2/18/2021 | PYMNTS.com
For over 30 years, Batteries Plus has been growing and adapting to meet customer needs. Management says its resilience during downturns such as the COVID crisis has stoked demand from franchisees, and the retailer has now announced plans to open 50 new stores this year.
The country’s leading omnichannel battery and lightbulb retailer said on Tuesday (Feb. 16) that the consistency and resiliency of its brand has brought in 10 new stores this year, with plans to open at least another 30 new Batteries Plus locations during 2021.
The 33-year-old Wisconsin-based retail chain currently has about 700 stores nationwide — 85 percent of which are franchisee-owned — and is in the throes of a major growth spurt and refresh cycle. Initiatives include updating stores, adding digital convenience capabilities like curbside pickup and delivery, and offering more niche repair services to augment its core business.
“We have a moat, if you will, around about 75 percent of our assortment that is protected from online competition, because it’s either a non-shippable item or a service offering,” said Jon Sica, chief strategy officer for Batteries Plus, in a telephone interview with PYMNTS. “So we are doing 55 [franchisee] signings, and then we’ll be doing store refreshes and re-grand openings at almost half of our system — so around 330 stores in 2021,” he added, noting the company’s efforts to improve the layout of its stores to make them more customer- and COVID-friendly.
There’s also an effort underway to make further digital innovations and investments in omnichannel technology, appealing to customers and investors to further improve the retailer’s competitive advantage, said Sica.
The Service Niche
Not surprisingly, Sica said that “batteries are, by far, the biggest part of our business.” The company claims to be the undisputed leader in the expanding $32 billion U.S. battery replacement market. At the same time, it also has a major stake in the $22 billion lightbulb replacement market, in what amounts to a 70 percent retail, 30 percent commercial split for most stores.
That said, the growing portfolio of services offered by Batteries Plus has become an increasingly important niche for the business, whether it’s cell phones, laptops, tablet repairs, key fob replacement and programming, or free battery installation.
“Where we compete with others online and [in-store] is by offering service and really promoting our free auto battery installation right now, especially as cold sweeps across the country and is killing batteries left and right,” noted Sica said.
The Franchise Opportunity
With average revenue of $1.3 million and 53 percent profit margins on merchandise at the top 25 percent of its stores, the case for investing as a franchisee is compelling. The company is adding capacity in all 50 states, but is currently targeting California, Texas and the Northeast as “key growth markets.”
“Early last year, our stores were deemed essential businesses, which allowed them to remain open and continue to meet customer needs at a time when health and safety were a top priority,” said Scott Williams, CEO of Batteries Plus. “The stability of our business model quickly became apparent, and entrepreneurs across the country took notice.”
To qualify to purchase a Batteries Plus franchise, investors need a minimum net worth of $350,000 and at least $100,000 in liquid assets. That said, the company reports that multi-unit purchases are common, accounting for 85 percent of its top-performing stores, while the average multi-unit franchisee owns four or more stores. “From a store [count] perspective, we’re probably not even halfway there,” Sica said.