Multi-Unit Franchisee Magazine Issue III, 2017 | Page 90
FranchiseMarketUpdate
BY DARRELL JOHNSON
Where Are We?
For retail, the future has already arrived
“L
ocation, location, location.”
Those three words used
to mean the same thing.
I’m not sure that applies
any more. In the new world of commerce,
they may mean your location, my location,
and some location where I will be.
If you want to sell me your product
or service, will you need to address all
three? If so, there are huge implications
for the contractual terms of the func-
tions that franchisors are responsible
for executing. This will span traditional
contract topics such as exclusive terri-
tories and delivery models to franchisor
functional activities such as training and
site selection.
Let’s look at some of the recent devel-
opments and trend prognostications that
might influence future buying behavior.
By future, I mean inside the typical real
estate lease period for retail establishments.
Each one of these points is disrupting one
or more industries.
• The largest taxi company in the world
doesn’t own any taxis (Uber).
• The largest hotel company in the
world doesn’t own any hotels (Airbnb).
• IBM’s Watson can deliver basic legal
advice within seconds with 90 percent ac-
curacy (compared with 70 percent accu-
racy from humans); and cancer is being
diagnosed with four times more accuracy
than by humans alone.
• Facebook pattern recognition software
recognizes faces better than humans do.
• 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 ac-
cidents, 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 iden-
tify nearly any disease, giving world-class
medical access to nearly every person on
the planet.
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MULTI-UNIT FRANCHISEE IS S UE III, 2017
• The first smartphones with 3D scan-
ning capabilities will be out by the end of
the year, allowing you to scan your feet
at home and send the file to shoe compa-
nies that are now building equipment to
custom manufacture your perfect shoes.
• The cheapest smartphones now cost
less than $10. Within the next few years
70 percent of all humans will own one,
What does
“location” mean
in a world that is
being changed in
a dramatic and
rapid fashion?
giving nearly everyone access to world-
class education offered by organizations
ranging from Khan Academy to Stanford
University.
• Finally (not that it is relevant to this
column), by about 2020 we will have apps
that can tell by your facial expressions if
you are lying. Imagine what that might
do to televised political debates.
Real-world consequences
Some of these developments and forecasts
will take longer than predicted to imple-
ment. Some will morph into something
else. However, most are already happen-
ing 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 checkup
when I can send all my biomarker infor-
mation 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 online, what does that mean for
our educational system and all the ancil-
lary education businesses? If software
can recognize my face, change the menu
board to my preferences, or instantly tell
a salesperson about me, what kind of em-
ployees 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 ex-
periences better, you may be missing the
point. Some may want that “experience”
in your retail establishment, enjoying the
ambiance and good service your establish-
ment strives to achieve. Yet one size doesn’t
fit all (think shoes, as the 3D point above
dramatically demonstrates). They may
want your product or 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 still in your establishment but in a
less formal, minimal service way.
Being all things to all people is a pre-
scription for failure. However, being stuck
with a fixed retail design without consider-
ation for the variations in what your core
constituency wants isn’t any better. Un-
derstanding 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 help-
ful with our clients for both franchisee
recruitment and consumer marketing.
What a fascinating and challenging world
we are in today.
Darrell Johnson is CEO
of FRANdata, an indepen-
dent research company sup-
plying information and
analysis for the franchising
sector since 1989. He can
be reached at 703-740-
4700 or djohnson@fran
data.com.