GUEST COMMENT How collaboration between non-competitive retailers is becoming more prevalent in the
Competition between retailers is at an all-time-high. Retailers are finding new services and offerings to make themselves stand out amongst their competitors like never before, due to the multitude of multichannel offerings now available, or else run the risk of being lost in all the noise.
Digitalisation has massively disrupted the landscape, and now customers have more options than ever before to cater to their range of needs. They have a multitude of choice, from shopping on the high-street, online, to click and collect services and able to pay through different channels. This has dramatically altered consumer behaviour with customers wanting more options when it comes to shopping experience and if retailers are to reach them successfully, they need to provide them with the channels to do so.
And so, it is in recent events that we have seen retailers think outside the box, to find new ways to reach their consumers and desired audience, setting themselves apart from their competitors. Throughout the past year, we have seen collaboration between some retailers take place; partnering up with non-competitive retailers. Last year we saw successes between Tesco and Arcadia in doing this. As non-competitors they were able to sit together in store, giving Arcadia exposure to Tesco customers, and vice versa.
At the beginning of the year I predicted that this trend would become more widespread amongst retailers, and we are now seeing this come to fruition with recent announcements of the Post Office and WHSmith, who have signed a new ten year agreement, and the deal between Amazon and Barclays.
There are two types of collaboration that we are seeing amongst retailers. The first is between online-only retailers creating partnerships and agreements with bricks and mortar retailers. The second is between those who already have a bricks and mortar presence. These are retailers who are teaming up with non-competitors to widen their scope and increase footfall cross-over and reach more customers.
For online-only retailers, it is true that online shopping is steadily on the rise, the value of online sales increasing by 9.3% in April year on year. However, we are also seeing demand for physical presence. Collaborating with those who have a bricks and mortar establishment provides the online retailer with the physical presence that they so greatly need. John Lewis recently said “In-store experiences are now key as we’ve seen customer demand for physical experiences before committing to purchase increase”. Our own research corroborates that although one in four consumers always choose a digital option when it comes to retail, click and collect was the third most used digital service. With this demand for both digital and face-to-face services, it’s more important than ever for retailers to create a balanced, efficient offering that caters for all customers.
As for the retailers either sharing space or teaming up and selling ranges such as Tesco and Arcadia, this opens up another type of customer base for the retailer. Partnerships such as this compliment the others principal offering. While Tesco do sell clothes, it isn’t its primary income, and so in sharing store space with Arcadia, they are likely to attract more customers who are coming into the store for the ranges, and Arcadia will benefit from customers doing their grocery shopping. As well as this, for more regional stores, having Arcadia lines in large Tesco stores means that they are more likely to increase sales and their customer base. For those who do not have Topshop, Dorothy Perkins and other Arcadia lines in local town shopping centres or access online, having the option to buy items from the local Tesco supermarket will make it much more accessible for a wider variety of customer.
Over the course of the next year, we can expect these partnerships to continue to develop and become more selective. With increasing competition from their high-street counterparts, this type of partnership will become an increasing priority for online retailers looking to establish a physical presence with a partner that has a ready-made customer base and guaranteed footfall. For the ‘high street’ retailer, working with an online counterpart offers an added convenience to their customers. Presenting customers with a viable alternative to simply shopping online, there is an expectation of a wider customer base, which will in turn result in more sales. Retailers considering this avenue would be wise to spend time researching a partner that best fits with them. One that is different enough not to simply ‘steal’ their customers, but similar enough to drive conversion and is a sensible fit.Rupal Karia is managing director of retail and hospitality at Fujitsu.