Global fashion brand DeFacto breathes new life into the franchise system, supporting its business partners in all franchise processes to operate in accordance with the brand’s DNA. In this way, the brand, which has signed a more seamless and smoothly functioning system, provides all it franchisers with a turnkey retail experience. We had an interview with Serdar Ersoy, DeFacto Alternative Sales Channels & Business Development General Manager about all the details of the brand’s new model franchise system, its technology and globalization strategy.

What is DeFacto’s franchise strategy? What are the points that it differentiates in terms of franchising in the sector?

On the way we set out in 2005 with the vision of becoming Turkey’s global fashion brand, we continue our activities uninterruptedly with a total of 500 stores in 93 countries today. As a franchise, we have 34 stores in 13 countries. As a company that has grown with its own investments to date, we have made serious investments in the franchising area in line with our decision to expand our franchise network in order to increase the investment growth rate, especially in the last two years. We double our growth rate with our own investments and franchise partners at the same time. In DeFacto, expansions and franchises operate like a standalone company managed with its own dynamism. We’ve worked on this system down to the last detail and it’s pretty settled right now.

We examined different franchise models around the world before making this move. When we look at the world, generally we see that the wholesale model is preferred. Since we have adopted the corporate base business model as DeFacto, we have designed a new generation franchise model for ourselves. The most fundamental feature of this model, which distinguishes DeFacto from the sector, is that this channel is uninterrupted and integrated like our other channels (flovless). We are developing our business processes to provide 360-degree service in order to avoid any shortcomings in the selection of franchises in the countries. As DeFacto, we are in the loop from finding a place for the store to construction, from product selection, planning, pricing to operational efficiency processes and we are moving forward with our business partners. The most important detail is that we don’t keep our franchise stores separate from our own stores and we operate them in the same way. We do PNL Traiding on a store basis every month and we can analyze the monthly performances and different details of all store employees. In short, we provide our support for all our franchises to operate in accordance with the DNA of our brand.

As a strong and well-established brand, we provide all our franchisers with a turnkey retail experience. We take an active role in all processes in the preparation of the store, from determining the location of the store to the project and construction process. In addition to this, we provide operational support from the products to be shipped to the prices at which the product will be sold. The company manages the entire end-to-end process with its own teams on a country basis. This is not a very common model in the world. The message we want to convey here as DeFacto is to cooperate with a visionary partner with a financial and commercial background in the targeted country. All remaining processes are meticulously managed by DeFacto franchise teams. Our main priority is the rapid, profitable and reliable growth of our business partners.  Together with the global human resources, our franchises are growing rapidly in the countries they enter.

Can you talk about DeFacto’s globalization strategy? As we approach the end of the year, can we get some information about DeFacto’s performance and new targets?

DeFacto’s step into the retail and fashion industry started with the aim of bringing our quality and original designs to our consumers all over the world. Today, we continue to grow with a total of more than 500 stores and 15 thousand employees in 5 continents. We have a very strong vision to increase the number of countries in which we operate to 180 in 2025. In this context, we continue to establish new business partnerships with e-commerce and franchise channels and to open stores in strategically important locations for our investments which we have made by combining the power of fashion and technology.

We are improving our strong omni-channel infrastructure, which we lead from Turkey, to include our franchises. We cooperate successfully with e-commerce channels to deliver our products all over the world. One of the best examples of this was our cooperation with Zalando, a multinational e-commerce website in Europe. We entered 12 European countries in a record time of four months. We managed to increase our net income by 400% in our European operations, which we provided through Zalando.

Parallel to this, we started selling on Amazon and entered the US market.  In addition to these, our hybrid team continues its activities in England.

As DeFacto, our target was to open 50 stores in line with our 2023 goals. We have now achieved this target 90% now. We plan to meet our targets as 10 stores inland and 40 stores abroad. We especially aim to expand the franchise channel by 300% in the next 3 years.

As DeFacto, how do you use digitalization and technology in your organization?

As DeFacto, we established DeFacto Technology 7 years ago to produce all our technological infrastructures and started to prepare the omni-channel infrastructure. While our developer team, which includes more than 300 people, continues to develop our infrastructure, we develop our own software that pioneers the transformation of the retail industry. We are proud to say that DeFacto is a brand that produces not only fashion but also technology. In short, we share our knowledge with our franchises and continue to grow together.

Today, the boundaries between physical and online in the customer’s shopping journey have been removed, and we defi ne this intertwined concept as “Phygital” and we work to offer innovations to our customers in this direction. The best example of this, is our “Infi nity” themed phygital store that we opened in Berlin at the end of 2021. We have designed a store experience that will be a pioneer in the retail sector and where our customers will experience the concept of new generation merchandising in depth in our Berlin store. For example, when our customers like a product, they have the opportunity to see the outfi t on the “smart mirror” and can place their order and receive the product from their home.

Our technological work continues without slowing down to make our customers’ shopping journey faster and easier. The most important of these efforts is our DFPOS application, which prevents the formation of queues in front of the cash register by providing the opportunity to pay at every point of the stores. DFPOS, the first “Android POS” project implemented in the retail sector in Turkey, it facilitates the shopping experience of customers by enabling omni-channel supported payment and return transactions at every point of the store with the mobility it provides. After all the transactions, the printouts of the transactions can be received on the same device as at the cash register, and the sales information are sent to the customers’ mobile phones as SMS.