Utilising the latest technology to reduce franchise overheads

Ross Clayton | Vast Furniture & Homewares

Utilising the latest technology to reduce franchise overheads

Whilst the franchising industry in Australia has seen steady growth over the past few years, franchisees are nonetheless being constantly impacted by ever rising costs such as high wages with weekend penalty rates and escalating lease fees.

Now, more than ever, franchisors and franchisees need to work together to adapt their business models to maintain profitability. The furniture industry in particular has always suffered from the need to have large showrooms; but now, as a percentage of turnover, the impact of  these overheads is double what it was 10 years ago! This is clearly not sustainable and why it is important for the industry to look at embracing technology as a solution.

The furniture industry is historically a bricks and mortar style business, with retailers showing everything they have for sale on the shop floor. Technology however can reduce the need for this traditional approach, allowing us to showcase our full range of products in ways that  can minimise those costs. For example, a store may display a black sofa, with a giant LED screen hanging above it, with the five different colour options that gives you the option to scan the code and picture it within the 3D image of your living room. Quite a different approach to the traditional method of displaying all five options in the showroom. As franchisees start to use technology in this smart way this will clearly decrease the need for larger showrooms therefore immediately reducing the rental overheads.

Furthermore, to combat high warehousing overheads, clearly there needs to be more flexibility in terms of both storage and delivery. By looking at other outsourcing options, this minimises the need for stores to invest in long leases themselves, and enables them to only pay for the storage that they use pro rata. What a saving!

Another major area where greater efficiency can be achieved through a more digital approach is in marketing. Today through platforms such as social media, and email marketing we can market directly to the people that may be interested in buying our product. This ability to focus on our demographic gives smaller marketing budgets a chance to target and engage with their customers like never before. Sales tracking tools can provide insight into what is working and what is not – ensuring less wastage or hit and miss approaches.

A fully rounded franchisor will be thoroughly across digital marketing, up to speed with the right social channels, on point with their brand and well drilled to give the customer the right product at the right price, within an acceptable timeframe – all against the backdrop of measurable and accountable exemplary customer service.

This ‘brand experience’ will help franchisees meet their profit targets and will gradually reduce the crippling overheads.

Another common major financial drain for a business is in operations and again this is where technology can come to the fore and help reduce costs.

It’s only a few years ago that most businesses would have had a full time bookkeeper. Plus, most of us also had a separate admin person – handling reception; answering the phone; managing filing; procurement; monitoring fulfilment to customers; the inventory out process. In total there were often three people working full time managing these tasks.

Today we have just one person running these functions thanks to new technology. We have no receptionist as most of our enquiries are sent through email or social messaging, and this is now shared by several staff as and when it occurs. We have converted to fully cloud based systems for all of our all admin tasks, have integrated software to generate our accounts and have tools on our website that alert us and our customers of actual stock levels in different cities… and this all integrates with our own custom CRM tool, which gives us complete visibility into every transaction, and it is all automated.

At Vast we also use a combination of onshore and offshore staff. Alliances can be built overseas that can lead to the development of a solid task force enabling your home team to concentrate on the sharp edge of your business. The rules are simple. If you can put a process behind something, you can outsource it. Let’s face it there are never enough hours in the day for your existing team, so a scalable (cloud based) workforce is one of the handiest new tricks in the book.

Getting the back end of your business sorted costs both time and money but it is worth it as your franchisees can then focus on what they do best, and get back onto the showroom and sell.

For franchisees and franchisors that work together and with the new technologies open to us, lots more doors will open rather than close, and then the opportunities to look at increasing market share, and profitability in a challenging market can become a reality.

At just 30 years old, Ross Clayton started what would become one of Australia’s most successful furniture franchises, Vast, by re-writing the rule book and putting the heart back into timber products. Vast Furniture & Homewares is one of
the largest growing bespoke furniture brands with stores in 25 locations across Australia and New Zealand. Sustainability is front of mind with the company taking great pride in using recycled and ‘upcycled’ materials throughout their supply chain.