Challenges in retail, particularly High Street/bricks and mortar retail, is leading companies to explore increasingly innovative ways of surviving and winning in difficult conditions. One way which is perhaps surprising is competitors joining together to pool resources, working on the basis that success, even at the cost of helping your rivals, is better than extinction.
Along with sustainable/ethical sourcing, re-selling marketplaces and experiential retail environments, collaboration represents the biggest trend across retail in 2020. Brands have been collaborating across product ranges for years, but it’s rarely with direct competitors. However, declining retail footfall and falling consumer confidence, coupled with a proliferation of online competition, is challenging classic retail models and causing intense margin pressure.
Some businesses are wondering whether it might be better to work together, rather than against each other. Brands often use the same resources, whether it be warehousing, freight, contract manufacturing, so why not combine forces and pass on some of the margin pressures from the consumer back up the supply chain in the form of increased purchasing power, as well as potentially improving speed to market. Collaboration isn't new – Samsung and Sony joined forces to create the first LCD TV and BMW and Daimler are working on an all-electric, on-demand autonomous vehicle. Many suspect 2020 is the year more consumer-facing brands, such as apparel and retailers, will follow suit.
The retailers running away from the pack in beauty and apparel latched on to the notion of collaboration years ago. JD Sports has some of the longest, and best, relationships with leading competing brands. By providing them with the optimal influencer activity, co-labs, and retail environments to showcase the product range and resonate with their target consumer, they have managed to keep them all onside through illustrating the power of their platform. Equally, competing brands have no issue with being matched together in curated looks on END. knowing their association with the platform enhances the brand's credibility, even if it helps competitors at the same time. Shared success is becoming increasingly attractive as businesses adapt to the harsh realities of modern retail.
All of this represents significant opportunities in M&A. Firstly, businesses becoming increasingly intertwined from a supply chain perspective leaves several markets ripe for consolidation. Equally, it creates opportunities for joint ventures with seemingly competing brands joining forces to share a piece of a bigger pie than they could achieve on their own. And it increases the likelihood of acquisitions and integration vertically along the supply chain. Working together may just be the solution to the challenges facing the High Street.
Collaboration is key to saving the high street, Tony Mannix, chief executive of logistics firm Clipper, said at Drapers Fashion Forum today. Mannix said retailers under pressure should work together – even if they are competitors – in areas of the business where there is no unique selling point such as warehousing and logistics.