Network retailing is on the rise! In 2016, 48% of French people looking to create their company intended to launch it as a franchise1. That is 8% more than the previous year. This organizational model, invented in the 19th century, and which has developed in various mixed forms, looks more attractive than ever.
Network Retailing, a fashionable organization mode.
You have to admit that network retailing has solid advantages. Organized around a parent company, member companies remain commercially independent whilst taking advantage of the reputation of a recognized brand. Half of franchised entrepreneurs declare that they opted for one network rather than another because of the brand image – the number 1 selection criterion. Support and limited financial risk complete the podium.
For the network heads, the possibility of counting on locally-based companies gives it the opportunity to expand its market. In this way, the network becomes more resistant to the increasingly rapid changes in the economic environment.
You have to admit that network retailing has solid advantages. Organized around a parent company, member companies remain commercially independent whilst taking advantage of the reputation of a recognized brand. Half of franchised entrepreneurs declare that they opted for one network rather than another because of the brand image – the number 1 selection criterion. Support and limited financial risk complete the podium.
For the network heads, the possibility of counting on locally-based companies gives it the opportunity to expand its market. In this way, the network becomes more resistant to the increasingly rapid changes in the economic environment.
National branding VS. local presence: The number 1 challenge for networks
But things are not all bright in the world of network retailing. Whilst complementarity between national branding and local presence is an undeniable growth factor, its implementation can turn out to be a real headache for central marketing:
• How can you ensure that the brand positioning is uniform and coherent across the network?
• How can you allow network members to customize their offers, whilst maintaining the coherence of the final result with the national campaigns?
• How can you assess the effectiveness of a national brand strategy when it is implemented by independent companies on a local level?
• How can you successfully carry out network marketing strategies whilst remaining effective and cost-efficient, even when the number of members increases?
Network retailing and digital technologies, a winning combination
To overcome these potential difficulties, traditional collaboration tools are no longer suited to networks’ needs for flexibility and rapidity. Centralized databases, pre-validation by creative staff, libraries of network coordination materials updated in real time… New technologies provide elements of response to these questions. This is the challenge taken up by networks such as Honda, Volkswagen and Société Générale, using dematerialized sharing platforms.
These brands are not isolated examples. In a constrained environment, network retailers have chosen to reinforce support for their members. 73% of networks have invested in IT systems to improve their internal reporting tools and communication between the network head and member companies. By using the potential of the digital tools at their disposal, networks communicate with more agility and coordinate their marketing actions more effectively.
Welcome to the era of simple, high performance networks. As easy as that.
