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opportunities explored Case Study: Thorntons

Chocolate confectioner, Thorntons has been in the business of franchising for over 100 years. Over the past year it has seen a renewed emphasis in this area as it seeks to expand its franchise opportunities particularly for gift and greeting retailers, while narrowing down its wholly owned store presence.

n the company’s most recent strategic review this June, Thorntons admitted tough trading conditions and unveiled its plan to streamline the business, respond to changing consumer shopping behaviour and reduce its operating costs. It has been 12 months since Thorntons


reduced its franchise start-up fee by two thirds from £15k-£5k. The new-style franchises differ from the old model with some signifi cant advantages. Thorntons has also done a lot of work to reduce the costs and lower the threshold for franchisees. “Our new shop fi ttings are around 40-45

percent cheaper than before so the franchisee will benefi t greatly from the new format. In the current climate it makes sense to keep our costs as low as possible.” “We’ve also launched a new small format

to increase opportunities for small store to buy into Thorntons. Traditionally retailers would be required to have a 1200 square foot of retail space, but the new format merchandising and display means that Thorntons can work with as little as 600 square foot of retail space. This makes us much more accessible in small shops, precincts, surburbs and market towns. What a big brand does is bring people in – people know Thorntons and they trust what they are getting.”

“What we did at the new Occasions store

in Wootton Bassett was a variation on a theme. It went down well with franchisees and the people who have seen it. This refl ects our offer going forward. The franchise has to fi t the environment, the Thorntons brand must fi t the store and the format must fi t the retailer. Only if we have a happy retailer we can get off on the best possible footing.” Despite a number of store closures,

Thorntons has increased its franchises and increased its market share year on year through their multi channel approach, including their franchise network, third channel distribution through multiples and supermarkets and online through Thorntons Direct. “Thorntons is a well known name. We like to have a high street presence where we can but it depends on the town and

its shopping patterns.” said Han. In some areas, out of town developments have taken business away from the high street. It might no longer be suitable to run a Thornton’s own store, but more appropriate for to open a Thorntons franchise in a gift and greetings card shop instead.” To implement its growth strategy successfully, Thorntons needs to instil confi dence in potential franchisees that their new venture will be profi table, especially if the company is giving out a negative message through its own-store closures.

“It is important for people to understand

why Thorntons takes the decision to close an individual store.” Han explains. “Some of our shops were opened 25-30 years ago when the town was a very different place. In some cases the town has been redeveloped and the store is now at the wrong end of the high street. As a public limited company, Thorntons has to answer to its shareholders and as the retail landscape has changed it has demanded that we make decisions in the best interest of the company. So it’s been a question of whether to keep going as a loss making enterprise or to quit our losses and walk away.” Advantages of owning a Thorntons franchise include ready-made partnerships with card brokerages like UK Greetings, Hallmark, The Great British Card Company and Post Offi ce bring to retailers. However an independent retailer can still choose to source their card stock independently. “Together with our partners we offer a hand-holding process and training programme if it is required. New retailers get so much help they cant go wrong.” Han said. It their new, differentiated own-store

proposition, Thorntons has already been working on developing a less seasonal business with more all year round gifting occasions, such as chocolates for birthdays, congratulations, thank you’s etc. They are creating new products, ‘little gifts’ and will launch more best selling gift ideas from Thorntons Direct. The merchandising and displays are improved, with more products out of packaging and space for the quality of 23 Han Van Reen

chocolates to be demonstrated. Thorntons will also improve the customer experience with a new customer sampling and service programme to launch soon. Han Van Reen outlined the changes, He

The Thorntons franchise at the new Occasions card shop in Wooton Bassett

said: “We have designed a new shop format for our stores, the fi rst new shop refi t has just opened in Birmingham. If it works and helps to support sales then we will roll this out slowly, but we are not going to impose it on our franchisees – we will test it in year one. We are not going to sell an unproven format to new franchisees. Flexibility is key here - the fi nal solution has to work for both us and the retailer.”

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