Every retail operator starts with that first single store. The management hones their operational skills; develops a “how-to-go-to-market” strategy; and hopefully finds success for years to come. Then they wonder if they could replicate this success in a second location? A third? Or more? How do they make that happen and what are the key elements to consider making that leap?
Do You Have What it Takes?
It is one thing to be able to run one location if you can touch and impact everything at the location. But how do you spread your management influence over, say, five locations? While it is quite a difference going from running one location to managing multiple locations, it is clearly not an anomaly. In fact, over 50% of all retail locations are managed by multi-unit operators. Of that number, roughly 30% run between two and 30 locations, and over 5% of owners make it past the 100-unit mark. There is clearly precedent for
becoming a multi-unit operator.
Core Ingredients for Consideration
First and foremost, you need to have the operating experience to blossom out to multiple locations. In a nutshell, can you “walk the walk” when it comes to operations and can you translate that to managing people to execute? Next to consider is determining whether your brand is well-established and proven enough to expand.
Can you create a customer experience that can transcend transactions into experiences?
Lastly, have you assembled a strong team that is able to implement your systems and procedures even without you being present? Consider the pros and cons of becoming a multi-unit operator:
Pros:
- Lower variable costs
- Volume purchasing and the ability to spread out your marketing costs
- Could be easier to manage
- Cross-training and optimal utilization of employees
- Learning and improving
- Testing items and procedures at one location then rolling out to other locations
- Lower fixed costs
- Spreading costs of equipment over multiple locations (i.e., a delivery vehicle)
- Better handling of a crisis
- Relocating inventories from one location to another if need be
Cons:
- Could be difficult to manage
- May stretch you too thin if you don’t learn to delegate
- May hide problems at some units
- Bifurcating your unit profit and losses (P&Ls) is a must to keep tabs on each location’s financial performance.
- Could lead to higher costs
- If you are not watching your costs and overall operations carefully, the cost can get out of hand.
- Could lead to lower sales
- Customers may avoid other locations if they experience service issues at one.
Changing your Management Style
Managing multiple locations versus one requires a change in management structure. Multi-unit leaders manage the people that manage the problems and shape the experience of every team member and guest in their market. The individual general managers manage the store problems themselves. Essentially, you become a manager of people versus a store.
In summary, the success of multi-unit corporations depends on the competence, capabilities and commitment of field managers as they embody the brand through their actions, oversee daily operations and implement new initiatives. They are no longer the tactical doers but rather the managerial visionaries that align each store staff to a common goal. If they can pull that off, a multi-unit operator can extract all the real and tangible scalable benefits that come with multi-store operations.
John Matthews is the founder and president of Gray Cat Enterprises Inc., a Raleigh, N.C.-based management consulting company. Gray Cat specializes in strategic project management and consulting for multi-unit operations, interim executive management and strategic planning. Matthews has over 30 years of senior-level executive experience in the retail industry.
