Essential Supports You can Expect from the Shopping Outlets Now

How do stores usually open? At best after a simple marketing study. A subjective analysis of already operating shops is conducted, fragmentary information about competitors is collected, a simplified sociological portrait of the territory is compiled. But a few months pass, and it turns out that the revenue is half as much as expected. Consider the approaches to choosing the place for the retail outlet, which are used by the most successful traders in the Shopping Outlets.

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One can single out the following ways of effective deployment of the retail network, which are used by the most successful traders in the Russian market:

  • franchising;
  • purchase of existing business through mergers or acquisitions;
  • building their own stores with the use of both their own and borrowed funds.
  • The following types of key resources are needed to create or develop an existing retail network:
  • financial;

Temporary

The importance of financial resources is not necessary to explain. Undoubtedly, the company can attract investments and borrowed funds, but the level of the former is limited to the risk managers of investment funds or other institutional investors, and the level of the latter directly depends on the company’s capitalization.

If we talk about the second factor, then its impact on rapidly developing markets is often even higher than the impact of the financial factor. If the network did not occupy any promising place, then it went to competitors and the network lost twice: the first time that it lost its possible income, and the second – when this income received a competitor.

If you rank each of the ways of developing the network in terms of capital intensity, the following sequence is obtained:

purchase of business (costs are highest, since in addition to the estimated value of the company’s assets, it is also necessary to pay for some intangible assets of the acquired company, of course, if the company does not experience financial problems and is not in bankruptcy stage);

  • Construction
  • Franchising
  • Ranking by

Time costs give the following picture:

Construction (maximum time: direct acquisition of land and construction, recruitment, training, etc.);

Acquisition of existing retail assets (time required to complete the transaction and time to integrate business processes);

Franchising

We see that, in terms of time and capital, expansion of the retail network is most effective through the franchise program. Certainly, for the sake of high speed it is necessary to sacrifice a certain share of profit. If you rank networks organized on different principles according to the share of profit that remains at their disposal, the following picture is obtained:

Networks that completely belong to the owner, do not outsource logistics and other operations that own all real estate objects that are used by the network to carry out activities. In this case, we are dealing with a quasi-vertically integrated company that has a margin at its disposal as the owner of real estate (stores as real estate objects), as a retail operator (stores as point of sale and assortment management objects) and as a logistics operator (transportation and warehousing).

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