win cash prizes in this Spring Clean Special Draw of R10 000 per day from 6 to 25 September. To enter, all you need to do is sell Cash Converters an unwanted item that you have decided to spring clean.

Sorting through your cupboards for items that are in good condition but rarely used and that you are ready to sell could put you in line to be one of the lucky winners of a fistful of cash that will make your budget stretch further or give you a head start for early Christmas gift buys. If you have not yet managed to act on this year’s resolution to declutter your space, here is an excellent incentive to make good on that goal.

Many of us have items crowding our homes that turned out to be bad buys, were unwanted presents or are outdated for our needs. Trading in these items can help you trade up to something that suits you better – as well as giving you the chance to be one of the lucky cash winners!

Get ready to cash in on:

  • Spare phones, computers or cameras
  • Unused power tools or exercise equipment
  • Unwanted jewellery and watches
  • Unnecessary kitchen appliances and electronic goods
  • Surplus gifts or inherited items

“Essentially, we are paying you to spring clean!” says Richard Mukheibir, CEO of Cash Converters. “Even if you are not fortunate enough to be one of our daily cash-prize winners, you will be cashing in on items you do not need. That is a welcome boost to anybody’s wallet with petrol prices and the VAT increase still eating away at our income.”

Apart from all the excitement around the opportunity to win big, the outcome is win-win for everybody, says Mukheibir. Whatever you choose to trade in for cash in hand could well become the treasure that somebody else has been looking for. He believes the Spring Clean process also has an important message for South Africans.

“We are specifically running this promotion during Heritage Month because it helps enable a key change in mind-set that we need to entrench if we are to live sustainably on our beautiful planet,” he says.

“It has been estimated that the City of Johannesburg’s landfills will be full in just six years’ time, for instance. But enabling items you do not need to have a second, useful life, or astutely buying quality second-hand items you do need, is taking action on the reuse, recycle, repurpose message of our times. That makes you one of the savvy consumers who are doing what they can to save our planet for future generations.”

Related: Cash Converters Franchise Listing

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