Partnerships becoming the norm in challenged retail sector

by Kim Souza (ksouza@talkbusiness.net) 166 views 

Partnerships are growing in popularity in the challenged retail sector, with retailers joining forces aimed at growing sales and providing convenience options for consumers. For example, Wal-Mart’s online business announced a partnership with upscale apparel retailer Lord & Taylor for a new flagship store on Walmart.com in spring 2018.

“Our goal is to create a premium fashion destination on Walmart.com,” said Denise Incandela, head of fashion, Walmart U.S. eCommerce. “We see customers on our site searching for higher-end items, and we are expanding our business online to focus on adding specialized and premium shopping experiences, starting with fashion. We’re excited that Lord & Taylor is part of the team we’re working with as we continue to create a new Walmart.com.”

Jason Long, CEO of St. Louis-based Shift Marketing, said five years ago the chance Lord & Taylor would partner with Wal-Mart Stores was likely nil. But given the challenges in department stores with declining foot traffic and Wal-Mart’s all-out effort to grow its online business in the face of Amazon, the two unlikely partners have found some common ground.

“I think it’s great for Wal-Mart who’s starting to get some cache around its name. It started with the Jet.com deal and with all the higher-end e-commerce acquisitions it’s made this year. It’s bound to lift Walmart.com’s perception, especially in apparel,” he said.

Walmart U.S. eCommerce CEO Marc Lore said Bonobos and Modcloth apparel would be sold on Jet.com but not on Walmart.com. The deal with Lord & Taylor, which allows for a marketplace store on the website, is a great way for the retailer to reach a new audience, Long said.

Wal-Mart said it’s also evolving how consumers will shop for fashion on the site by adding an element of discovery and inspiration.

“As retail continues to change, this flagship store creates enormous growth opportunities for Lord & Taylor and our brand partners,” said Liz Rodbell, president of Lord & Taylor. “Our customers trust us to deliver high-quality fashion apparel and accessories, and we will soon be able to extend the reach of that offering to new customers through this flagship store. Walmart.com is a shopping destination that reaches a wide base of customers looking for premium fashion brands. They are a great company for us to work with as we continue to grow our digital presence.”

Wal-Mart has expanded its online assortment over the past year to more than 60 million items and at the same time Lord & Taylor has worked to expand its online offering. Lord & Taylor will continue to maintain its site in addition to selling on Walmart.com via its marketplace store.

Long said it seems like Lord & Taylor would have looked to pair up with Amazon first since they likely have a similar client base, but so much of Amazon’s movement in apparel has been in the private label space and that could have worked in Wal-Mart’s favor.

“I wonder if Lord & Taylor might also eventually look to expand with an off-price segment like Nordstrom Rack. It seems like that would be a great fit for Walmart.com too,” he said. “Wal-Mart is looking up.”

That said, Wal-Mart’s chief rival Amazon is looking down the socio-economic spectrum to grow its Prime membership base. The Amazon Cash service recently rolled out at nearly all 7 Eleven convenience stores. At these locations consumers can add cash to their Amazon accounts. The e-tail titan said the service is a way it can better serve U.S. underbanked and unbanked consumers – an estimated 27% of the adult population.

Before the 7 Eleven partnership, Amazon began offering the cash deposit service at CVS and GameStop locations and a few other supermarket chains. Amazon said earlier this year shopping online should not be a luxury for a some, but an opportunity for all as many times the best economic deals can be found online only. Amazon Cash allows consumers to load between $15 and $500 in a single transaction, with no fees. This is not the first partnership Amazon has made with 7 Eleven as it has located lockers for online order pick-up in select stores in more than 300 U.S. cities.

Long said Amazon Prime membership is huge – estimated at 85 million people – and the retailer is always looking for ways to draw in more paying members and expand the perks for existing membership.

“Amazon Prime continues to be the way more consumers buy things and consume media. It’s an ecosystem and once onboard many times members don’t shop hardly anywhere else online because they want to ensure they are getting their money’s worth for the $99 membership fee. Amazon’s efforts to expand the entertainment perks also keep members happy so when that $99 charge pops up on their Visa bill many folks barely pay attention. I order my $8 can of nut snacks which are delivered next day and I know Amazon has lost money of the deal but they do it anyway,” Long said.

He said that model is why Wal-Mart, a money maker, continues to mount a defense of marketshare by growing its shopper base and expand sales.

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