High inflation in 2023 didn’t keep consumers away from retail brands, as many franchises in the segment grew sales last year.
Across all retail companies included on the annual Franchise Times Top 400, 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 Top 400 ranking lists the largest U.S.-based franchise systems by global systemwide sales.
The sales growth wasn’t limited to one type of retailer. No. 101 Nothing Bundt Cakes turned in a 20 percent sales increase, from $617 million in 2022 to $741 million in 2023. Once Upon a Child, a clothing resale concept ranked No. 147, was another good example, with sales rising 8.3 percent, from $466 million to $505 million.
Metal Supermarkets, meanwhile, a specialty retailer that supplies small metals, grew its sales from $262 million to $273 million in 2023, despite having to manage shifting product costs.
Stephen Schober is the CEO of Metal Supermarkets.
“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 tactics to build sales despite obstacles have 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.
At No. 128 Batteries Plus, sales were flat from 2022 to 2023, holding at $612 million, but Chief Development Officer Joe Malmuth said it was still a strong year.
Joe Malmuth is the chief development officer at Batteries Plus.
“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.”
Batteries Plus did experience its own 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,” he continued. “We’re back to prepandemic 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 saw sales declines.
A 3.6 percent drop for rent-to-own concept Buddy’s Home Furnishings put it at $264 million in systemwide sales last year.
Mitchell Lee is the chief financial officer at Buddy’s Home Furnishings.
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.”