4 trends in fashion franchising in 2018
Fashion – this is a separate world, living according to its own laws. The same can be said about franchising in the fashion industry. It belongs to retail and does not exist quite the same way as the franchises of catering or services. In retail sales, all the emphasis is on the product, there is no standard menu for all points of the network, there is no procedure for purchasing goods, suppliers and other "rails" on which the franchisee can move. There is only a product that is either sold or not. However, without accompanying factors, of course, there is no way.
The fashion industry has been going through hard times for several years. Prices are rising, household incomes are falling, imports are increasing, and all this makes life difficult for market players. However, is the cloud over the industry so big? We tried to understand and identify the main trends of fashion franchising in 2018.
It is becoming increasingly difficult for fashionable franchises to find a suitable platform for themselves. But this is the key point for the franchisee: when the franchisor provides the goods, it remains only to find a good location so that the business becomes effective. However, many industry representatives say that there are obvious difficulties with this on the market now.
"Our company is actively developing the direction of franchising as one of the most promising in business. To date, 58 stores have already been opened in Russia and Kazakhstan. We help partners in the organization of retail space, we can make a detailed business plan, analyze the first sales, organize trainings for employees. But at the same time it is not without difficulties: this is the lack of high-quality sites that would correspond to our development concept. In addition, against the background of a general decline in consumer activity, traffic in shopping malls is falling. Although in fact, no crisis and difficulties will not hurt if the business owner is burning with his favorite thing," comments the president of the company FiNN FLARE Ksenia Ryasova.
Experts say that there is really less free space in shopping centers. Moreover, this trend has been observed since 2016, which indicates that the crisis has been overcome. If we turn to the figures, then, according to the company CBRE, the share of vacant space in the retail segment of the capital decreased to 8.7%: in the first quarter of 2018, the indicator lost 0.3%.
Specialists from the company JLL, which helps retailers select retail spaces, pay attention to the fact that they are especially willing to "snatch up" places in shopping centers built in 2016–2017: there the indicator of "freedom" has decreased from 14% up to 12.6%.
"In 2014–2015, the typical level of vacant space at the time of the opening of the shopping center was 25–30%; and only two years later the facilities stabilized and the vacancy rate decreased by half. Shopping centers in 2016 and 2017, with a similar share of vacant space at the time of opening, showed faster occupancy rates: the volume of vacant space in them halved in one year. Thus, the decrease in input is manifested not only in the low proportion of available space, but also in the reduction of the time of exposure of high-quality new projects," comments Ekaterina Zemskaya, head of the Department of Commercial Real estate at JLL..
WHAT DOES THIS MEAN: shopping malls are mainly occupied by fashion franchises. The process is happening so fast that there are fewer and fewer high-quality vacant sites. By the end of 2018, analysts predict a drop in the share of vacant space by another 1%, which will lead to an increase in rental rates and an even fiercer struggle for a place in the sun.
To be continued.
The text is based on the materials of Buybrand