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Developing strategic partnerships with competitors can be a win-win


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In the business world that values hyper-competitiveness and steadfast individualism, retail leaders may feel (rightfully) wary at the thought of joining forces with a brand in the same industry. For many, it defies reason and taps into a sense of professional vulnerability.  

However, strategic alliances developed through collaboration can create new opportunities for both parties. When business leaders can critically examine how an isolationist business strategy costs extra time and resources, they have the freedom to consider that alliances look and behave a lot like networking — an essential function of business growth.

Think of it this way: a retail business becomes successful because it can do one (or, if they’re lucky, a few things) thing well. The business thrives because they understand their product and market. Very few retailers are excellent at everything they do. 

That’s why strategic partnerships can be the right tool for growing a retail business. Whether your goals are to improve margins, expand into new markets or territories or test new products and technologies, strategic partnerships have helped many retail leaders get the job done. Often times, partners come from formerly rivalrous relationships. But don’t worry. They’re likely just as stumped when it comes to filling in the gaps and checking their blind spots.

We’re sharing why these partnerships matter for growth-minded retail leaders, how to form the right kinds of relationships while shedding the “rival” tag between would-be partners and a few real-world examples of large retailers who are making strategic partnerships work with companies that would otherwise be competitors.

Key takeaways
  • Developing strategic alliances with competitors can be a budget-friendly strategy to spur growth and increase brand recognition.
  • Retail companies can’t do it all. Enter partnerships and alliances to cover the gaps while retail leaders can develop the company’s strengths.
  • Recent retail partnerships between Amazon and Kohl’s and Toys R Us and Target show the great success possible when brands team up instead of competing.

Thinking about the bottom line

Risk is rampant in retail, especially in an age where disruption lurks around every corner. It’s impossible to plan for every weakness and guard against each threat. When each decision comes down to the bottom line, retail leaders need all the help they can get.

Strategic partnerships can help ease some of the burden. Other organizations can address your weaknesses and manage your threats with their core competencies. Benefits to partnering up include the following:  

  • Reduced costs for bigger savings. Two companies can combine resources and share expertise so both can save money and build new paths to success.  
  • Increased capital for marketing and product launches. A collaboration allows each business to pursue its own respective projects with a padded budget. Businesses may also find that they can secure loans more easily when pooling resources. 
  • Greater protection in risk-prone areas. Smaller businesses may struggle to afford crucial security features, especially when working in ecommerce. These protections may include cybersecurity and anti-fraud measures to keep customers and businesses safe at all times.  
  • Introduction to international markets. This benefit may take longer to achieve, but depending on the partner, it may not take as long as some might think. Maybe a small business is on the verge of penetrating the international market; pairing with a much larger business that aligns with its business model may serve as the tipping point. If the bigger business already has a foot in the target country, such a partnership can streamline the process with existing knowledge of the business styles, protocols, cultures and language of the target market.  

When searching for and vetting partners for potential collaborations, it’s common (and prudent) to ask about the risks of teaming up with any partner, especially one that does business in a similar space. But since retail changes can hit at any time, it helps to think in terms of strategic collaboration over competing against other businesses. Welcoming partners in as “co-opetition” may be the perfect tactic.  

What to look for in a strategic partner

Determining what you need from a partnership is the first step, before even thinking of which partners would be best to work with. You can achieve this through assessing your company’s current needs, business priorities, challenges and more. The gaps will jump out when they’re put under a magnifying glass.

Once you have a clear idea of what you need from a partner, you’re ready to form a partnership. It is important to consider the following things to ensure success:  

  • Terms of engagement. Determine the length of time that both parties want to work together.  
  • Brand alignment. Do both companies share similar cultures and brand values? For example, if one company is dedicated to community involvement, the partner should share this value.  
  • Location. Are both businesses ecommerce-oriented? Are they in the same city? Will time zone differences affect coordination for marketing campaigns, product launches or customer deliveries?  
  • Target audience. Both companies should share a similar profile and appeal to similar demographics. Otherwise, they may both find their businesses suffering.  
  • Complementary products. While it is probably not ideal for both companies to sell identical products, it is vital that the products be complementary. For instance, a bicycle sales and repair store might consider partnering with a parts seller. We’ll get into this in detail in the next section.
  • Can both parties deliver? The benefits need to be mutual, so both partners must add unique value to the other. 

Now that you know what you need from a partnership, the search for the right partner should be much easier. A good partner will have done their homework on you as well. Look for the partners who are prepared and articulate about their needs, goals and outcomes. Those alliances will pay the highest dividends.

Big businesses teaming up for retail success

To better understand why teaming up instead of competing is so valuable, it may help to look at a few examples of partnerships between huge brands that are working out for both sides: Kohl’s and Amazon teaming up to fulfill Amazon returns in Kohl’s stores, and Toys R Us leaning on Target to relaunch their brand through Target.com’s ecommerce infrastructure. 

Amazon + Kohl’s: Giving Amazon a brick-and-mortar presence for returns

Kohl’s announced the availability of Amazon Returns at more than 1,100 stores nationwide last July. The department store allows Amazon customers to visit their local Kohl’s store to return eligible Amazon items, without a box or label, for a free return, according to the Kohl’s website

Amazon dominates just about everything in retail. But returns can drag down a shopping experience, especially when customers lack access to packing materials or are at the mercy of unpredictable pickups from shippers. Amazon has very few physical retail locations around the U.S., making returns a potentially costly shopping feature. 

When Kohl’s stepped in to accept Amazon returns, it looked suspect on the surface. Why would an Amazon customer even bother with a brick-and-mortar store? The two retailers saw how they could benefit from what the other one had: Amazon’s market share and Kohl’s neighborhood presence.

Kohl’s CEO Michelle Gass mentioned the partnership last month at the National Retail Federation’s annual Big Show in New York City in an interview with CNBC’s Courtney Reagan. “I get this question, ‘Is Amazon working?’ Amazon is working. This returns program is working. We’re seeing the traffic. We’re getting new customers,” she said.

When these two retailers started working together, more shoppers came into Kohl’s stores. Amazon solved one of their biggest cost concerns. The question shifted away from two similar retailers competing to how two retailers who understand the other’s problems could find a way to work together to solve both issues.

Toys R Us + Target: Reviving a beloved brand through ecommerce

Toys R Us had a rough few years before they relaunched their retail operations last fall. They announced their big comeback with an enhanced ecommerce experience featuring videos and articles on the latest toy trends and brands, in-depth product reviews and hot toy lists to help shoppers find what they need.

The big story wasn’t just that Toys R Us was back. It was that they came back through a partnership with Target. Marketing Dive published a piece on how the Toys R Us/Target partnership is one of the key retail storylines to watch in 2020:

An important element for brands to watch in the ongoing Toys R Us resurrection is the fact that the company has partnered with Target as an affiliate resale partner online. The Toys R Us website directs shoppers to Target for purchasing, where they can take advantage of Target’s two-day shipping. This basically means that Toys R Us is an affiliate website for Target.

When a retail company is missing a specific piece — in this case, a strong ecommerce strategy — they can turn to a partner that does the necessary function very well. It’s a similar setup to the Amazon and Kohl’s potential rivalry; Target does well in toy sales, but Toys R Us specializes in toys. Toys R Us needed a way to get back in the game, so they asked Target for a hand up. Both companies can exist in the same space and even work together to get what each needs.

Partnerships forge paths forward

When companies work together, they can overcome their challenges and become stronger. Companies that do well also strengthen their markets and industries. It’s in the best interests of all retailers to contribute to the growth of the market. Strategic partnerships, when done well, are the backbone of this type of growth. In a way, working together can help retail leaders stay competitive.


Are you an ecommerce service provider looking for a way to make a bigger impact across your industry? Signifyd partners with companies across all industries. Contact us to chat about joining the Signifyd Partner Network.

Chris Martinez

Chris is a content strategist at Signifyd.