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06 Apr 2017

Aldo's Norman Jaskolka fires broadside at franchisee role

Aldo boss Norman Jaskolka used his 'in conversation with' session at today's World Retail Congress to rail against the traditional franchise role as he warned that tight retail margins and increasing online sales made the current set-up redundant.

Aiming fire at franchisees “who cannot add value” and “landlords who have not yet recognised the seriousness of the market” he stressed the scale and peril traditional retail faces and the urgency required to reset conventional relationships.

His forthright views no doubt made for uncomfortable listening in the GCC, a region heavily reliant on franchise partnerships, as he said that simply providing locations was no longer enough in the new retail paradigm.

“Retailers need a franchise partner that can execute the brand and introduce contacts that the retailer could not reach themselves,” he said. “As a brand, we also need retailers who can create the brand experience we need. If a partner is no more than a distributor then there are serious issues.”

Jaskolka said that these factors had come to a head because of the online threat and pressure on margins, as he revealed that his own footwear business would see online sales match sales from its circa 800-store estate for the first time this year.

“We have seen retailers affected first by these changes, with a number going out of business,” he warned. “What we have to look at now is the cost of real estate, because some landlords have not yet recognised the cost of retailing.”

Looking to the future, he said that it made little sense to have a distributor for online and a different one for offline in a given market, so these would need to be delivered together as he said: “We need to look at how we bring franchisees into the loop.”

He foresaw new relationships, with the franchisee acting more like a “media channel” where the retailer paid them for their services, while he insisted that retail remained a vibrant sector but that “we have to redefine what we mean by retail, because it's on- and off-line.”

The first challenge was for retailers to understand their own transformation, then look at how best to take this forward, he said. “What we can't have is traditional relationships getting in the way of our access to the consumer,” he warned. “If that happens, we need to re-work those relationships.”

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