In 2015 Walmart Stores Inc. was struggling to keep up with Amazon.com Inc. Walmart had the big stores and the household name, but this paled in comparison to Amazon’s key advantage: online infrastructure. Walmart.com was something of a mess and was far less intuitive than the Jeff Bezos’ patented one-click checkout system. Walmart turned all of this around by joining forces with, in this case purchasing, Jet.com. The ecommerce company was able to overhaul Walmart’s online ordering system and made Walmart.com the model of efficiency it is today. This was just the beginning of retailers joining forces to carve out a space in the competitive B2C world.

Photo provided by Kroger.

On Dec 11, 2019 The Kroger Co. and Walgreens Boots Alliance, Inc. announced that they have entered into a strategic partnership to cut supply costs and potentially manufacture goods for each other. This level of collaboration is what is needed to survive in the top tier. Smaller companies have always sought partnerships against bigger competition, but we are now seeing the trend move toward larger company alliances. It is no secret that retail companies are struggling to get customers in-store and the industry is very top heavy. Retailers need every advantage they can get and collaboration is how the strong are surviving. Strategic alliances often allow two companies to save money without compromising their stock value and can also lead to innovative new products for the market.

In addition, collaboration is the sole reason we may see a true revival of Toy’s R Us in the future. Tru Kids Brands, Inc. bought the license and has partnered with the Target Corporation to power its online ordering. Target got in on another partnership as it struck a deal with Disney to create unique in-store displays. The miniature displays inside select Target locations have been a huge draw during the holiday toy season.  CVS Health also partnered with Target in 2015 when the former bought all of Target’s in-store pharmacies. The deal gave CVS a larger retail footprint and they announced another deal this year that will see them use Target’s shipping infrastructure to deliver prescriptions. In 2020 and beyond, the two retail giants will likely hammer out additional deals and could even move towards a merger.

Furthermore, Technology companies have also forged their way into these strategic retail alliances. Microsoft Corporation has leveraged its Azure cloud technology to help boost ecommerce and efficiency. Overstock.com has partnered with several companies that have been eager to use their advanced blockchain system. These kinds of partnerships have whittled down the barrier between retail and digital shopping as companies constantly try to keep pace with their competition.

Strategic partnerships could make it even more difficult for a new retail business to break into a market segment as the titans of industry are banding together to weather the storm of change. Companies like Walmart and Target have used this method to rise above and put more pressure on the competition. Likewise, the Kroger and Walgreens alliance was born out of necessity and 2020 will likely bring more fusions of unusual allies.

Vendors can take advantage of these new partnerships as they present opportunities for renewed product mixes stores sell online and on the shelf. Subscribers that follow our weekly Datatracs can log into their databases and directly contact the companies teaming up. Having campaigns ready to launch to newly merged, acquired, or partnered retailers is key to increasing the chances of having your products picked up by the top chains.