Beth Nilssen
April 16, 2018 / Great Advice

Looking beyond the headlines of the retail industry

One of the most common questions I get from prospective franchisees is this: How will I find a great location for my first salon? They ask me this because they know how critical a good location is to the success of their business, especially when first starting up. I can’t help but think that part of their concern stems from all the bad news they see and hear through the media about failing retail operators and the incredibly competitive real estate market.

I usually respond by telling that that their concerns are well founded. Yes, it is a competitive retail environment, and yes, we are in the middle of an extremely competitive real estate market.

And then I tell them that those two things aren’t necessarily bad news for our franchisees because, while those variables might make it hard for other businesses to compete, we believe this competitive climate creates opportunities for our industry sector of walk-in haircare salons. Namely: We attract a consistent customer base that’s loyal to a brand and a location. We’re a customer destination that fits in with other shopping patterns. And, we have the best franchisees with a reputation for being great tenants, paying their rent on time, and giving back to their communities. (In other words: landlords love Great Clips!)

We also have some very smart people on our corporate office real estate team who stay up on the trends, and they share that information with franchisees. Here’s an excerpt of an article recently published in our weekly newsletter that informs franchisees and their managers on what’s going on in the industry. It focused on how critical it is for businesses in any sector, large and small, to anticipate and adapt to changing consumer and market patterns.

Evolve, or get left behind.

There’s no better example of what happens when your business doesn’t evolve than big department stores like JCPenney, Macy’s, and Sears. Phil Wahba of recently published an article, Can America’s department stores survive?. In it, he notes that these department stores have a 40% merchandise overlap with one another. This is not just product categories either, but specific brand-name products, that then compete for customers through deep discounts that leave little margin. In the article, he states:

“If department stores are to reverse these trends, they will need to address a multitude of self-inflicted wounds. For all the changes they have made in recent years, they still tend to revert to the same toolbox: more discounts on more of the same merchandise, with uninspired product presentation in the same old dingy buildings. With so much sameness, the only way to entice shoppers is with deals.”

Department stores can’t survive while cutting deeply into margins just to get customers into the store. What the above-mentioned department stores haven’t done is concentrate on the customer experience. This could be another major reason why they are slowly meeting their demise.

Retailers find success with reinvention of physical locations

According to Michael Owens of Retail Spaces, smart retailers are capitalizing on the knowledge that customers are placing increasing value on unique, personalized experiences over factors such as price and product. These retailers have recognized the important part brick-and-mortar operations will play in securing their future.

PetSmart is cashing in on Americans who spent $60 billion on their pets in 2015. (Haircare, in comparison, is a $65-plus billion dollar industry.) PetSmart opened more than 80 stores in 2016, featuring new concepts that include swanky pet spas accompanied by on-site bars and cafés for pet owners to enjoy while their furry friends are being pampered. Retail giant Lowe’s is in the midst of a technological revolution called Lowe’s Vision—an in-store navigation app that uses augmented reality to help customers find what they’re looking for via turn-by-turn directions on their smart phone.

If you’re in the market for a new phone, you may step into an updated and friendlier Verizon store. The store has been decluttered, and displays are simple and pleasing to the eye. Customers more easily handle and view the products they’ve already researched online, in a less-intimidating and stimulating environment.

Finding your place in the retail landscape

Now that you’ve heard that the retail landscape isn’t all doom and gloom, you may be wondering where a Great Clips business fits. Great Clips real estate consultants put a lot of thought into identifying what makes the best locations for a walk-in haircare salon—variables like visibility, access, parking, and what kinds of retail stores are nearby, while also keeping tabs on new trends in a market that may affect these variables.

The competition for retail customers and locations is high. Great Clips and its franchisees are in a good place to capitalize on their strong position in the industry and in their communities.

Beth Nilssen By Beth Nilssen on April 16, 2018
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