Collaborative Partnerships: Retail’s Evolving Business Model
Between constantly evolving competition and higher customer expectations, brands are feeling pressure to find innovative ways to delight their customers. From this pressure, a new trend in the retail business model surfaced with the emergence of creative partnerships.
Kohl's partnership with Aldi supermarkets looks to “right-size” its locations and get creative with shared real estate. RadioShack announced its attempt at the "store-within-a-store" approach, rolling out “RadioShack Express” locations within 60 HobbyTown locations across the country. Macy’s recent partnership with b8ta, a try-before-you-buy technology operation, allows customers to try tech products in Macy’s stores that the big-box retailer wouldn’t normally offer.
In Square Root's 2018 customer experience research, 79 percent of retailers agree that physical spaces are where their brands come to life. For new partnerships, the stakes are even higher. The in-store experience will be perceived by customers as one interaction, regardless if there are two brands in play. The challenge isn’t just sharing the space, it’s about connecting the customer experiences of each brand into one unified interaction.
By bringing two companies together under one roof, organizations are essentially combining two complex systems: their technologies, internal processes, leadership, brand guidelines, customer expectations, and more. This is a huge challenge. How do you get all of the important information to the right people instead of mashing experiences together that stress your retail machine? The answer lies in your leadership and data.
In our 2018 State of the Store report, more than 1,300 store and district managers said they're dissatisfied with their jobs, citing misalignment and poor communication as the top contributing factors. This is concerning because unengaged leaders impact everything from team turnover to the customer experience.
Partnerships add even more complexity to store execution. Therefore, organizations must make even more effort to ensure their leadership is engaged, happy, and empowered to bring the partnership to life. Cross-organizational alignment and streamlined processes for district and store management are critical for successful partnerships. Imagine the missed opportunities if Kohl's and Aldi's leadership aren’t coordinating seasonal activities, in-store promotions and team training. To make this happen, organizations must provide the tools to share performance data between partners. Then, both leadership teams can align to integrate company goals and quickly collaborate to drive improvements together.
Integrated data and information also presents a huge opportunity for retailers. Brand partnerships create opportunities to attract new customer segments as well as keep the shopping experience fresh and exciting. For example, a new b8ta innovation center inside Macy’s provides customers with a convenient opportunity to experience new tech in stores. While that may not be the initial motivation for a consumer to walk into a Macy’s, imagine if the retailer could also optimize the displays outside the b8ta centers based on shared customer demographics and shopping behaviors. An elevated experience becomes an exceptional one.
Connect the Dots and Act on Them
We haven’t seen the end of the experimentation with creative retail partnerships. While they offer a wealth of opportunities, the real winners and losers in retail partnerships will be those that best integrate their teams and their data to improve both operations and the customer experience. The true power of shared information comes in connecting the many data points these partnerships offer and empowering your team to take action on them.
Chris Taylor is the founder and CEO of Square Root, a provider of store relationship management software.
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Chris Taylor is founder and CEO of Square Root, a store relationship management software.