To Scale or Not to Scale? 10 Factors for Brands to Consider
Multi-location (MULO) brands are complex and sometimes filled with risks. In the retail sector alone, more than 3,000 stores have closed so far this year. However, establishing a brand in one region and scaling it to multiple geographies (sometimes even global) can be very profitable in the long run.
But with that complexity comes a wide range of challenges.
- Deciding whether to grow within a region or expand nationally or even internationally is critical.
- Determining if and how your company will franchise is a major decision. The upside of franchising is that you can attract committed operators who have a sense of ownership. But a few bad deals or lack of product/service quality can sink an entire region.
- You need to plan your locations carefully (which is much easier now than ever before due to automated site selection tools).
- Ensuring your brand and product service quality is consistent across your locations is important, especially because a gaffe at one site can impact your entire brand’s reputation.
- Regionalizing your product offerings can be a big part of remaining competitive with smaller operators and appealing to the needs and tastes of your individual markets. See, for example, how Cane’s launched in New York City.
- Balancing high-level brand marketing with regional awareness takes a unique skill set and a wide range of media. Operators must decide how much autonomy and funding to give their local managers to build relationships and traffic in their individual locations.
- Finding talent at each of your locations that can deliver against your brand promise is often difficult. Once you’ve found high-performers, leverage them to boost performance throughout your network.
- Rolling out new technologies across a network requires a high level of planning and training. You must continuously look for ways to automate functions to drive costs down.
- Fully integrate your online offerings with your physical locations. Today’s consumer is truly omnichannel, and you want to keep sales within your brand, using digital marketing to continuously drive interest, along with local campaigns.
- Performance data (which is now easier to get instantly) is important in understanding which locations are under-performing and why.
Whether your business is retail, restaurant, or service, these challenges are part of all your operations and day-to-day management.
Some brands choose to remain regional. Marketing and advertising are much simpler for geographically focused brands.
But the “combination” model is commonplace. For example, the Carvel ice cream brand has individual stores in some areas, but their branded cakes are available nationwide in MULO grocery stores.
We’re also starting to see more brands co-locating with other retailers (like Sephora and Kohl’s). That gives a company a way to expand without shouldering 100 percent of the infrastructure and marketing.
Scaling doesn’t necessarily mean putting pins in every state on a national or global map. As analytical tools become more sophisticated, so does distribution planning.
Understanding the unique personas of the companies who are fans of your brand will enable you to find similar populations in other regions. But a “scattered strategy” can also lead to additional costs — from product shipping to marketing.
Join us at the Place conference on November 7th to learn how automation can enable faster decision-making and scaling for MULO brands and hear from the companies that have taken their locations from one to many. (Use code FON for a $300 discount.)