Utilizing Small Town America Expansion, Franchise Sales Continue to Pickup Steam
September 06, 2007 // Franchising.com // ATLANTA – While many franchise companies are fighting to secure solid leads resulting in unit sales, Aaron's Sales & Lease Ownership has figured out the art of selling a franchise, as the retail giant has sold more than 130 franchise deals in the first six months of 2007, bringing its total over the last year to more than 250.
"Rather than competing for leads, real estate and development opportunities in strictly large markets, we changed our focus to small town America. Sometimes when you focus on the smaller things, big results occur," said Greg Tanner, National Director, Franchising for Aaron's Sales & Lease Ownership. "Going into smaller towns has given us the ability to market ourselves in places we had never thought of going. Now, some of our best performing stores are the newer ones that have opened in small towns with populations of less than 30,000 people."
Aaron's, a division of Aaron Rents, Inc., is the nation's leader in the leasing and sale of residential and office furniture, consumer electronics, home appliances and accessories. Aaron's currently has more than 1,250 Company-operated and franchised stores in 47 states and Canada. While a significant share of Aaron's locations have traditionally located successfully in or near major markets and large cities, the company is enjoying tremendous growth in towns in with smaller populations, 60 or more miles away from the nearest major market.
Aaron's will continue to attract local and area developers to open multiple franchise locations in urban markets, while simultaneously concentrating efforts in smaller communities. Aaron's new franchise strategy has focused on larger, free-standing buildings of between 8,000-10,000 square feet with high recognition in the community, versus blending into strip malls.
With revenues of nearly $5 billion, the consumer durable goods leasing market is one of the most consistent growth markets in the nation today. Having only penetrated 20 percent to 25 percent of the potential market, there are still significant opportunities.
"We will continue to open new franchise locations in traditional urban markets, however, by extending into smaller towns in rural areas, we increase our penetration in a growing and underserved market," Tanner said. "In addition to the excellent unit-level economics of Aaron's stores in these smaller towns, our strategy to target these areas was based on demographic research that shows an ideal match between the incomes, population, lifestyles, behavior patterns and buying habits of typical Aaron's customers."
United States Census Data shows that more than 50 percent of the nation's 96 million households fit the profile of a typical Aaron's leasing customer. By carrying a larger selection of new products and big brand names, including Philips, Sony, General Electric and Maytag, at low prices and offering flexible financing options, Tanner says Aaron's is well poised to grab a significant share of the $125 billion household and electronics industry.
"We are a unique retail category that offers the same products sold in big box stores, but we are more flexible when it comes to payment options," he said. "Our customers can pay by credit card or cash like most other stores, but they can also pay 90 days same as cash or take on a one to two year lease if they want to. Whatever their situation, we work with them."
Celebrating more than 50 years of business success, Aaron's is most known in communities around the national for its culture, service, program, and people. "Those are our real secrets," Tanner said.
Aaron's seeks to double its number of stores within the next five years. Currently, about two-thirds of the stores are Company-operated, with one-third franchised. The result is more than 448 operating franchised stores, with another 275 already sold and scheduled to open within the next three years. Aaron's franchisees must have a net worth of at least $450,000, of which $350,000 is liquid, Tanner said.
Shifts in the nation's economy have also set the stage for tremendous future growth of the Aaron's concept. The continued tightening of consumer credit and the growing number of American households with real annual earnings under $50,000 has created an unprecedented demand for the leasing of big-ticket consumer goods.
"That's one of the truly rewarding aspects of operating a neighborhood business like Aaron's," Tanner said. "Customers can come in our stores and lease or purchase high-end products at prices they can afford, on a payment schedule that works for them."
Aaron's is a premier franchising concept, publicly traded (NYSE: RNT) since 1982, involved in the leasing and selling of residential furniture, appliances, electronics, and computers. Whether a customer wants temporary use of a quality product or ownership at an affordable price, Aaron's provides both options. In business since 1955, Aaron's began franchising in 1992. Today, the Company has more than 1,250 stores in 47 states and Canada.