The phrase 'united we stand, divided we fall' has been bandied around for centuries. However, as the retail landscape becomes increasingly unpredictable, and nimble new e-commerce pureplays challenge the status quo, it seems like this is a phrase traditional retailers are setting a lot of stock by. In this piece, Richard Wolff, managing director, UK & Europe retail lead, Accenture Strategy, tells RetailTechNews why more of our established retailers are seeking to live by this motto and forge closer relationships with their competitors, as well as what makes a successful partnership. 

RetailTechNews: Why is sharing customer insights, technology, and industry knowledge becoming more important in the retail industry?

Richard Wolff: The most recent disruptive force – digital innovation – is proving to be the biggest challenge for almost every retailer. It’s given rise to agile e-commerce players that live and breathe rapid innovation and customer relevance; it’s enabled smaller brands to level the playing field with larger players, in terms of consumer reach and market visibility; and it’s fundamentally changed consumer behaviour.

It’s become clear that ‘organic’ digital transformation – where well-established retailers look to transform themselves into digital businesses entirely through internal change – is all but impossible. The evidence being that not a single large retailer has done so. The cultural shift needed to become a digital-first, customer-centric organisation is harder than many have anticipated; and it’s forcing retailers to rethink their growth strategy.

The priority now is customer relevance. To get it right, retailers need to have a firm understanding of who their customers are, what their ultimate brand purpose is, and what they want to stand for, and ensure they have the necessary agility built into their business models to constantly adapt to changing customer needs.

That means taking a more strategic approach to data analytics, ensuring customer insights are fed back through to R&D and acted upon; faster development cycles to get new lines onto shop floors quicker and with greater frequency; intelligent targeting to better anticipate and pre-empt customer wants and needs; and immersive store experiences to better connect consumers with brands and to give them a new type of value.

To gain a competitive advantage, many retailers are joining forces with other companies – even those that have traditionally been competitors –  in ‘ecosystems’ to create new customer propositions, enter new markets, and ultimately grow. Each player brings something unique to the table – such as, customer insights, technology, and industry knowledge – which can enable them to achieve higher levels of growth over what could be achieved by going it alone.

What are the benefits to such partnerships for retailers?

Accenture Strategy’s research suggests that 82% of retail leaders globally say that building ecosystems is critical to gaining a competitive advantage. Such ecosystems – as proven in other industries including technology, financial services, and consumer goods – can enable rapid innovation, prototyping, and proposition co-creation, as well as helping retailers access new customer segments or enter new markets.

A third of large retailers globally are looking for ecosystem partners today. Over the next 12 months we’re likely to see more retailers look beyond their brand or industry confines to see what partnerships or innovations they can capitalise on by teaming up with other players, large and small. The beauty of ecosystems is that no single company owns or operates all components of the solution. The value generated from this type of collaboration is much larger than the combined value each of the players could contribute individually. Critically, the risk is distributed equally, which will reassure many retailers. 

How can retailers identify the right companies with which to form a partnership?

The creation of ecosystems presents an opportunity for retailers to tap into new sources of growth and get ahead of the waves of change that are currently impacting the industry. With the right partners, collaborative mindset, and pre-determined measures of success, retailers have a lot to gain.

Richard Wolff, MD & Global Lead, UK Retail, Accenture Strategy

For ecosystems to deliver growth, it’s important for retail leaders to consider what the strategic intent and innovation goals are upfront. When ecosystem players combine their functional, technology, and industry strengths and capabilities, they can deliver exciting new customer propositions and open new markets.

Selecting the right partners is critical to success. Retailers should look for partners with complementary capabilities, a collaborative mindset, industry experience, customer relationships, and data to set themselves up for success. They must also clearly define how data will be shared and how success will be measured. Proper governance frameworks can ease fears and reduce friction among participants.

Once companies with distinct capabilities join together with a shared vision and clear outcomes, they can launch and operate their ecosystem. The process involves planning and testing the ecosystem design and piloting the market play.

Are retailers reluctant to join forces with their competition? How can they look past this factor to build partnerships?

The thought of retailers joining forces with other players to tackle tough market competition and spur new growth will be enough to send shivers down the spines of some of the more traditional players. However, it’s a reality that will quickly become the ‘new normal’ as many large retailers search for a new growth formula.

We’ve seen this recently with the UK’s largest retailer, Tesco, announcing a strategic alliance with Europe’s largest retailer, Carrefour, to optimise costs, improve customer choice, and enhance their competitiveness. Furthermore, the tech giants are also actively developing partnerships with retailers that go beyond the classic supplier relationship, such as Walmart and Microsoft.

Lack of trust can be a major challenge in building ecosystems. Retail leaders are particularly concerned about ceding control when partnering with other organisations. According to Accenture Strategy’s research, 37% of retailers globally are concerned about sharing company assets and secrets with other organisations.

With increasing market pressure, retailers will be forced to find a way to partner in this way. More retailers will join forces, as they look to protect themselves, create new growth, and gain a competitive advantage – particularly in the wake of Brexit – and with the added threat of a U.S. retail titan looking to cause further market disruption.

What are some examples we’ve already seen of these types of partnership?

Next recently announced that it’s partnering with Rockar – the omnichannel vehicle retail specialist – to sell cars in Next stores at the Manchester Arndale shopping centre. Tesco announced a strategic alliance with Europe’s largest retailer, Carrefour, to optimise costs, improve customer choice, and enhance its competitiveness. Ikea announced a creative partnership with Adidas to understand what people want and need when it comes to exercising, sleeping, and eating at home. Furthermore, in the U.S., the department store Kohl’s announced that it is leasing store space to food grocer, Aldi, in a bid to optimise its existing real estate footprint and increase store footfall by offering customers new value.