How to deal with increased retail competition? Collaborate

Rupal Karia
By , - Reshaping BusinessRetail

Competition between retailers is at an all-time-high. They’re finding new services and offerings to make them stand out amongst their competitors like never before.

With a glut of multichannel offerings now available there are more opportunities to engage with customers than ever. But with that comes a greater risk of being lost in all the noise.

The digital frontier

Digitalisation has massively disrupted the landscape and given customers a multitude of choice. From shopping on the high-street, to online, click-and-collect services and being able to pay through different channels, people are able to shop in a way that suits them.

This has dramatically altered consumer behaviour, with customers wanting more options when it comes to the shopping experience. If retailers are to reach them successfully, they need to provide them with these options.

Fresh thinking

With this, we’ve seen retailers starting to think outside the box to find new, unusual ways to reach their desired audience and set themselves apart from competitors.

Throughout the past year, we’ve seen non-competitive retailers collaborating and partnering to achieve the cut-through they need.

Last year, for example, we saw Tesco and Arcadia doing this successfully. As non-competitors they were able to sit together instore, giving Arcadia exposure to Tesco customers and vice versa.

Two types of tie up

Last year I predicted this trend would become more widespread amongst retailers, and we are now seeing this come to fruition.

Recent announcements by the Post Office and WHSmith, who have signed a new ten year branch relocation agreement, and Amazon and Barclays – the former will use the latter’s branches as collection points – are signs that the movement is gaining pace.

We’re currently seeing two main types of collaboration amongst retailers.

The first, like the Amazon-Barclays tie up, is online-only retailers creating partnerships and agreements with bricks and mortar retailers.

The second is between those who already have a physical high street presence. These are retailers who are teaming up with non-competitors to widen their scope and increase footfall crossover and reach more customers.

Something for everyone

Trend forecasts currently favour online-only retailers – online shopping is steadily on the rise, with the value of online sales increasing by around 9.3% year-on-year.

However, we are also seeing demand for stores to have a physical presence.

Collaborating with those who have a bricks and mortar establishment provides online retailer with the physical presence that they so greatly need.

John Lewis recently stated that “instore experiences are now key…we’ve seen customer demand for physical experiences before committing to purchase increase.”

Our own research corroborates that view. Although one in four consumers always choose a digital option when it comes to retail, click-and-collect was the third most used digital service. This would suggest customers are keen to have some form of physical aspect to their purchase journey.

With this demand for both digital and face-to-face services, it’s more important than ever for retailers to create a balanced, efficient offering that caters for all customers.

Spreading appeal

As for the retailers either sharing space or teaming up and cross-selling ranges, such as Tesco and Arcadia, the aim is to open another type of customer base for each retailer.

Partnerships such as this must complement both parties’ principal offering.

While Tesco does sell clothes, that isn’t its primary income and arguably not a direct competitor to Arcadia. In sharing store space with Arcadia, they are likely to attract more customers who are coming in to browse Arcadia’s ranges. Meanwhile, Arcadia will benefit from exposure to customers there to do their grocery shopping.

For more regional stores, having Arcadia lines in large Tesco stores provides an opportunity for increased sales and a widened customer base.

For those who don’t have Topshop, Dorothy Perkins and other Arcadia lines in their local town shopping centres, having the option to buy items from the local Tesco supermarket will make it much more accessible to a wider variety of customer.

A trend with longevity

Over the course of the next year we can expect these partnerships develop further and become more selective.

With increasing competition from their high street counterparts, this type of partnership will become an increasing priority for online retailers looking to establish a physical presence with a partner that has a ready-made customer base and guaranteed footfall.

For the high street retailer, working with an online counterpart offers added convenience to their customers.

Presenting customers with a viable alternative to simply shopping online, there is an expectation of a wider customer base, which will in turn result in more sales.

Retailers considering this avenue would be wise to spend time researching a partner that best fits with them – one different enough not to simply ‘steal’ or even alienate their customers, but similar enough to drive conversion and prove a sensible, profitable fit.

Rupal Karia

Rupal Karia

Head of Commercial Sector at Fujitsu at Fujitsu UK&I
Rupal heads Fujitsu’s Commercial Sector encompassing Retail, Hospitality, Manufacturing, Utilities, Telecoms and Services; a business with a large number of household brands as clients.
Rupal Karia

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