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May 2006 |
Volume 7, Issue 5, Part 1 |
When it comes to retailing, food-related concepts continue to dominate the world of franchising. One franchisor we talked to remarked, "there seems to be no end to the new ways you can make a sandwich." But for many of the corporate dropouts looking into franchising as a second career, moving into food service lacks appeal. When we went looking for some non-food retail franchises, we were pleasantly surprised by the number of interesting and profitable ideas. In this issue we talk to Ray Margiano of Foot Solutions and Bob Wilke of HobbyTown USA to get their views on franchise retail concepts.
Foot Solutions is a Georgia-based franchise that focuses on foot health and wellness. The concept fills a market niche that falls somewhere between the medical shoe stores and the comfort shoe stores. Company president Ray Margiano says, "Medical shoe stores provide products that can help people resolve some of their foot issues and make the pain go away, but the shoes are so ugly no one wants to wear them. On the other hand, the comfort shoe stores offer shoes that look better and are very comfortable, but they don't have the support or the features involved to really solve the problem. My idea was to come up with a niche that fell right between. We use medical technology to scan the foot and make custom-fit products and arch supports which really become the foundation for the foot. Then the shoes are made on a different shaped lath. Most of the shoes you buy in shoe stores are built on a straight lath to fit the masses so they accommodate the foot, but don't really fit right. Ours is as close to a custom designed shoe as you can get. And we do that right in the store. We have our own lab and facilities."
Margiano started a similar franchise company, Heel Quik, in the early '80s. His experience with Heel Quik has provided valuable lessons for this venture. "I tried to identify everything negative about Heel Quik and see how I could design a better program," says Margiano. "For example, Foot Solutions stores are all located in strip malls whereas Heel Quik were in malls. I learned a hard lesson about malls. Being open seven days a week and all kinds of hours, you end up working for the mall. In strip centers, our stores are open 10-6 M-F, 11-5 on Saturday, and we don't pay any percentage rent. We don't really rely on a lot of foot traffic going by us because 40% of our new customers walking through the door are referrals from other customers. We still need good locations though, so we look for medium to high-end strip centers that have a range of stores that focus on the same 40 and older market. We try to party up with them to get the synergy of people coming into the strip center."
On the fast track
Foot Solutions has only been franchising since 2000 and already there are 200 stores open with commitments for another 60. The company started franchising internationally last year. Clearly, the concept has found an audience. "We say our focus is the 40+ market, but the baby boomers are our target audience, "says Margiano. "These are people who are interested in health and taking care of themselves. They may have problems getting fitted or standing on their feet a lot. The problems may be medical or nonmedical - they just know that their feet hurt and they need help. People visit us to see if they can resolve their own issues before going to see a podiatrist or other doctor."
This so-called "market niche" is actually a huge untapped market. Margiano says there have been medically documented studies that found 30% of the population have some kind of foot problem or issue. "There is the raging issue of diabetes, with 20 million people affected in the U.S. Certainly weight is another issue that is contributing to foot problems and two out of three Americans are overweight. These are all people we can help," says Margiano. "We are not looking to put shoes on all people, but rather that 10 or 20 percent who have real needs."
 Niche marketing is the key to retail survival
According to Margiano, if you're going to survive as a retailer, you must be in a specialty niche. "You can't just offer anything," says Margiano. "There has to be something exceptional about it because the big box retailers are able to buy anything ordinary at lower prices. If it wasn't for the sophistication of what we do and the amount of time we spend with the customer, we would have a problem with those retailers. But we spend 30-45 minutes with our average customer and our people are trained extensively. I did a lot of research to make sure I wouldn't bring on a category that would get sucked up by the big box shoe stores. The Foot Solutions concept is unique and sophisticated enough that it would not be easy for a big box retailer to replicate."
Foot Solutions has no direct competitors. "I feel very confident right now," says Margiano. "We have basically become the big fish in a small pond literally over night. Anything can be copied, but we have reached critical mass. Getting to 200 stores is a major accomplishment and with no one even close to us it would be hard for anyone to catch us at this point in time."
Contact Information: Raymond Margiano, President, Foot Solutions,http://www.FootSolutions.com, 1-866-338-2597.
HobbyTown USA was founded in 1980 by Merlin Hayes and Thomas Walla in Lincoln, Nebraska. The sole purpose for establishing the company was to share the partners' dream with other people who wanted to own their own hobby store. In fact, the company motto is "Building Your Dream." HobbyTown is now the largest retail hobby franchise in the world with 190+ stores open or under development in 41 states.
HobbyTown stores are primarily located in strip malls. Each store is packed with model railroads, radio-controlled vehicles, model rockets, science kits and various toys, games and collectibles. HobbyTown Senior Vice President, Bob Wilke, says, "The average store is 4,500 square feet. Most stores are laid out to facilitate onsite activities and utilize custom manufactured Lozier shelving for consumer friendly merchandising."
Customers are as diverse as the array of products. Wilke says, "Basically, our customer base includes anyone who enjoys the challenge, competition, and fun of hobbies. Our stores cater to the male audience from toddler to seniors. But we also appeal to the toddler-teen female consumer." These fun-loving hobbyists make up a huge market. "Retail hobbies are a $1-2 billion-plus industry that continues to enjoy a paced growth," says Wilke. "New technologies added to existing hobby products expand the appeal while the traditional hobby products remain the stable foundation of the industry."
 World leader in hobby products retailing
HobbyTown USA is widely regarded as the leader in hobby products retailing, but there is plenty of competition for customer's attention and wallets. "The hobby industry competes for the consumer's leisure, recreational and entertainment dollar," says Wilke. "We have positioned ourselves as a family activity resource offering products and activities that are 'renewable' by design. Hobby grade products such as radio control airplanes, cars, slot cars and model railroad sets offer replacement, expansion and upgrade accessories. These extend the life of the product over a comparable single-use toy." The company also competes by providing the most diverse array of products possible under a single roof. "Our stores offer a family friendly shopping experience while providing needed expertise for the serious hobbyist," says Wilke.
As a franchise concept, HobbyTown has received plenty of accolades. For starters, the company was named the #1 hobby retail franchise in the U.S. by the Entreprener Franchise 500. It also ranks in the top 2% in IFA estimates of franchise systems worldwide based on the company's current volume and franchised units. "The success of HobbyTown USA," says Wilke, "can be attributed to the people within the franchise organization, the evolution of our operating systems, the expanding consumer hobby audience and continued growth since we began franchising in 1986. It's a combination of expertise, proven systems and a strong industry that keeps us in the forefront."
The success of HobbyTown has not gone unnoticed by prospective franchisees. The company is known to get lots of inquiries, many of which are unsolicited. Wilke says the attraction goes back to the founding partner's dream of having fun and making money at the same time. "Our franchise is attractive to men and women who want to develop their own business while selling fun. The hobby, toy and recreational products we offer are a welcome respite from today's demanding performance-driven lifestyle. Many of our prospective franchisees are seeking a transition from the uncertainty of a corporate environment to an opportunity to control their future in an industry built on fun and entertainment," asserts Wilke.
Wilke says HobbyTown looks for earnest, self-motivated individuals. "They should have a strong desire to be a positive influence in their local community by engaging people in a new hobby. Our franchises have been successful for owners with a wide variety of backgrounds, including those ranging from extensive hobbies to absolutely no hobby or retailing experience."
Contact Information: Wilke, Senior Vice President, HobbyTown USA, http://www.hobbytown.com, (800)858-7370.
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