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The New Shop makes a bold bet on its franchise model

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The New Shop’s franchise model is inspired by leading global convenience retail and QSR model such as McDonald’s, Subway, 7-Eleven, The UPS Store, and Dunkin’ that have built a strong brand and established operations procedures that can be replicated across different locations including India

Launched in 2019, The New Shop (TNS) has fast racked up a reputation as India’s fastest-growing 24/7 omnichannel, convenience commerce company. Over the past two years, the company has been on a great ride in the grocery retail business, clocking a torrid pace of expansion by adding over 50 stores to its fleet.

TNS stores are located in densely populated residential areas and at mass transit hubs — railway stations, airports, highways, tourist attractions, and petrol stations. The stores also double up as online stores and fulfillment centres that provide instant hyperlocal delivery within 1.5 km of all locations. With some 100 stores under its belt currently out of which 70 are franchise outlets, TNS has become the punchline to how to make a breakout success in grocery retail.

Now, with popular Bollywood actor Rajkumar Rao taking on the mantle of brand ambassador for TNS, the retailer has quickly launched a commercial campaign designed to fuel its business growth further. The fresh initiative marks a new chapter in the retailer’s onward journey with the ground being laid to ratchet up its franchise operations and the brand’s peppy profile in the days to come. Already, the association has stirred up buzz in the industry, and TNS expects the campaign to radiate a strong force field that will propel its franchise model into higher orbit.

“The New Shop is indeed banking on the franchise model as a key strategy to ramp up its business and expand its brand footprint. With a market size of $3 trillion globally, the convenience retail industry is still at a nascent stage in India, presenting a significant growth opportunity for organized C-store businesses. The New Shop is looking to achieve significant payoffs by expanding its footprint through franchising, as it allows us to reach
more customers and expand their brand presence,” says Aastha Almast, co founder, The New Shop.

The TNS franchise model is inspired by leading global convenience retail & QSR models such as McDonald’s, Subway, 7-Eleven, The UPS Store, and Dunkin’. “These companies have built a strong brand and established operational procedures that can be replicated across different locations, including India,” says Aastha.

“The TNS business model” she elaborates, “is also designed to act as a lodestone for aspiring entrepreneurs wanting to make their bones in the grocery retail business and our brand campaign is built around this theme with Rajkumar Rao acting as the torch bearer to semaphore this message loud and clear.”

Aspiring entrepreneurs in India face numerous challenges when starting a business and the TNS ad campaign hits a red hot seam of youthful aspiration, showing the way to unlock business opportunities and surmount challenges.

The campaign pans out the story of Chotu Mishra, played by Rajkumar Rao, a small-town boy who dreams of becoming an entrepreneur but his business ideas are womped-womped by his family and friends. But undeterred by the carping criticism of those around him, Chotu bets on a promising franchise opportunity, which allows him to beat all odds and fulfill his dream of becoming a businessman.

Aimed at attracting aspiring entrepreneurs, businessmen, and traditional shopkeepers who are looking for a simple and hassle-free way to start their own businesses, the campaign is expected to position The New Shop as a viable option for those looking to enter the world of entrepreneurship.

“Rajkummar Rao’s journey to success in the film industry is a testament to his hard work, dedication, and willingness to take risks, just like the company’s franchise model. As a brand ambassador, Rajkumar Rao will help to strengthen The New Shop’s brand image and expand its reach to a wider audience. His association with the brand will create more awareness and trust in The New Shop, as people relate to his personal story of success,” says Aastha.

The franchise business proposition of The New Shop is pretty simple and straightforward. Franchise partners are required to pony up Rs. 20 lakh as upfront investment to start with. The payoffs include franchise partners getting access to a comprehensive operating system, which includes end-to-end store setup, brand licensing, inventory, legal and licensing
support, and training, support, and continuous learning opportunities. Also, franchise partners get the opportunity to earn a steady income from their convenience store.

“The New Shop’s business model is designed to benefit both the franchisor and the franchisee, with the franchisor providing the necessary support and resources to help franchisees succeed and grow their businesses. It is a win-win proposition for both parties,” says Aastha, adding that the brand has been able to demonstrate broad strength and
attractive four-wall economics as evidenced by its lower cost on transactions, cost-effective customer acquisition program and very good margins.

“Our cost of operations and unit economics are the best by any industry yardstick. In fact, our current gross margin is over 28% and comes to Rs. 560 per sq.ft., which is a very good
number and we are extremely happy about it and working to take this number even higher,” says Aastha.

Also, TNS relies on multiple strategies to improve its gross margin and unit economics. “Retail unit economics is best measured by the metrics of sales per sq.ft. and with our stores between 600 sq.ft. and 800 sq.ft, the average monthly revenue per store is Rs. 15 lakh and sales per sq.ft. works out to Rs. 2,000, which is high compared to our competitors or by the industry standards,” adds Aastha.

With 70 stores currently operating under the franchise model, and with a credible commercial narrative sold by its newly appointed impresario, TNS hopes to hit the afterburners on growth and expansion, going ahead.

The brand is gearing to hit its hottest business streak over the next 1-2 years by expanding at a whiplash speed and bringing its store count to a thousand units. “Our course is charted
and TNS is ready to zip along on the road to the next level of growth and expansion with the franchise model as its business compass,” assures Aastha.

With an ambitious blueprint to uphold, TNS is counting on spinning its franchise wheels fast enough to make all its plans come together. “We have access to a ready pool of 50,000
locations, have brand and supply chain partnerships in place, and enjoy an omnichannel presence. The franchise model also offers financing support and an easy exit procedure for
franchise partners, which will obviate the need for chasing the white whale of funding and raising capital by the bucketload,” says Aastha, rounding off with a calm assertion that the
company is confident of growing and scaling up its business creditably over the coming days.

Elements of The New Shop’s Franchise Model

The NEW Shop is banking on the franchise model as a key strategy to ramp up its business and expand its brand footprint. The brand’s tagline ‘Anything, Anytime, Anywhere’ embodies the availability and reach of its convenience stores for every-day products and it feels that its successful franchise business model has much potential in store to cover substantial ground in the days to come. The salient features of its franchise business model are:

Well-Defined Business Model: A successful franchise system requires a proven and well-defined business model that can be replicated across different locations. It is essential to have a clear understanding of the target market, products, services, marketing strategies, and operational procedures.

Honest communication and documentation: The franchise agreement must clearly outline the terms and conditions of the franchise relationship, including the obligations of both parties, the fees and royalties, the territorial rights, and the renewal and termination clauses.

Effective Training and Support: The franchisor must provide comprehensive training and ongoing support to the franchisee to ensure that they have the necessary skills, knowledge, and resources to operate the business successfully. This includes site selection, marketing,
management, and operational training.

Consistent Branding and Marketing: A successful franchise system requires consistent branding and marketing across all locations to maintain brand recognition and customer loyalty. The franchisor should provide the franchisee with marketing materials, advertising support, and brand guidelines to ensure that the brand is presented

Continuous Improvement and Innovation: The franchise system should be continuously improved and updated to stay competitive and relevant in the market.
The franchisor should provide ongoing research and development, technology upgrades, and new products and services to help the franchisee stay ahead of the competition.

Mutual Trust and Respect: A successful franchise relationship requires mutual trust and respect between the franchisor and the franchisee. The franchisor must be committed to the success of the franchisee and provide ongoing support, while the franchisee must adhere to the terms and conditions of the franchise agreement and maintain the quality and standards of the brand.

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