Pakistan has one of the fastest-growing trade industries in the world. The country’s middle class is on the rise, too. Independent retailers must respond to changing consumer trends, so METRO Pakistan has founded the franchise concept Freshly to support them.
Wide aisles, tidy shelves, an appealing design in shades of green and white: the branch in Bahria Town, a district of Lahore (Pakistan’s second largest city), is inviting.
A banner above the entrance reads “Freshly – The Neighborhood Store for Fresh Living”. The interior of the shop is pleasantly cool thanks to an air-conditioning system, far from ubiquitous in Pakistan. Its product range contains a wide variety of high-quality food products and everyday goods.
Raafay Munir, Senior Manager Operations and Commercial explains: “Fresh fruit, vegetables and meat from our meat counter, which upholds the highest hygiene and quality standards, are especially popular with our customers.”
The traditional food and local supplies business in Pakistan is dominated by traditional shops: small, owner-run corner shops selling their goods behind a counter. They obtain their products from various suppliers and resell them at a low profit. Unlike the traditional shops, Freshly franchisees do not need to negotiate with hundreds of suppliers, as they receive their entire product range from a single source.
METRO also provides them with their entire equipment including the shop front, refrigerated shelves and an electronic cash register system, which supports cloud-based reports that make the goods and shop management easier and more sustainable. Franchisees receive continuous support, staff training and efficient marketing solutions from METRO, such as the weekly Freshly flyer advertising the latest deals and discounts. The innovative concept has been well received by franchisees and consumers.
Freshly is just on time: with more than 220 million inhabitants, the Islamic Republic of Pakistan is one of the most populous countries in the world. Its middle class is growing, and as incomes rise, so does the demand for fresh food. Urban dwellers, in particular, prefer modern stores with a wide range of goods. Thirteen Freshly shops have already opened in Lahore; another 11 are set to open by the end of the financial year. Asim Isar, Finance Director, has no doubt: “We want to continue our expansion.” Pakistan is the only METRO country operating entirely within the hard franchise model (see the info box). Its current share of wallet, i.e. METRO’s share in all products sold by those stores, is 80 per cent plus. Additional shop openings in Lahore and other cities are planned for 2020. “In the long term, we ultimately want to use our pioneering position to become Pakistan’s leading franchise network in the food retail sector”, says Asim Isar.
Hard franchise (or business format franchise): In this model, the franchisor continues to look after their franchisees intensively even beyond the starting phase, much like in a branch outlet. Its main priorities are the establishment and expansion of a strong brand, requiring diligent quality management and communication. The hard franchise model of METRO Pakistan also involves advice on the product range, pricing and the organisation of supply shipments from the METRO warehouse and from METRO suppliers.
Soft franchise (or licence system): In this model, the franchisee usually receives the business concept, brand, basic business equipment, advertising materials and master agreements with certain suppliers as a bundle. In many cases, the franchisee is left to their own devices after a single introductory seminar; the franchisor is merely available to answer questions.
Both franchise models share the franchisee’s status as an independent businessperson who is solely responsible for their business.