Pandemic-Driven Consumer Demands Are Changing Franchise Models in 2022
If 2020 and 2021 taught us anything, it’s to be flexible. But let’s put 2021 in the rearview mirror and look forward into 2022. The world is changing at a rapid pace, and consumers are demanding more from their favorite brands, resulting in sweeping changes among franchise systems across the U.S. I predict that in 2022 franchise brands will need to focus on four major trends to stay relevant.
1) Consumers will increasingly want to customize their experience
Changes in consumer behavior resulting from the pandemic have resulted in increased demand for online ordering, contactless payment, and delivery of many retail goods. According to a survey of U.S. consumers by SurveyMonkey in November 2021, 89% of adults strongly or somewhat agreed that businesses should continue to offer hybrid shopping options after the pandemic. In addition, most consumers wanted flexibility in how they do their shopping, with 56% of respondents preferring hybrid shopping experiences, such as ordering groceries online, then going to the store to pick them up. This survey confirms what many people have observed: namely, that the pandemic has accelerated the adoption of customized shopping experiences by most consumers. Retail stores and restaurants will continue to add drive-through windows, curbside delivery, and third-party delivery services as a result of this shift in consumer preferences.
2) Consumer loyalty is now experience-based
Before the pandemic, customer loyalty was often tied to a specific product or price point, but now most consumers stay loyal to a brand because of the experience they receive, even if it costs more. With rampant supply chain and staffing issues throughout the retail and restaurant industries, this could become a concern for some franchises.
Although 2021 brought more self-service technologies, a Datamark study shows consumers still prefer phone and in-person conversations. This means that these interactions are critical and can make or break a customer’s relationship with a brand. This may require investing more in training for frontline employees and focusing on providing better, more compassionate customer experiences. Now, more than ever, to maintain brand loyalty, franchises must understand the value of a positive customer experience.
3) The Great Resignation will result in the Great Hiring-nation
In 2021, the term “The Great Resignation” was coined to describe record high numbers of U.S. workers quitting their jobs. In September, and again in November 2021, the Bureau of Labor Statistics reported all-time high numbers of people leaving their jobs. According to Wired, the phrase “The Great Resignation” misses the point: “The real takeaway is why people are leaving their jobs in the first place – rampant stress, the shift to remote work, a forced reckoning with what matters in light of the pandemic – and what resigning is leading them to do next.” Many media sources have called The Great Resignation a wake-up call for managers to give employees better hours, pay, and flexibility in scheduling.
Franchise systems are feeling the effects of The Great Resignation as many people quit jobs in the retail, restaurant, hospitality, and service industries. With so many job openings across the country, managers are increasing pay and rethinking the demands placed on workers. I predict that franchised businesses will offer more flexibility in scheduling, training opportunities, and benefits for hourly work in 2022. According to Elise Gould, an economist with the Economic Policy Institute, “Hires are on an upswing as quits continue to rise. Workers appear confident to quit their jobs in search of better ones.” These trends signal a healthy dynamic in the economy as employers respond to employee demands for better working conditions.
4) Consumers and franchise prospects will seek out socially responsible brands
The increasing divisions in U.S. politics, racial tensions, and monopolistic business practices have led to a demand for more accountability around environmental and social concerns, such as climate change and diversity. Consumers and prospective franchisees will be demanding more information about a franchise system’s environmental impact and its values related to human rights, equity, and inclusiveness in 2022. The voluntary adoption of investment standards like ESG (environmental, social, and governance) and B Corp certification will continue to extend to franchise businesses. For example, the McDonald’s website discusses sustainability, responsible sourcing, climate change, and reducing food waste. Prospective franchisees will look to invest in a brand that embraces socially responsible values in the coming year.
Pandemic-driven changes in consumer preferences and worker demands will drive changes to franchise brands in the coming year. Consumers will continue to prefer brands that offer a hybrid shopping experience. Moreover, consumers are willing to pay more if a positive personal interaction is included in that shopping experience. Franchise systems will bounce back from The Great Resignation by adding flexible scheduling, training opportunities and other benefits to hourly jobs in 2022. Franchise brands that embrace social values will be more attractive to consumers and prospective franchisees.
Lynne Hanson is a partner at the Denver-based law firm Moye White, where she concentrates on franchising and distribution regulatory law. She has represented franchisors in business, trademark, regulatory, and transactional matters for more than 20 years. She can be reached at 303-292-7927 or firstname.lastname@example.org.
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