The new age of retail partnerships

David Orgel
Principal, David Orgel Consulting

Partnerships can be fraught with uncertainty for retailers. A lot can go wrong quickly. 

Nevertheless, in a transforming retail business, there’s more risk in avoiding partnerships than in embracing them. Increasingly, retailers can’t go it alone and still achieve their goals. Retail now relies on an interconnected set of partnerships to move the business forward. Partnering is now an imperative, but it needs to be done well.

The retail industry has witnessed a mind-blowing number of partnerships in the last few years, in all shapes and sizes. The arrangements range from relatively informal collaborations to deep relationships (which is why the word partnership itself may be too general). Partnerships target a range of goals, from boosting retailer omnichannel and procurement capabilities to enhancing consumer-facing experiences. They impact the largest and the smallest of retailers and increasingly transcend traditional boundaries of competition.

Let’s face it. Retailers tap into partnerships because they don’t have the capabilities to overcome challenges by themselves. That’s why Albertsons and Takeoff Technologies late last year announced a “strategic partnership focused on the future of grocery e-commerce.” The effort, which broadened an existing arrangement, centers on developing micro-fulfillment centers for order fulfillment. 

Albertsons’ president and CEO, Vivek Sankaran, explained the value of the partnership in no uncertain terms.

“In working with Takeoff, we can evolve how the MFC ties into our store and e-commerce ecosystems and accelerate our path to best serve our customers.”

Another partnership brought together two high-profile retailers — Kroger and Walgreens — in a sourcing arrangement that crosses traditional competitive lines. In December, the companies unveiled a venture called Retail Procurement Alliance to achieve “purchasing efficiencies, lower costs and combined resources to help drive further innovation.” The effort builds on a relationship developed in the past couple of years that led to the Kroger Express concept in some Walgreens stores and a curated assortment of Walgreens health and beauty products at some Kroger stores.

Meanwhile, retailers are embracing programs with the biggest technology companies when it boosts customer experience and competitive advantage. Walmart has partnered with Apple to make its voice order grocery shopping service available on Siri. As reported in DSN, customers can use a new Siri shortcut for online grocery to start adding items directly to their Walmart online grocery cart, after they’ve paired their accounts. As DSN reported, Walmart is expanding its voice-activated grocery shopping capabilities as the company’s chief rival Amazon makes inroads in both the grocery and voice technology spaces.

Partnerships also are useful in making progress with cutting-edge technologies just now taking off — literally. CVS Health and UPS Flight Forward, a unit of UPS, said they have agreed to develop a range of drone delivery use cases, including business-to-consumer operating models. The focus will include delivery of prescriptions and retail products from retail stores to customer homes. 

These examples help underscore that retailers need to embrace partnerships when they can’t achieve goals on their own. More and more, partnerships aren’t just to achieve a result, but to first identify a road map for success. All the typical rules of collaboration apply, such as to carefully consider partners in advance and to pull out as quickly as possible if things aren’t going well. 

However, today partnership success is more likely to keep getting redefined in real-time. That’s because, given the retail industry’s transformation, the goalposts keep moving. 

About the Author

David Orgel

David Orgel is an award-winning business journalist, industry expert and speaker. He is currently the principal of David Orgel Consulting, delivering strategic content and counsel to the food, retail and CPG industries.

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