Agility and partnerships go hand in hand with brand relevance and evolution. So do innovation and investment.
The new partnership between Next and Reiss ticks all those boxes, as retailers increasingly evolve into ecosystems and brands become retailers.
The tie-up between Next and Reiss is another example of retailers realising how partnerships can enable them to become stronger together.
Reiss will be the first big-name brand to migrate to Next’s Total Platform service, which seems a logical step for Next as it has been continually building its online ecosystem in recent years.
Now it is leveraging that expertise to take over Reiss’ websites, online operations and supply chain. That will ultimately generate cost efficiencies across both businesses and bring a better customer experience – a win for the retailers and their customers.
“Previously it would have been unthinkable for M&S to depart from its private-label strategy or to sell products exclusively online”
The partnership goes further than outsourcing, however. The two businesses remain independent of each other for now. Under the terms of the deal, Next will take a 25% share in Reiss but it has the option to increase that to up to 51% by July 2022.
In a similar vein, Marks & Spencer has been thinking very differently about its strategy since launching its Never the Same Again programme, including ‘thinking like a pureplay’.
Following its joint venture with Ocado and acquisition of Jaeger, its latest initiative is the Brands at M&S programme, partnering online with a curated selection of desirable fashion brands including Triumph, Sloggi, Hobbs, Joules, Seasalt and White Stuff.
It should provide a welcome boost to the M&S clothing ranges and it is a strategy that shows encouraging early signs. The company revealed that nearly 10% of customers purchasing Nobody’s Child products online are new to M&S womenswear.
Tearing up the rule book
Previously it would have been unthinkable for M&S to depart from its differentiated private-label strategy or to sell products exclusively online.
However, times have changed. Retailers and brands are now tearing up the rulebook in a bid to become stronger and more relevant to customers.
For smaller brands such as Seasalt, Joules and Hobbs, it is great news because by partnering with M&S or with online ecosystems such as Asos and Zalando, they are able to increase their reach to new customers and accelerate growth.
As retailers like Next, M&S and Boohoo continue to build their propositions, the distinction is blurring between retailers and ecosystems. Partnerships take away some of the risks of innovation and they give retailers more customer data that can be fed into strategic decision making.
Partnerships are good for business
Even the strongest retailers are relying on partnerships to drive innovation. Without its relationship with Morrisons, Amazon would have found it harder to launch its grocery service in the UK or to open its first Amazon Fresh contactless convenience stores in London.
It’s a win-win relationship for both retailers. Even as Amazon develops its own-brand grocery ranges, Morrisons on Amazon is now present in 50 cities across the UK, accounting for 10% of sales in stores offering the service.
Rise of the super-brands
The next step in the evolution of retailers and brands is among a small group of super-brands, which have reached a level of relevance to consumers where they no longer need to rely on retailers.
Last week, Adidas set out its strategy to 2025, revealing that it planned to grow its direct-to-consumer operations to account for 50% of retail sales from one-third at present.
This means larger brands will rely far less on their retailer partnerships and increasingly go it alone. Adidas’ strategy follows the same direction as Nike, which has significantly reduced the number of retailers it supplies to.
Expect to see more super-brands breaking through the barrier to go it alone. For the rest, it is becoming increasingly evident that the lines are blurring but most still find that they are stronger together.
These are exciting times in retail – there will be more partnerships to come.
Retail Horizon 2021
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