High inflation in 2023 didn’t keep consumers away from retail brands, as the segment had many companies grow their sales last year.
Across all retail companies included in Franchise Times’ research, sales increased from $146.3 billion in 2022 to $151.9 billion last year, a 3.8 percent increase. Leading the charge was 7-Eleven, the No. 2 ranked franchise brand, with $97.8 billion, up 4.7 percent from 2022’s $93.5 billion.
The sales growth wasn’t limited to just one type of retailer, either. Nothing Bundt Cakes had a 20 percent increase in its sales from $617 million in 2022 to $741 million in 2023. Once Upon a Child, a clothing brand, was another good example, with sales rising 8.3 percent from $466 million to $505 million.
The sales growth was evident even with brands that have to deal with more than matters like inflation. Metal Supermarkets grew its sales from $262 million to $273 million in 2023, despite having to manage shifting product costs.
Metal Supermarkets CEO and President Stephen Schober
“We’re in a specialty industry, because metal prices are something that goes up and down as a commodity,” said Stephen Schober, CEO and president of Metal Supermarkets. “We still managed to show growth despite prices weakening. It wasn’t as strong as other years. But as far as invoice counts and number of stores, as well as physical quantities of metals sold, we performed well.”
Schober said building sales despite obstacles has been learned over 40 years of business.
“We’ve seen all of these economic issues before,” Schober said. “We recognize there was a spike in metal prices during the pandemic like there was for other commodities. So, we switched what we emphasized to franchisees. We talked to them about pushing invoice sales and pounds of metal more than dollar sales, so they were focused on doing the right things.”
Additionally, Schober said the brand made an effort to support a higher level of metal services than previously done. The brand offers metal cutting for various types of metal, but Schober said franchisees were encouraged to become more dedicated to drilling, punching holes and bending metals for customers.
Even brands that had sales stay mostly the same experienced improvements. Batteries Plus had system-wide sales come to $612 million for the second consecutive year, but Chief Development Officer said 2023 was still strong.
Batteries Plus Chief Development Officer Joe Malmuth
“The secret sauce is that the nature of our business is very needs based,” Malmuth said. “So, no matter what kind of fire is going on in the world, we have the things people need to get by. We’ve also been growing our B2B model. The retail space is steady, but the growth on the commercial side is where we see consistency from.”
Like other brands, Batteries Plus did experience its own form of challenges, notably, supply chain shortages. Fortunately, Malmuth said the company had an ace up its sleeve.
“Many years ago, we started a buyer’s program, creating a support mechanism for our owners,” Malmuth said. “We’re headquartered just outside of Milwaukee, and in that area, we have a 150,000 square-foot distribution center where we bring a lot of that inventory in and house it, before distributing it as an inventory retail mechanism for our stores.
“We started seeing the prices of shipping containers going up every day, so we weaponized that division,” Malmuth said. “We’re back to pre-pandemic levels of inventory now, but at the time, the winning strategy was whatever company had the inventory got the sales, and we needed to protect our franchisees that way, making sure they stayed in stock to service the customers.”
While many brands did have success in 2023, others did have sales declines. Buddy’s Home Furnishing, for example, had sales fall from $274 million to $264 million, a 3.6 percent decline.
Buddy’s Home Furnishings Chief Financial Officer Mitchell Lee
Mitchell Lee, Buddy’s chief financial officer, said even though inflation played a role, the brand’s 2023 financial results were also impacted by a larger amount of spending on inventory.
“In this business, it’s good to have more inventory because you can put more product out on rent,” Lee said. “You’re still making the same amount of money, but you’re also making that same investment back into the business. Inflation is the biggest difference on our bottom line but there’s also us buying more inventory for our stores. We need to keep putting inventory in the stores.”