“Retail Frenemies”: Three Reasons to Play Nice on the Retail Playground

In this fluctuating retail industry, it comes as no surprise that retailers are going beyond whatever it takes to not only keep their doors open, but to stay ahead of the game and capture consumer attention. Even if it means partnering with the opponent on the playing field. With the recent news that Nordstrom has partnered with Anthropologie to launch a home shop in their stores, on top of other retailers taking similar steps in recent years, there are various reasons behind being “frenemies” with the competition on the playground. Here are the top three reasons this strategy can open new doors for brands like yours:

1. Give Customers a Reason to Return

Keep shoppers coming back for more by offering unique experiences that they can’t refuse. From hosting exclusive card member events, to piloting smaller format stores featuring only personal shoppers, Nordstrom is one of the only retailers that has made innovating and diversifying the shopping experience a huge part of their strategy over the years. Building off the success of their J. Crew, Etsy, and Top Shop collaborations, Nordstrom’s home décor partnership with Anthropologie is just one more step in the right direction to not only retaining their loyal fan base, but giving a reason for Anthropologie fans to shop at Nordstrom as well. Forbes states, “The collaboration is the latest in a string of fraternizing-with-the-enemy style partnerships reaching store shelves, as merchants look for creative ways to uncork new revenue streams in a sector upended by digital shopping.”

2. Connect with Your Omni-Channel Consumer

Brick-and-mortar retailers aren’t the only ones teaming up to do business. There is now a growing trend in collaborations between retailers and online competitors. Since Fall 2017, Kohl’s has been partnering with Amazon to launch Amazon Smart Home Experiences in select Kohl’s locations. These “pop-up stores” not only allow shoppers to demo Amazon products before purchasing, but also feature free Amazon Returns, making it easier than ever before for an Amazon customer to return an online purchase. The partnership is obviously working for both Kohl’s and Amazon – Kohl’s stock rose 10% and also pulled a 6.3% in-store sales increase in Q1 2018 over the holiday season, higher than the national average of 5.5%. On the flip side, Amazon customers get what they’ve been wanting for years – an easier way to return purchases. “We’re a few months into it, but we know one thing for sure: the experience is amazing and people are using the service,” Kevin Mansell, Kohl’s Chairman, President and CEO, said. The key takeaway here is that by partnering with an online brand and vice versa with a brick-and-mortar retailer, everyone wins by making it easier for omni-channel consumers to not only make purchases wherever they are, but return purchases as well.

3. Band Together to Gain Market Share

With these “frenemy” collaborations, we’re seeing retail become more symbiotic than competitive, where brands mutually benefit and gain market share simply by working together to build a great customer experience. Since 2015, Ulta Beauty has focused on building extremely strong partnerships with their supplier brands to not only give shoppers the best in-store, try-before-you-buy experience, but to also give brands the ability to understand their customers in real-time. Linh Peters, Ulta’s Senior Director of Loyalty Marketing, stated, “Brands are at our doorstep, wanting to understand who is shopping their brands and also consumer behavior…We have a ton of data, and we’re able to tell them what the guest is doing within our four walls. We’re also online with their brand. It’s not something that a lot of retailers can give.” Even though the retailer has been in business for more than 25 years, Ulta’s focus on building strong supplier partnerships, a nuanced marketing strategy, and engaging in-store experience catapulted their market share past their biggest competitor, Sephora, in only a couple of years.

Retail partnerships, just like any relationship, can be tricky to navigate and make work. However, with the right objectives, a strong mutually-agreed upon plan, and a lot of goodwill, partnering with the “enemy” can actually extend your reach, increase brand loyalty, drive sales, gain market share, and accomplish your goals faster than working alone.

BDSmktg specializes in not only recommending and building the right partnerships at retail, but making them work effectively for your brand. Read some of our success stories here, and give us a call to start building your custom retail activation strategy today.