Why partnerships are the new black in retail
As retail slumps to its weakest level since the 1990s, brands big and small are being forced to re-evaluate their proposition and plans for the future.
Regardless of brand legacy, global ties, nicheness or celebrity ambassadors, no retailer seems protected from the backlash of the pull in consumer spending, with academic bookshop, The Co-Op being the latest Australian retailer to collapse into administration.
The executive director of the Australian Retailers Association, Russell Zimmerman, described September’s retail trade figures from the Australian Bureau of Statistics showing annual growth of 2.51 per cent as “stuck in neutral.”
With the figures showing tax cuts and successive interest rate cuts have failed to boost Australia’s retail sector, and with traditional sales and marketing channels faltering, retailers need to step outside of their comfort zones to explore new ideas and ventures, in order to survive.
The rise in retail partnerships
One of the ways to do this is through partnerships, whereby businesses team up with other businesses, be that friend or rival, for the greater good of the bottom line – while offering consumers something new and desirable.
Examples of retail partnerships include Australian independent Gelato Messina and iconic Peters Drumstick partnering to create Drumstick X Messina; Australia’s largest producer of biscuits, Arnott’s, tying up with infamous food spread Vegemite to create Shapes Vegemite & Cheese; well-known ice cream Golden Gaytime and doughnut behemoth Krispy Kreme teaming up – and many more.
Globally, this year Ferrero partnered with US soft drink multinational Coca Cola to combine the flavour of the soft drink with the popular candy Tic Tac; McDonald’s China partnered with Disney – the list of brands and businesses seeking to form smart partnerships grows ever more weird and more wonderful.
Particularly in this retail downturn period, brands looking to seek a smart alliance with another brand – even a rival brand, may be the smartest and best bet it has to stay out of the red.
This need not be a big brash physical product smash up such as some of those mentioned above, but could be through affiliates, influencers, strategic business partners, mobile apps, publishers or any other type of partnership.
Partnering for good
A corporate social responsibility venture is another growing form of partnership that brands and retailers should explore as the pressure ramps up on firms to be more accountable and sustainable. This isn’t just to appeal to consumers and ensure revenue growth, but is necessary to keep a happy workforce and attract talent.
In Australia, 7-Eleven joined forces with Simply Cups as part of a pioneering partnership effort to revolutionise cup recycling and Volvo Car Australia’s Living Seawall ocean conservation project proved a successful joint prototype project between Volvo, the Sydney Institute of Marine Science, Reef Design Lab and North Sydney Council.
Either way, whatever the strategy or style of partnership, investing in partnerships will drive growth and competitive advantage and the stats prove it.
The bottom line on partnerships
A global study conducted by Forrester Consulting on behalf of Impact has confirmed that there is a direct correlation between a businesses’ partnership program maturity and their ability to meet and exceed revenue and growth goals.
The ‘Invest in partnerships to drive growth and competitive advantage,’ study found that companies with the most mature partnership programs are driving revenue growth nearly twice as fast as companies with less mature programs.
Furthermore, it showed that these companies are up to five times more likely to exceed expectations on a variety of business metrics, such as stock price and bottom-line profitability. 77 percent saw partnership development as central to their 2019 sales and marketing strategy and 62 percent of companies surveyed believe implementing technology to optimise partnership management will be high priority or critical to drive success as part of a mature program over the next 12 months.
The research also found that the most mature programs have a dedicated group of people who own the partnership channel and must be treated as its own channel versus a side project or bolt on. Partnerships thrive when they have the people and technology to sustain, nurture and develop them.
With sales departments hitting roadblocks and unmet targets becoming the norm, honing in on the rising partnership economy may be a retailer’s best bet at we look toward an increasingly bumpy retail future. Now is the moment to think about how your own brand could begin to better recruit, execute and manage a partnership strategy as we enter a new decade.
Adam Furness is APAC Managing Director of Impact. He has been working in media and advertising for nearly 20 years. With experience across, radio, TV, and digital media, he has a passion for tech-based start-ups.