Choos­ing sides

Ama­zon or Wal­mart? Some re­tail­ers are mak­ing al­liances

The Progress-Index - - BUSINESS - By Anne D’In­no­cen­zio The As­so­ci­ated Press

NEW YORK — Store chains feel­ing the up­heaval 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 Ken­more­branded 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 high­est-profile part­ner to Google in voice shop­ping. And the dis­count chain that touts low prices an­nounced a web part­ner­ship Mon­day with high-end depart­ment store Lord & Tay­lor.

“When you are in an his­toric un­charted chaotic sit­u­a­tion, you of­ten see th­ese strange bed­fel­lows,” said Joel Bines, co-head of AlixPart­ners’ 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.

“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-square-foot Ama­zon ar­eas that sell Echos, Fire tablets and other gad­gets. Peo­ple can also ar­range to have an Ama­zon em­ployee visit their home and in­stall a de­vice or rec­om­mend smart home prod­ucts to buy. 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.

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 higher-end prod­ucts on Wal­ 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 WeWork and leas­ing back a por­tion of the space.

Nei­ther com­pany would say 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 last year, Wal­mart has bought sev­eral on­line brands like Bono­bos and Mod­Cloth.

An­a­lysts say Wal­mart is de­vel­op­ing its own higher-end on­line mall as a way 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.

Wal­mart store cus­tomers have a me­dian house­hold in­come of about $48,000, below the $56,000 for wal­ cus­tomers, ac­cord­ing to Craig John­son, pres­i­dent of the re­tail con­sult­ing group Cus­tomer Growth Part­ners. Ama­ shop­pers have a me­dian 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.


The Ken­more Elite Smart French Door Re­frig­er­a­tor ap­pears on dis­play at a Sears store July 20 in West Jor­dan, Utah.

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