MISSED OPPORTUNITIES

Over the past six years there have been significant changes within the franchise sector across the globe and in New Zealand. Rising living costs, turbulent economies, global instability, and the rapid acceleration of technology and AI have all helped reshape the franchise landscape and consumer behaviour. 

“Since the pandemic, there has been inconsistent growth for many franchise brands, and in the last few years we have experienced the most volatile environment I have seen,” says Vanessa Wilmot, Managing Director at Geotech Information Services. 

Vanessa points out some notable trends impacting consumer behaviour in New Zealand, which include the aging population (around a fifth of the population is now aged over 60) and increasing cultural diversity. And with hybrid models of working now more commonplace, she says, New Zealanders are purchasing more from ‘local’ offerings than ever before.

However, with the rising cost of living, consumers are also being more selective with their spend. It is even more critical than before for franchise systems to ensure that they are located in the right locations within communities.

“This is where data and a well-defined network plan can assist,” says Jeff Vassel, Global Business Development Manager at Geotech. “It is important for franchise brands to determine where their key target markets are located in high concentrations – at home, at work and at play – and to position sites or territories to be able to conveniently tap into those local community-based markets.

Not only are consumers feeling the pinch, but so are franchise networks, recognises Jeff.  All of the different factors at play in the current environment mean that the costs of doing business are higher. 

“The cost to franchisors and franchisees in making the wrong site or territory network planning decisions can be substantial,” he says. “For franchisors, it can lead to missed opportunities (if a better or more suitable site or territory was available), underperforming franchises, and even market share lost to competitors if they are more conveniently positioned. For franchisees, it can lead to reduced revenue and increased costs of trying to counteract the consequences of poor site selection.”

What can franchise systems do?

“We are finding that franchise systems are turning more than ever before to network optimisation strategies and organic growth, rather than just focusing on new sites or territories,” says Jeff. 

“What now separates higher growth franchise systems from the rest is their use of cutting-edge data analytics, AI, and making more informed data-driven decisions. 

“By understanding how your sites and territories are performing compared to their true potential, you can identify which sites are underperforming and the potential upside in revenue for a range of different possible actions. We often find that there is as much, if not more upside in undertaking a network optimisation strategy than there is in opening new sites or territories.”

How can Geotech help?

Founded over 20 years ago, Geotech Information Services works with businesses on both sides of the Tasman. Geotech is a member of the Franchise Council of Australia and has been actively involved with New Zealand franchises for many years.

Geotech provides data solutions that allow franchisors to make smarter, faster, and more profitable decisions for their network planning, network optimisation, and territory allocation.

“In a data-driven era,” says Jeff, “the challenge for many companies is knowing where to start, and what types of business problems data and analytics can help solve.” He cites a few examples:

Sales forecasting & strategic network planning: Analyse the sales performance of stores or territories in your network against their site, precinct and local market characteristics, to identify critical factors driving sales and incorporate them into your forecasting models.

Quantifying cannibalisation within your network: Understand the potential impact new locations have on your existing franchise network.

Network optimisation strategy: By understanding how your existing network is performing versus the potential of each store or territory, underperforming sites or territories can be identified and network optimisation strategies implemented to increase revenue.

Local store marketing: A data-driven local marketing system, combined with local demographic and traffic information, ensures the most effective local marketing strategies are being adopted by every store or territory in a network.

Channel strategy: Gain valuable insights by understanding how online and delivery channels work and interact with traditional retail outlets. Do the channels work together and complement each other, or compete and cannibalise?

Be proactive today for growth tomorrow

“We are currently operating in one of the most challenging and rapidly changing business environments the franchise sector has faced,” says Jeff. “For franchise brands, the cost of making the wrong decisions has never been higher. Renewing a lease, opening a new location, retaining an underperforming site or territory, or failing to identify untapped opportunities within an existing network can all have significant long-term financial impacts on both franchisors and franchisees.”

“Franchise systems that are proactive and willing to continually evaluate and optimise their networks will be far better positioned for sustainable long-term growth,” adds Vanessa. “In today’s environment, network planning is no longer simply about expansion – it is about ensuring every site and territory is performing to its full potential.”

And Jeff concurs, “Franchises that embrace data, analytics and strategic network planning will be best placed to reduce risk, uncover opportunities and build stronger, more resilient networks for the future. To learn more about how Geotech Information Services can support you in identifying where the opportunities are for your brand, contact us now.”  

For more information and advice on buying a franchise get your FREE copy of Franchise New Zealand magazine.