Tuesday, December 21, 2010

Non-traditional Development in Franchising and Beyond

By: Amanda Rich

In franchising, we hear the phrase “non-traditional development” quite often. This is when a concept decides to expand in places other than the norm, like airports, turnpike stops and college campuses.

News broke yesterday that the biggest company in the world has some non-traditional development up its sleeve. Walmart is opening a 10,000 square-foot store at the University of Arkansas next month in what appears to be part of a series of tests of smaller-format stores. Walmart’s U.S. CEO Bill Simon hopes these smaller-store formats will allow the company to grow in places where its supercenters, often around 200,000 square feet, won't fit or can't get zoning.

Franchisors often encounter the same kind of roadblocks as Walmart when seeking new real estate, which makes me wonder if more companies will replicate the giant retailer’s solution – build smaller units. Developing a prototype with a smaller footprint and less product offerings could be the way of the future for brands that want to build in densely populated urban areas like New York City, a market Walmart now has its eye on.

In an effort to expand into new cities and stay relevant for consumers, I believe we’re going to see more brand extensions come the New Year. This morning on the way to work I heard a report on NPR about Goodwill Industries holding trunk shows and opening year-round boutiques in an effort to raise more money and broaden its appeal. If you thought boutiques were reserved for high end designer labels that come with a hefty price tag, think again. About two dozen Goodwill boutiques are open today with more planned for the coming year.

From fashion to groceries, I believe we’re going to see more brands build on their success by extending their core product offering in 2011. And I believe this trend will trickle into the franchising industry, as more concepts look for new ways to attract franchisees and expand into new territories.

5 comments:

  1. If your planning to start a business start first with a franchising for with this you don't need a very large amount of money you can monitor if you business is gaining profit or not. be wise enough to run your business and know the economic system for you to be able to adjust and be updated with the latest product that is in demand.

    sugar

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  2. For this to succeed Walmart must make sure to have a big warehouse near the smaller stores because of the lack of space for storage.

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  3. Any updates about the franchise in New York. Did the venture succeed?

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  4. I heard Walmart is opening more of these smaller-format stores due to the success of the Arkansas chapter.

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  5. I'm noticing these new mini-stores for the past couple of weeks in New Jersey.

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