With 2020 in the rearview mirror, the coming year presents numerous opportunities for prospective retail franchise owners.
Certainly, many of the challenges of COVID-19 persist. However, businesses have learned to adapt and adjust operations to not only overcome hurdles imposed by the pandemic but put themselves in a position of strength as economic conditions improve.
With that in mind, here are a few of the factors that make 2021 an ideal time to invest in a resale retail franchise:
Resale Retailers Are Taking the Lead
Heading into 2021, there is consistent consumer demand for affordable, high-quality used apparel, sports equipment, music gear and more. The road to economic recovery is underway. Resale retail franchises, including the five within the Winmark brands, have proven to be resilient to economic pressures.
When consumers need to make their dollars count for more, resale stores like Once Upon A Child®, Plato’s Closet®, Style Encore®, Play It Again Sports® and Music Go Round® fit perfectly into their shopping habits. Not only are they able to find quality used items at highly discounted prices, they’re able to sell their own clothing, sporting goods, music equipment and more for cash on the spot. This buy-and-sell business model helps create a highly localized inventory built on environmentally sustainable practices.
Resilience of Franchise Business Model
One of the biggest takeaways from 2020 has been the strength of the franchise business model. Mom-and-pop, independent small business owners have unfortunately taken the full brunt of the challenges imposed by the coronavirus pandemic. Meanwhile, franchise owners have been more insulated from the worst effects because they had the support of a franchisor behind them.
In many cases, franchisors reacted quickly to support franchisees with adjustments to operational standards and supporting franchisees through the myriad of economic relief programs. For example, the Winmark team made available additional opportunities for ecommerce, curbside pickup, delivery and virtual shopping. Instead of having to concurrently come up with new strategies, adjust operations and deploy them safely and effectively on their own, franchisees were able to utilize the Winmark team and their fellow franchisees for support.
Interest Rates Continue to Be Low
In response to the uncertainty and disruption caused by the pandemic in 2020, the Federal Reserve has promised not to increase interest rates until 2023. This is aimed at helping to spur the economy and support existing and new small business owners. The rates are pinned between 0.00 and 0.25 percent.
For prospective retail franchise owners, this move assists in creating a more stable lending climate. The Fed also introduced the Main Street Lending Program, which helps free up lines of credit to small- and medium-sized businesses.
Second-Generation Real Estate Opportunities a Silver Lining
Yelp’s Local Economic Impact Report found nearly 98,000 businesses permanently closed between March and September 2020, with those in the restaurant industry taking the biggest hit. These closures are focused primarily in some of the largest metropolitan markets, including Los Angeles, New York and San Francisco. Business owners in smaller metro areas and the suburbs have fared better, particularly those that were able to adapt quickly to meet the needs of local consumers.
Still, the resulting commercial real estate market is expected to offer greater opportunities for second-generation real estate than seen in the recent past. With store closures and landlords offering greater flexibility with their rental agreements, retail franchise owners are likely facing a buyer’s market.
Brick-and-Mortar Sales Projected to Grow in 2021
After a string of strong years for ecommerce, it’s expected the retail industry will see reinvigorated demand for in-store experiences. Research from CBRE Group anticipates a decline in the rate of ecommerce sales growth through 2021 and into 2022.
There are several reasons for a market correction. After an extended period of isolation, consumers will be seeking a deeper engagement with the businesses they support through a physical storefront. While it’s expected that buy-online, pick up in-store and curbside pickup options will remain in place, these will largely be complementary to traditional brick-and-mortar shopping.
Winmark retail franchises offer an omni-channel experience – blending online with in-store shopping – and are likely to be in the best position looking ahead. A robust digital presence allows retailers to capitalize on online shoppers who are searching for specific products and redirect them in-store to complete their transaction and increase the likelihood of additional purchases.
To learn more about franchising with any of the Winmark resale retail franchises, download one of our free franchise reports today!