In this FDD Talk 2015 post, you’ll learn the following:
- Section I – Background information on the Batteries Plus Bulbs franchise opportunity, including relevant news updates
- Section II – Estimated initial investment for a Batteries Plus Bulbs franchise, based on Item 7 of the company’s 2015 FDD
- Section III – Presentation and analysis of Batteries Plus Bulbs’ financial performance representations, based on Item 19 of the company’s 2015 FDD, including information on the:
- 2014 average net revenue and merchandise margin for franchised and company-owned Batteries Plus Bulbs Stores that were in operation for the entire 12-month period ended December 31, 2014
- 2014 average annual net revenue percentage increase for Stores that were in operation for the entire 12-month period ended December 31, 2014
- 2014 average annual net revenue percentage increase for all Stores in operation as of the last day of the most recent year
- 2014 average merchandise margin for retail and commercial customers for all Stores in operation as of the last day of the most recent year
- 2014 average retail and commercial revenue as a percentage of total revenue for all Stores in operation as of the last day of the most recent year
- average net revenue for the first full 12 calendar months of operation for franchised Stores opened in 2011, 2012, and 2013
- average net revenue and average merchandise margin for Stores that were in operation for the entire 12-month period ended December 31, 2014 by length of time a Store has been in operation (1 to 3 years, 4 to 6 years, and 7+ years)
- 2014 average net revenue, expenses, and EBITDA for company-owned Stores owned and operated for 7 years or more
Section I – Background Information
When Batteries Plus Bulbs first got started back in 1988, it was just Batteries Plus, selling and recycling batteries of all types. Back in 2010 it made a major move by adding light bulbs into the mix and then officially changed its name in 2013.
It began franchising in 1992 and opened 42 new stores in 2014, with another 55 planned for 2015. Headquartered in Hartland, Wisconsin, the chain has expanded to more than 640 locations in 47 states and Puerto Rico.
When it comes to batteries or bulbs, you’ll be hard-pressed to find a faster grown chain with such a solid history behind it. Here’s how privately-owned Batteries Plus Bulbs keeps the lights on in its stores to serve more than 1.5 million customers each year across the country:
Riding the Technology Wave
The original concept came about from the realization that as society becomes increasingly dependent on a variety of mobile devices (and yes, that includes devices as large as automobiles as well as the proliferation of smaller electronic devices), there would inevitably be a growing demand for replacement batteries of all shapes and sizes.
Just for the record, the U.S. replacement battery market is estimated at $30.7 billion (by contrast, the U.S. light bulb replacement market is estimated at $17 billion).
According to Ron Johnson, Apple’s former senior VP for retail (and ex-CEO of JCPenney), “A store has got to be much more than a place to acquire merchandise. It’s got to help people enrich their lives. If the store just fulfills a specific product need, it’s not creating new types of value for the consumer” (source).
Batteries Plus Bulbs accomplished this important objective through several different efforts. First, they stock many odd and hard-to-find varieties, which is something most big one-stop-shopping box stores don’t bother to do.
The chain also includes Tech Centers where customers can get help meeting unique challenges in repairing and/or customizing portable power needs, as well as general smartphone and tablet repair services including battery replacements, cracked screen, charge port, button and antenna repair, and more.
Serving a Variety of Customers
Batteries Plus Bulbs was smart in diversifying its clientele beyond individual consumers to include both businesses and governmental entities. The way this pans out in terms of business strategy is around store location. The chain keeps an eye out for areas that have strong residential density combined with high business density. Whether it’s a hospital, hotel chain, or the military, Batteries Plus Bulbs can step up to the plate and meet the need.
I wouldn’t say that Batteries Plus Bulbs is recession-proof, but it definitely has shown resilience in the face of troubled economic times. In fact, it logged in double-digit growth even in the depths of the Great Recession. After all, people need batteries and bulbs regardless of what’s happening in the economy.
There’s not much to say here except that no one else can match these numbers: The chain can access 45,000 different types of batteries, light bulbs, and accessories. Clearly, if you need it, they probably have it (or can get it).
Section II – Estimated Costs
- Please click here for detailed estimates of Batteries Plus Bulbs franchise costs, based on Item 7 of the company’s 2015 FDD (updated).