“Even though we’re heavily dependent on mall foot traffic, we’re actually quite recession-proof,” said Marvin Biltis, CEO. “We’re doing well because more customers are choosing to repair their watches and jewelry rather than buying new.”
The jewelry industry itself has been hit hard by the recession, with major retailers such as Zale’s closing upward of 100 stores and many independents filing for bankruptcy. Fast-Fix, on the other hand, finished 2008 slightly up in same-store sales, and Biltis expects the company to open between 12 and 15 new locations by the end of 2009, especially in light of the many new prime real estate openings in malls with so many other stores closing.
Air of permanence
Fast-Fix began primarily in 10-foot by 15-foot kiosks sitting in the middle of the aisle of a mall. Most of the jewelry and watch repair work can be done in store while the customer waits, other than the complete overhaul of an expensive watch. In addition, 90% of the work can be completed in an hour. And when dealing with items that are not only valuable from a monetary standpoint but also an emotional one, speed, accuracy, and trustworthiness are all necessary.
As a result, over the past few years, Fast-Fix has converted many of its stores, and the majority of its newer locations, into small mall-based inline stores measuring between 400 and 800 square feet. Biltis said that although inline stores typically handle the same level of work as a kiosk, they inspire more trust and confidence from consumers.
“Consumers believe the kiosk may be on wheels and will disappear in a day or two,” he joked. “Inline stores have an air of permanence.”
Transitioning an existing kiosk into an inline store requires an investment on the part of the franchise owner but comes with an almost 100% guarantee that it will do more business than the kiosk. Biltis said 14 out of the top 15 stores in Fast-Fix’s company are inline stores. In addition, in the past few years, telephone companies have made a tremendous impact on the cost of kiosk rent because those companies rely less on sales and more on incentives from their parent companies. “We’re paying as much as $100,000 for a kiosk in some malls, and although our stores are very nice, it’s hard to justify that much rent,” Biltis said.
In one location in Florida, when the mall wanted to raise the rent to $100,000, the Fast-Fix location moved into an inline store and now pays a rent of only $40,000. “It’s supply and demand, I guess,” Biltis said.
Since its founding in 1984, Fast-Fix has grown to roughly 160 stores in the US, three in Canada, and four locations in Ireland. As a Canadian by birth, Biltis said the move into Canada was natural. The move to Ireland was by design.
“I’ve done international trade shows and events for a number of years in parts of Europe and Asia, trying to attract international franchise owners,” he said. “We have a couple we’re talking to in Italy, which has been delayed with the economic downturn, but the move into Ireland is already showing more promise than we’d expected.”
Led by Master Franchisee Shane Cooney, Fast-Fix is now represented in two locations in Dublin, one location in Belfast, and another location soon to be opened in the southern part of the country. In addition, Cooney is planning to expand into the UK.
But no matter where a Fast-Fix store is opened, the same business platform applies. Each location is independently owned and operated. The company’s headquarters acts more like a training ground for new franchisees rather than a corporate parent. “A service business is different than a merchandise business where you’re just retailing and selling product,” said Biltis. “Our business depends on establishing a relationship between the store personnel and the customer.”
At various times in the company’s history, there have been corporate locations, but the head office is staffed as a training department where jewelers can become businessmen. Some technical training is offered, such as how to do watch repairs, but the majority of the information shared pertains to good merchandising and marketing practices and the sharing of new ideas from the entire Fast-Fix franchise community.
As an example, Fast-Fix has developed unique marketing programs that take advantage of the stores’ mall-based locale and getting other merchants to refer business to the Fast-Fix stores. “We don’t compete with jewelry stores because we don’t carry high-end jewelry,” said Biltis. “So whereas jewelry stores can’t afford to staff jewelers 24/7, we can guarantee there will always be one at any of our stores.”
Business and brand
Although Fast-Fix locations have continued to experience growth, it’s not the kind of growth Biltis is satisfied with. To overcome the drop in mall traffic, the company has started television campaigns in some of its major markets, including Florida, Phoenix, Texas, Kentucky, and Tennessee. Similar to much of the company’s business platform, franchisees pay for the ads, chipping in a percentage that’s dependent on the number of stores in their market.
In New York City, for example, there are only three stores total, making it practically impossible to make TV ads feasible. But in a market with 21 stores, like Los Angeles, the cost is less per franchisee and therefore much more effective. And although the ads help build Fast-Fix brand recognition, Biltis said it all comes back to the franchisees themselves and their ability to be strong businessmen and women.
Franchisees must first pass the financial test that proves they are viable and will have enough money to sustain their business for at least the first three months—the typical amount of time it takes for a store to be profitable. Secondly, franchisees must be good businessmen and women, regardless of their experience in the jewelry business. “I wish I could pat myself on the back and say ‘If you own a Fast-Fix, you’ll be successful because of the brand.’ That’s not the case,” said Biltis.
“A great owner will do double what a poor owner will do because we are a service business. We can’t be cookie cutter, and each franchisee knows and understands this,” he concluded.