Once location was king. But industry ‘disruptors’ and online business have been gamechangers, says Darrell Johnson CFE, CEO of FRANdata
Location, location, location. In the new world of commerce, these three words may mean your location, my location, and some location where I will be. If you want to sell me your product/service, will you need to address all three, well, locations? If so, there are huge implications for the contractual terms to the functional responsibilities franchisors are responsible for executing. This will span traditional contract topics like exclusive territories and delivery models to franchisor functional activities like training and site selection.
Look at some of the recent developments and trend prognostications that might influence future buying behavior (and by future, I mean inside the typical real estate lease period for retail establishments).
The largest taxi cab company in the world doesn’t own any taxis – Uber
The largest hotel company in the world doesn’t own any hotels – Airbnb
Because of IBM Watson, you can get basic legal advice within seconds, with 90% accuracy compared with 70% accuracy when done by humans; cancer is being diagnosed with four times more accuracy than humans alone
Facebook pattern recognition software recognizes faces better than humans
The first self-driving cars, trucks and even ships will be in commercial use soon
Working while you commute will move residential markets further out and change traffic patterns
Few of our children will bother to get driver’s licenses
With a dramatic decline in car accidents, the auto insurance business will drop dramatically
Within a few years medical devices will work with your phone to measure more than 50 biomarkers that will identify nearly any disease, giving world class medical access to nearly every person on the planet
The first smart phones with 3D scanning capabilities will be out by the end of the year, allowing you to scan your feet at home and send the file to shoe companies that are now building equipment to custom make your perfect shoes
The cheapest smart phones are now under $10 and within the next few years 70% of all humans will own one, giving nearly everyone access to world class education offered by organizations ranging from Khan Academy to Stanford University
Some of these developments and forecasts will take longer than predicted to implement. Some will morph into something else. However, most are already happening and have near-term consequences for retail businesses. Do I need a shoe store if I can essentially send my foot to a shoe company, pick the style I want, and get a custom-built shoe back, all in a matter of a few days or even hours? Do I need to go to the doctor’s office for a check-up when I can send all my biomarker information to her? If the auto and insurance industries are in for revolutionary change, how does that change where people live, how they move around, and what they spend money on? If my child (or me, for that matter) can take a course from a world-renowned educator, what does that mean for how our educational system and all the ancillary education businesses? If software can recognize my face, change the menu board to my preferences and instantly tell the sales person about me, what kind of employees will you want to hire?
That brings me back to the initial point: Location. What does that mean in a world that is being changed in such a dramatic and rapid fashion? Perhaps the starting point in answering that question is to focus on what people want to spend their free time doing. While this applies to all generations, I’ll use Millennials as an example. My key observation is how protective they are of their personal time. If your focus is trying to make their experiences better you may be missing the point. Some may want that “experience” in your retail establishment, enjoying the ambiance and good service your establishment strives to achieve. Yet one size doesn’t fit all (think shoes as the 3D point above dramatically demonstrates). They may want your product/service delivered to them so they can save their personal time for other things more important to them. Some may want your product or service ready as their autonomous vehicle drives by or in your establishment but in a less formal/minimal service way.
Being all things to all people is a prescription for failure. However, being stuck with a fixed retail design without consideration for the variations in what your core constituency wants isn’t any better. Understanding how your key demographic spends their personal time is a good step. Of course, you need to first understand your key demographic. On that front, there is a tremendous amount of data to draw from. Our own experience accessing a data house with detailed records on 150 million households has been very helpful with our clients for both franchisee recruitment and consumer marketing. What a fascinating and challenging word we are in today.
About the Author
Darrell Johnson is the CEO of FRANdata the leading franchise-focused research and advisory firm in the industry. FRANdata’s team of strategic analysts and proprietary database of franchise information enables its clients to improve franchise performance and grow their business.
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