This year, the retail sector is evolving so fast and so dramatically that companies now recognize they can’t manage the changes all alone, and because of that, strategic collaboration is on the rise.

For instance, retail companies are struggling to keep up with intense competition, discerning consumers, technology upheaval and regulatory changes. All these simultaneous market forces can overwhelm retailers and consumer packaged goods (CPG) suppliers, and inspire these companies to combine forces to gain a competitive edge.

How retail partnerships can lead to profit

Admittedly collaborative retail partnerships can increase business complexity, as successful partnerships depend upon open, ongoing communication, including sharing accurate, timely information across the supply chain.

Yet, as these figures show, retail collaborations can pay off:

  • 70% of retailers say data sharing significantly improves the quality of collaboration and dialogue between trading partners.
  • 75% of suppliers see data sharing with retailers as an important strategic initiative.
  • 78% increase in retailer sales result when retailers have a high level of trust in their vendors (compared to a low level of trust).1 63 Statistics that Prove Brands Benefit from Investing in Retailer Collaboration Tools. 2019.  

By combining their strengths, retailers and CPG suppliers can improve top line growth by reaching new consumer markets, and improving product quality and responsiveness to consumer demand for greater variety.

Retailers seek startups for their
product innovation and operational efficiencies 

Strategic partnerships can also help retail companies boost their productivity and efficiency, access new capabilities, and reduce risk and costs. For instance, more retailers seek partnerships with nimble CPG and beauty startups to fuel new product development, digital improvements, and operational and logistical efficiencies to boost productivity.2 Kalis, Jackie. 10 retail trends for 2019. BizCommunity. July 15, 2019.

According to McKinsey & Company “CPG manufacturers that are clearly winning relative to their category are those that have deepened and broadened their collaboration with retail partners, forming ‘power partnerships’ that yield meaningful growth in both revenue and profit.” McKinsey cites the partners’ long-term strategies, advanced analytical insights, agility and collaboration across the value chain as key success factors. In addition, open, transparent and ongoing communications boost trust and synergies, fusing partners’ strengths to create a new competitive advantage. 3 Alldredge, Kari, Brandon Brown, Lindsay Hirsch, and Travis Reaves. ‘Power Partnerships’: Manufacturer-retailer collaborations that work. McKinsey & Company. May 2019.

Which retail companies are teaming up
As these recent examples show, retail companies are getting creative with the types of strategic partners they team up with to serve consumers better.

Retailer partnerships

  • Kroger partnered with Walgreens to sell groceries in Walgreens stores to give consumers greater convenience, variety and time savings. This partnership emphasizes both retailers’ exclusive, popular private label products, and reflects how “consumers want to both look good and feel good, creating opportunities for businesses of all sizes,” according to Victor Martino, founder and CEO of Third Wave Strategies.4  Martino, Victor. Convergence of Food and Beauty Fuels New Self-Care Business Opportunities. CO by U.S. Chamber of Commerce. August 21, 2019.
  • Target recently partnered with Toys “R” Us’ parent company, Tru Kids Brands, to relaunch the toy brand online in the U.S. in time for the 2019 holiday shopping season. Now shoppers on the Toys “R” Us website can complete their purchases on and pick up their online orders in Target stores for more omnichannel service options.5 Ziady, Hanna. Target is helping to revive the Toys ‘R’ Us brand online. CNN. October 9, 2019.

Retailer-Brand partnerships

  • Whole Foods is collaborating with party goods supplier Packed Party to offer premium, sustainable products like plates, cups and party hats. Packed Party’s assortment has a young, fun, whimsical feel, which will appeal to younger adults who seek novel, upscale merchandise when they host a party, including bachelorette bashes. Since food and socializing make a perfect pairing, this collaboration makes sense for grocery shoppers who want to wow their guests.6  Dumont, Jessica. Why is Whole Foods throwing a party? Grocery Dive. August 9, 2019.
  • Kohl’s teamed up with WW (formerly known as Weight Watchers) to test a series of wellness initiatives, including the addition of a WW studio in a Kohl’s store in Chicago. A goal of the partnership is to position Kohl’s as a destination for health and wellness. For instance, Kohl’s hosts WW workshops and sells WW kitchen products, and Kohl’s employees receive access to subsidized WW memberships.7 Thomas, Lauren. Kohl’s is putting a Weight Watchers studio in one of its stores as part of a wellness push. CNBC. January 29, 2019.

Retailer-Solution provider partnerships

  • Walmart partnered with Microsoft as part of the retail giant’s digital transformation efforts with technologies like artificial intelligence (AI) and Internet of Things (IoT) to gain richer consumer insights, which will help Walmart deliver more personalized service.8  Wagner, Mitch. Microsoft & Walmart Heat Up Amazon War. Light Reading. November 6, 2018.
  • Kroger, Aldi and Sam’s Club partnered with same-day grocery experts Instacart to promptly deliver online grocery orders to consumers’ doorsteps as competition in the e-grocery channel heats up.9 Bodley, Michael. Instacart valued at $7.6 billion in crowded grocery delivery market. Digiday. October 16, 2018.  

Retailer-Media company partnership 

Walmart partnered with media company BuzzFeed to engage grocery consumers who crave convenience. The companies are integrating enticing recipe content with e-commerce links to the ingredients to save consumers time and money, and fuel mobile engagement and sales.10  Alcantara, Ann-Marie. Walmart and BuzzFeed Are Bringing Shoppable Recipes to the Tasty App. Adweek. August. 19, 2019.

Overall, strategic partnerships can help retail companies create an advantage by uniting their strengths, gaining new capabilities and expanding their reach. Hallmarks of successful collaborations include a commitment to open communication, integration and a spirit of cooperation with the common purpose of standing out from rivals in a meaningful way to improve the customer experience.

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