3 Challenges to Owning a Retail Franchise and How to Overcome Them

Being a business owner of a retail franchise can be a dynamic experience full of highs and lows. The retail segment is notorious for its fluid and ever-changing landscape, which can present some challenges for franchisees in this marketplace.

1. Most Americans Shop Online

It’s no secret that capitalism and the world wide web work well together. According to Big Commerce data, 51% of Americans prefer to shop online. Many of these consumers are Millennials and those from Gen X, who spend 50% more time shopping online than other age groups.

For retail franchises, it’s important to adopt technology and also be able to offer services or – at the very least – have a presence online. Since the internet is the first place that most shoppers turn, having the brand show up online is very important. More and more concepts are incorporating apps and different types of digital platforms to connect with shoppers in many ways.

1. Estimating Overhead Can Be Difficult

Rose Wheeler, a business writer with The Motley Fool, points out how business owners often run into issues by ordering too much or too little inventory. An imbalance in product can create big ripple effects and financial implications for a business, and it's best that franchisees try to avoid that at all costs.

“Keeping close relations with your manufacturers is always a good idea, as you can leverage things like renegotiating minimum order quantities to make placing bulk orders lighter,” Wheeler wrote in a 2022 article. “You can also employ markdowns and promotions to run through excess inventory.”

1. Customers Are Less Brand-Loyal

Brand loyalty has tapered off in popularity in recent years, likely largely in part to a saturated market full of competition and choices for consumers. Because there are so many options within each segment, shoppers have increasingly been trying new retailers and giving stores other than their favorites a try – be it because of a better price, a catchy ad or something else.

Huumon Creative, a digital marketing agency, explains in a post that “traditional customer loyalty programs such as special offers and promotions are still effective, but there is now a growing personalization trend. Maintaining communication with customers and getting to know them and their purchase habits is important to keep them loyal.”