|Franchising: When gold loses its glitter|
|Monday, 20 August 2012 00:00|
The advent of dollarisation three years ago ushered in a new era in the way business is conducted in this country and many saw it as an opportunity to capitalise on the new economic order, while others failed to adapt and fell by the wayside. There were, of course, some who did not waste time and took the opportunity to retool their operations in line with the global trends and got on with the job.
Suddenly the empty shelves were fully stocked up and money started changing hands and the abundance of foodstuffs was evident albeit not from these lands.
The retail business prospered overnight and there was fierce competition among the retailers battling for market share. Naturally competition is good as it benefits the consumer more as price wars rage and even the slightest of price differences counts.
It was during this transitional period that I noticed the emergence of one of the world’s largest retail chains, Spar, embarking on a massive expansion and growth strategy.
Spar is a voluntary trading organisation, where all independent retailers work together with their distribution centres to build scale, buying power and the Spar brand for mutual benefit.
In Zimbabwe, Spar is made up of 10 corporate stores and 60 locally owned independent retailers across the country.
The retailers apply to become members of a Guild of Spar Grocers, who in turn elect a Guild committee annually (made up of retailers and wholesalers) to administer and protect the interests of the Spar brand and its member retailers, together with formulating brand strategy. Mr Evan Christophides is the chairman of the National Guild of Spar Grocers of Zimbabwe.
I must admit that I was one of the greatest admirers of the Spar concept as it brought in a refreshingly new outlook to the retail business in this country at a time when most had resigned to the agonisingly difficult economic environment we were operating under. It was indeed “Spar everywhere you go”.
Sadly, it appears the honeymoon was shortlived as more and more retailers who had come on board started debranding for unexplained reasons.
After engaging some of the retailers on why they opted out, none of them seemed to be willing to give the full story why they were pulling out of this “noble association”. It was mainly a case of “trying to do things my own way” kind of answer just to brush me off.
I will not name any of the big and small operators that have pulled out of the Spar partnerships, but they are there to see around the country.
Could it be a case of stringent conditions that could not be met, or a case of failing to meet the required standards?
I will not go deep into that, but suffice to say, something must have gone terribly wrong. From a distance, it seems the environment does not seem to favour small businesses, but the big ones who have resources to invest in the undertakings.
A case in point is the rapid expansion that one of the outlets in the avenues has undergone over the few years that has effectively seen all the other businesses being overshadowed by just one outlet.
A lot of money has been invested not only in stock, but expansion of the premises that has seen the demise of not only a nearby filling station but a post office and other small shops nearby. Talk about the “power of money” and you will understand what I am talking about.
Around the townships, many Savemor outlets that started on a high note have easily fizzled out to general dealer status without any satisfactory explanations. Where are we getting it wrong?
Is it a case of not understanding the terms of engagement, or is it that the franchise fees being demanded are too high? What’s gone wrong with our homegrown brands?
Is it not time to get down to basics?
What is disheartening about the whole episode is that with time those businesses will not be able to pick up the pieces and return to the levels they had initially aspired to get to.
This is more or less similar to subsistence farming where the owners are not concerned about growth but just to survive. There is a time and place for every activity and in this environment, we cannot afford to just sit back and relax and enjoy the status quo. It’s time to move on and embrace the change.
For as long as we remain a consumptive economy, the retail business will always remain the only major sector with assured returns. While franchising may be good in the short term, it is prudent upon those in the game to stick to the rules and respect the terms of engagement.
Doing it otherwise can be costly, and at the same time regrettable in the long term. Please do not get me wrong, I am not a prophet of doom but if you look around, the unfolding events are a real cause of concern.
As always, let’s make money.