Editor's note: The Business Mentor is a weekly business column by Armando "Butz" Bartolome, president of GMB Franchise Developers Inc. and chairman of the Association of Filipino Franchisers Inc.
MANILA, Philippines - There are some entrepreneurs who focus on building one brand and expanding it through franchising. Others simply bankroll it, and then hope to be bought by investors.
There are other entrepreneurs who keep opening different brands, but claim to be part of a group.
Why does this happen?
I remember my experience with a mall operator and a franchiser client of mine. The mall operator wanted a new name for her concept. She asked why?
"So the market will think it’s a new player, a fresh new store," was the reply.
My client insisted on using the same name, "I am building my brand! Why should I keep changing my name every time you have a new mall?... Do you ask that of international brands?”
The mall operator gave in and allowed my client to keep her name. Now, though she would not want to be mentioned by name, her brand is one of the most recognizable brands in the country.
Sometimes, new mall officers have no idea about branding. They think that if they fill a mall with new names, their mall will look new. So they ask the operator to put a tag: "A member of the “SO-AND-SO” group of companies."
Why change the name? They say it is about market segmentation. Upscale markets will not bite into popular brands but like new things. Mass markets, on the other hand, look for familiar names. So, can we say that upscale markets are more adventurous? And mass markets do not experiment?
From the mall operators’ point of view, they stick to the usual operators (there must only be a handful of conglomerates and multi-brand operators operating in all our malls) because these have shown track records and are reliable. Because let us not forget that there are also horror stories of tenants just closing shop and disappearing, leaving an empty shop, rentals in arrears and a mall operator wondering what happened to the store that had no name to save anyway. So, because of such stories, mall operators gravitate to the “usual suspects” and start-ups will find it like going “through the eye of a needle” to get a precious mall space.
Further, the “usual suspects” bring in new brands but can easily change them if they do not work. So it may still be, “he who has the gold wins.” If you are a start-up concept, your best bet would be to start with a kiosk, look like a “tiangge” operator or find a location so far from everything that no seasoned operator wants to get the space (they call this the armpit of the mall). Or, start your own strip mall or stand-alone store.
These days, many mall tenants complain of high rents, but they continue to line up for that precious retail space every time a mall opens in another area of the country. That’s because malls guarantee traffic. Stand alone stores do not guarantee traffic nor security, parking and other amenities. So, malls are still king.
If you are a start-up and you believe in your concept and brand, stick to it. Bring it up to scale through franchising, and then continue to build your brand and show the landlords that you have brand equity. Then they will not push you around. Rather, you will even get suitors or offers from other competitor malls.
This reminds me of the story of Injap Sia, founder of Mang Inasal.
For some who may not know about this young entrepreneur, he was the one, which started a roast chicken with just P10,000 (US$ 228). Would you believe that a mall disapproved him when he first applied?
Thinking that he was new the field, he concentrated in other areas and made sure he established several branches. One day, he got a call from somebody from a known mall. He was invited to be one of the tenants. Surprised, he showed the disapproval letter from the same mall. Today the mall owner and another food tycoon partnered with him to put a new mall concept. Their goal is to build 100 malls.
If you are a one-store concept, do it well and be the “talk of the town”. People will promote you through “word of mouth” and the rest will be a smooth ride up until about four years. On your fourth year, be careful, as that is the real test of a new concept. If you survive it, you are on to become a lasting brand.
If you like to open different store concepts each time, do it, but have an umbrella strategy—telling people that all these “single stores” actually belong to one family or group. Then you have to build the group’s name, reputation and integrity. It still is similar to one brand—except it is one group carrying different brand names. They could be for different market segments, or different mall profiles.
Whatever you choose to start, be it a product or a service, do it for the long haul. And do it well.
For questions and more information, you may contact Armando "Butz" Bartolome by email: [email protected] His website is www.gmb.com.ph