Grow Market Lead
Consumer
data
BY TOM EPSTEIN
2013 Annual
Payments Review
Digging into trends and looking ahead
F
or the third consecutive year,
FPN is reviewing the previous year’s sales trends in
the franchise space. While
not encompassing all of franchising,
FPN does have real data on the 150plus franchise systems that endorse us
for our various products and services,
which gives us a good snapshot of
trends in franchising and the economy
in general.
In a year when the economy has been
sputtering along with sales fairly flat,
the holiday sales period was critical, as
always, to merchants looking to end the
year strong. November saw same-store
sales growth of 4.5 percent over 2012,
but in December that gain dropped to
2.9 percent over 2012.
Black Friday got things moving on
a positive note, with most analysts reporting in the +3.4 percent area over
2012. But with a short selling period
(Thanksgiving was late and Chanukah
was early), many consumers seem to
have made most of their purchases in
the first two weeks after Black Friday.
Small Business Saturday (which
for the first time welcomed franchiseowned businesses from chains smaller
than 100) and Cyber Monday were also
up 4.8 percent. Then things seemed
to level off, with Christmas week flat
against 2012, and the previous week
down 2.4 percent.
One interesting development is what
people were actually doing on Christmas Day, once all of the presents were
opened and the Chinese food delivered:
they were shopping on their mobile
devices! If you received a new smartphone or tablet as a gift, the chances
62
Franchiseupdate ISS U E I, 2 0 1 4
were pretty good you were using it
on Christmas to shop: 48 percent of
all online traffic that day was holiday
shoppers, up 28.3 percent over the
previous year; and actual purchases
made were up 29 percent over 2012.
Although smartphones drove 28.5
percent of the total traffic (compared
with 18 percent for tablets), more
people were actually making purchases
from their tablets: 19.4 percent, more
than twice the 9.3 percent from smartphones. Tablet users also spent an
average $10 more per purchase than
smartphone users.
Apple still seems to own the commerce piece of the mobile buying pie.
Of all purchases made, 23 percent were
made from an Apple device, with only
4.6 percent from Android users.
Breaking it down
Let’s look at some of the segments in
the franchise space for 2013 as a total.
(Please remember that the numbers
below are just a snapshot of what was
presented using credit or debit cards;
FPN does not gather information on
cash or paper checks.)
Sector
QSR
Dessert
Services
Restaurant
Home healthcare
Salons
2012 2013
+16% +12%
+28% +15%
+9% +11%
+7% +8%
+5%
+3%
Flat +2%
The leader again in 2013 was the
QSR sector, which was still being driven
by the dessert segment (which I broke
out into its own category again this
year). The dessert segment was also the
leader in actual number of new units
and percentage of new units opened in
2013. Fine dining and casual seemed
to have stabilized last year after several
difficult years.
The salons sector (hair salons, tanning, spa, and massage) continues to
lag a bit, but is showing some signs
of growth. The services industries
continue to grow, driven primarily
by mobile processing, as technicians
in the field are rapidly adopting new
technologies that allow payments to
be made in the home or at a job site
by swiping a credit card on a smartphone or tablet.
Compare all these figures with
what will likely be a GDP of around
+2 percent for the year.
Prepaid cards, as a percentage of all
payments, were up 7 percent over 2012
and continue to outperform all other
payment types. Credit card payments
were steady at 4.9 percent, debit payments slowed a bit from the previous
year to 6.2 percent, and checks continued to drop at 4.9 percent.
Technology continues to drive payments. Mobile of course is the biggest
driver of new payments acceptors,
and I look for mobile to become even
“more mobile” in 2014. For the past
few years, we have all been focused on
taking payments from smartphones
and tablets. Those methods will no
longer be considered leading-edge,
but more the standard. I would look to
smart watches, and whether a winner
emerges in the mobile wallet app space.
But not to worry: all of this new
technology will not mean huge changes
in the back office of how payments are
accepted, just in the method of interaction with your customers. n
Tom Epstein is CEO and
founder of Franchise Payments Network, an electronic payments processing
company dedicated to helping franchisors and their franchisees improve system performance, increase revenue, and reduce expenses. Contact him
at [email protected] or
866-420-4613 x1103.