Sharing Retail Revenue
A fashion company is involving franchisees in e-commerce.
Brands are increasingly recognising that stationary stores make a significant contribution to branding – even if they conduct a significant portion of business online. In the last issue of Radar, Nicola Kilner, CEO of beauty brand DECIEM, aptly said that brick-and-mortar stores were “for our revenue … not so important, more for brand positioning”.
Companies whose model is based entirely or partially on franchisees in stationary business are facing new challenges. In Europe, these include brands such as Benetton or Bata, each with around 5,000 franchise units, but also Levi’s, Swatch, Swarovski and The Body Shop. Fashion brand Mango, however, was one company making headway this summer, giving its franchisees a share of e-commerce turnover. This test is taking place in its most significant franchise locations of Spain, France and the Netherlands, but other countries are to follow. “It’s fair to share the online revenue with franchise partners,” says Mango vice chairman Daniel López. “Many of the transactions that end up in our e-commerce store come from customers who visit our physical stores.”
The move by the Spanish fashion company, which has been using e-commerce since 2000, is a first step. The next stage of expansion, to enable franchisees to participate more actively in the online success of a brand, could be a further emphasis on the showrooming function of the store. In their physical location, franchisees could then show other product options they don’t have in stock, but which can be ordered in store via a centralised e-commerce platform for delivery to the customer’s home.