Some retail chains choosing alliances— one giant or another
NEW YORK — Store chains feeling the up heaval in retail are making strategic alliances— and that can mean picking sides.
Kohl’s shoppers can find Amazon devices at some stores, and return items they bought from the online retailer. Nike has made some of its sneakers available through Amazon. The owner of Sears is selling Kenmore-branded appliances on Amazon in some markets. And Best Buy is teaming up with Amazon for voice shopping.
Meanwhile, Walmart, which has the most store locations, is assembling a coalition of its own: buying smaller online brands and becoming the highestprofile partner to Google in voice shopping. Andthe discount chain that touts low prices announced a web partnership this past week with high-end department store Lord & Taylor.
“When you are in a historic uncharted chaotic situation, you often see these strange bedfellows,” said Joel Bines, co-head of Alix-Partners’ retail practice and a managing director at the firm.
Since the beginning of the year, several retailers have filed for bankruptcy protection, including well known names like Toys R Us. And retailers have announced thousands of store closings, with more expected.
Analysts say some brands realize they might not succeed alone.
Accepted norms?
“You have to be challenging accepted norms. So you might find partners that you normally wouldn’t have considered,” said Wendy Liebmann, CEO of WSL Strategic Retail. “This has exploded because of the urgency to change. You look at retailers who are closing or struggling.”
So as Amazon moves even further into fashion, home electronics and grocery stores, and cements shopper loyalty with its $99-a-year Prime membership, stores are developing partnerships with the online retailer to increase customer traffic or expand their offerings online.
At the participating Kohl’s stores, shoppers will find 1,000-squarefoot Amazon areas that sell Echos, Fire tablets and other gadgets. People can also arrange to have
“When you are in a historic uncharted chaotic situation, you often see these strange bedfellows.” Joel Bines, co-head of Alix Partners’ retail practice
an Amazon employee visit their home and install adevice or recommend smart home products tobuy. And some stores pack and ship eligible Amazon return items for free. Kohl’s hopes the arrangement brings in shoppers who might pick up clothes or home items.
Analysts say other department stores, facing the same kind of issues, could follow.
From its base with 4,700 U.S. stores, Walmart is lining up other partners. In voice shopping, it hooked up with Google, which has signed up other chains such as Target and Home Depot to fight the dominance of Amazon’ s Alexa powered Echo devices.
‘A pivotal moment’
Lord & Taylor’s president Liz Rodbell told the Associated Press the arrangement with Walmart allows the chain to attract new customers who already are buying higherend products on Walmart. com.
She called the partnership “a pivotal moment” for the retailer. It comes after the chain’s parent company announced last month it was selling its New York flagship building to We Work and leasing back a portion of the space.
Neither company would reveal the financial details of the arrangement.
Denise Incandela, head of fashion at Walmart’s U.S. e-commerce division, says it’s focusing on specialized shopping experiences, starting with fashion. Since the $3 billion-plus acquisition of Jet.com last year, Walmart has bought several online brands like Bonobos and Mod Cloth.
Analysts say Walmart is developing its own higherend online mall as away to counter Amazon’s dominance.
Bines said it’s a good strategy, since Walmart. com could attract “an entirely different demographic” from the chain’s physical stores.
Median incomes
Walmart store customers have a median household income of about $48,000, belowthe $56,000 for walmart.com customers, according to Craig Johnson, president of the retail consulting group Customer Growth Partners. Amazon.com shopper shave amedian income of $85,000, Johnson estimates.
Liebmann says the bigger question is whether there would be any resistance from Lord & Taylor shoppers. Bonobos and ModCloth fans complained vociferously on social media when reports were swirling about Walmart’s move to buy the brands. “It has to be presented well,” Liebmann said.
Overall, Bines expects Amazon and Walmart to announce more partnerships. “In the next two or three years, companies will chose sides,” he said. “But after that, the lines will be blurred.”