Retail partnership announcements are frequently newsworthy because of the disruption they create in the industry and the innovation and imitation they inspire among the competition. Whether it’s a limited collection, a pop-up or shop-in-shop experience or some other kind of cross-over customer experience, these partnerships are founded on mutual objectives like increasing assortment, generating more revenue, or to widen market share with the acquisition of new customers.
As it seems like more of these relationships are being created daily, we get curious about whether partnerships are a winning, sustainable strategy in the daily battle for the hearts, minds, and wallets of customers.
1) Nike and Dick’s Loyalty Partnership
While the last decade has been one of streamlining at Nike to grow their direct-to-customer revenues, they’ve continued to maintain a special relationship and pivotal partnership with Dick’s Sporting Goods. Despite this shift away from wholesale, Nike has deepened their strategic partnership with Dick’s with the recent announcement of a loyalty app tie-up.
In this joint loyalty experience, Dick’s Scorecard members, who are also Nike members, will be able to shop a wider selection of Nike products, access exclusive member experiences like product launches and limited collections as well as attend unique in-store events targeted to members.
The loyalty experts at Kognitiv are strong proponents of brands finding the right partner fit and then vigorously executing against that. Peter Menges, EVP and Chief Commercial Officer, Kognitiv, expands on the idea of how alliances help each brand deliver on their promise to their customers:
“Ensuring that there are shared business objectives and a common belief in how to attract and retain customers has to be Job 1. That sets up any partnership from a position of strength and shared accountability. This loyalty app tie-up between Nike and Dick’s Sporting Goods is an excellent, and natural, extension of both brands’ promise to uniquely serve their members in a differentiated way. Think of it as a very tangible way the two brands can stay committed to the values that matter to their shared and growing customer base.”
The Dick’s Scorecard member and the Nike member get to engage with both brands in the channels they prefer, while the retailers retain control and enhance the experience in the specific channels they support. Furthermore, Nike and Dick’s Sporting Goods both can tap into more (and new) customers in this collaborative effort.
For an example of how this gets executed, a Nike sneakerhead gets initiated into a gateway sport on the House of Sports putting green, nurturing the nascent athlete who later gets additional coaching support or recommendations from the sports experts at Dick’s. Separately, a Dick’s Scorecard member might grow their Nike basket based on the preferential access and spend with the discovery of a wider selection of higher value Nike products. Additional customized rewards could provide the “nudge” that gets the new shopper to trial the more expensive Nike items. All the while Nike can move them into a higher spend category with the discovery of more luxury Nike apparel.
Here at The Wise Marketer, we’ll be paying close attention to reports from both brands on how the linked loyalty experience is unlocking new and valuable customer segments and translating into positive business returns for both partners.
2) Ulta Beauty at Target
Partnering with Ulta by launching the shop-in-shop concept, Target creates an even stronger foothold in the high-margin beauty and cosmetics market. The broad offering of beauty brands, merchandised well to integrate into the Target experience, will also be backed by Ulta Beauty expert training to enhance the Ulta shopping experience inside Target. Ultamate Rewards members can earn their points when they link their brand loyalty accounts together with Target’s program, enabling them to access the added convenience of shopping at Target in addition to their Ulta Beauty shop.
With this partnership, the Ultamate Rewards customers can now also shop Target’s extensive categories like clothing, home, grocery and pharmacy. This experience is supported on the website and app, as the loyalty partnership is integrated in the eCommerce experience, so that the Ultamate Rewards and Target Circle member gets the best of this new partnership in their preferred digital channel. For its part, Target not only gives Ulta valuable real estate within their physical locations, they also bring successful customer retention tools like free shipping and fulfillment options like drive-up, pick-up, and delivery with Shipt.
The brands expect to share the win with a combined loyal customer base of 100 million active members.
“The real partnership winners are organizations who can bring fresh value to their consumers in new ways and through new channels,” added Kognitiv’s SVP, Strategic Development and Marketing, North America, Ray Chelstowski. “Some partnerships are “expected” and those inevitably work well. However, in today’s environment, the partnerships that bring unexpected businesses together in a way that opens entirely new access and new experiences, those are the ones that pique customer interest and stimulate new purchases. Doing that takes real creativity and finesse.”
As a much-loved retailer, Target is not new to partnership with other strong retail brands that have a devoted member following. Starbucks Cafes at Target locations have long made Target the shopping destination of choice for Starbucks Rewards member who wants to fuel their shopping trip with their favourite Starbucks beverage. Considering the broad overlap of consumers that favour Starbucks and Target, this partnership is a classic no-brainer. Target brings real estate to the partnership, by offering convenient highly-trafficked retail locations. For their part, Starbucks enhances the Target shopping experience for someone like the home’s Chief Purchasing Officer, who can now do all their shopping in one convenient place, while appropriately caffeinated.
3) Kohl’s and Co.
In 2021, Kohl’s credited their partnership strategy for positioning them for sustained success in the incredibly competitive Department Store category. An earlier partnership to accept Amazon returns in Kohl’s locations introduced about 2 million new customers to Kohl’s. Amazon customers could securely return their purchases and access Kohl’s for shopping in other categories. Taking advantage of increased foot traffic with this partnership, Kohl’s also made improvements to their in-store offerings to refresh and strengthen the Kohl’s brick and mortar experience while improving their profit margins with stronger performing brands, increased sell-through and less clearance items.
As it made room within its four walls for improved merchandising of the strongest performing categories, Kohl’s also capitalized on another of its major retail partnerships. This one with Sephora. With this partnership, customers can experience a thoughtful immersion in a premium beauty destination, with front of store exposure at 200 Kohl’s stores.
The Sephora/Kohl’s partnership is projected to expand to at least 850 stores within 2 years and offers Sephora valuable real estate with a built-in customer base to target and nurture. It also further strengthens Kohl’s value proposition with a deeper and wider assortment across beauty, apparel, and home goods.
A critical consideration is that partnerships allow brands to focus on the things they do best, while leaning on the partner to fill in potential gaps and enhance the concerted offering. Great partnerships allow each retail partner to play to their individual strengths and reap the collective benefits.
Even with the acceleration of direct to customer initiatives, brands can still make room for key partnerships to augment their success. At the heart of a successful partnership is a common set of values, and a common set of business objectives, around delivering the best experience for customers.
Brands looking to partner should seek complementary offerings of product and services and some commonality of consumers. The right brand partner will be similarly committed to upholding customer-centric service for seamless experiences that will keep mutual customers returning.
Truly strategic partnerships will always seek ways to share data, measurement, and analysis to inform smart and timely decisions that benefit their customers, and ultimately drive a profitable, long-term partnership for all parties.