Retailers fiercely compete against each other, but in such a disrupted and competitive marketplace, it is now time to find ways to collaborate across the retail ecosystem to better serve consumers. Retailers could find ways to work together to create efficiencies and reduce costs, for example, in areas deemed to derive little customer value, benefitting themselves and the industry. Going a step further, there is the potential to collaborate on growth opportunities with other partners beyond retail – these partners could be customers, staff and communities as well as businesses.
To attract the right partner, retailers need to be able to carefully articulate the value they bring to the arrangement. It requires an understanding of where value is created that appeals to others, how much and how to maintain it. Mastering Rule 1 will inform this.
The first step in collaboration is to identify which capabilities must be kept in house, which ones to outsource and which ones are opportunities for new partnerships. Doing everything in house is no longer always the optimal option. For instance, retailers’ warehousing may have served it well to supply stores; but as distribution models and technology changes, what’s required to deliver to individual consumers is on a different scale and level of complexity.
Sharing common values with like-minded partners will bind the partnership. Without these values, the partnership will struggle to resonate as intended, however strong the business case is. Retailers need to be clear on what they stand for, with a strong and differentiated purpose that their ecosystem accepts too. Tomorrow’s consumer is adamant about what they will tolerate. Alignment on values will help to reduce reputational risks and build consumer trust.
It is a two-way process — not only to choose, but also to be chosen. Retailers looking to build a collaborative ecosystem need to move quickly — first to create the right internal environment before even considering embarking on partnering with others; and second, to avoid being left with an ecosystem of “B-team” players.
Collaborating to create efficiencies
Tesco and Carrefour surprised the retail community by forming a long-term strategic alliance in 2018. They saw mutual benefit in working together on strategic relationships with global suppliers, the joint purchasing of own brand products and goods not for resale.¹ The alliance could result in improved product choice and quality for their customers at lower prices, thereby enhancing their competitiveness.
Collaborating to broaden experience
Primark is collaborating with Duck & Dry, creating hair, nail and brow stations, offering its customers an opportunity to not only buy its fashion, but also to come into the store for an additional experience.²