Start with a free marketing strategy audit Start improving conversions with a free marketing strategy audit

Retail Partnerships: How to Collaborate with Other Stores to Drive Sales

by •

In 2023, brand partnerships aren’t a new concept. “The collab” has been an eye-catching tactic for retailers since the 2010s, and consumers have flocked to pairings both sensible (like Swiss Miss x Glossier’s limited edition hot cacao lip balm) and downright unexpected (like Taco Bell x CALPAK’s sauce-inspired duffle bag).1,2

But what’s the secret behind the most successful retail partnerships? Why should businesses consider collaborating with partners? Which tactics effectively drum up new clientele, and how do partner brands sustain profitable, long-term relationships?

In this guide, we’re diving into retail partnerships—breaking down the what, why and how behind impactful, value-driving collaborations between retailers.

Retail partnerships 101

In theory, retail partnerships are simple: Two (or more) brands share resources and ideas to attract new clients in a mutually beneficial way.3

If you need inspiration, take to the greats. There are numerous retail partnerships that have withstood the test of time, like:

  • Starbucks and Target
  • Home Depot and Pinterest
  • Casper and West Elm
  • Nike and Apple

But businesses don’t have to be household names to cash in on the retail partnership concept. All of these brands combined their specialties to produce something customers found unique and valuable, and businesses of all sizes can embrace the same philosophy.

Whether small businesses join forces to take a highly localized market by storm or mega-brands pool their massive resources to usher in a new zeitgeist, the root concept (and, ideally, the result) is the same: pooling resources and talent in an effort to help all boats rise.

Why partner with another retailer?

While the promise of mutual growth is attractive, why else are retail businesses motivated to work together? Let’s break down a few reasons why collaboration can be so lucrative.

Two heads are better than one

When trying to find ways to maximize value for customers or overcome other common hurdles, businesses stand to benefit from hearing as many fresh perspectives and ideas as possible.

In a partnership, each business unlocks more brainstorming power—a wealth of additional perspectives from players on their partners’ teams. That could look like:

  • Ideating new products – Whether they market these products as official collaborations or not, businesses can ask their retail partner for feedback or ideas on new products.
  • Sharing data – Partner businesses can also support each other’s research and marketing efforts by pooling their available data. If partners have any overlapping customer segments, each company has likely accrued its own information about those segments—data they can exchange for their mutual benefit.
  • Soothing everyday operational pain points – If partner businesses are in a similar retail industry, they can advise on solutions for common hurdles. If a company is struggling to find a reliable shipping partner, for instance, a partner brand could recommend a vendor.

Two wallets are better than one

Partnering brands that choose to offer a collaborative product or experience (more on these tactics below) can combine their financial resources to:

  • Share the cost burden – Creating new products, running new advertising campaigns and hosting events can be expensive. Partner businesses can split the costs to (potentially) increase their ROI if the launch is successful.
  • Reduce their risk – Any effort that demands significant up-front cost presents the possibility of risk. When businesses split the cost of new initiatives (which may or may not land with consumers), they can effectively limit that risk.

Especially for brands struggling with cash flow, a partnership could create opportunities to generate new revenue at a lower cost.

Two customer bases are better than one

No matter the partnership tactics they choose, collaborating brands gain access to their partners’ client lists. As a result, each retail partner could uncover:

  • Additional customer clout – During a jointly hosted event or while marketing a collaborative product, each brand can get facetime with their partner’s repeat customers—people who already trust one of the brands in the partnership.
  • Increased word-of-mouth advertising – With access to more potential clients, partners could generate a larger buzz for their next collaborative effort or increase overall market awareness of each company. Word-of-mouth advertising offers a massive revenue potential for companies large and small, international and local.4
  • Expanded networks – Customers aren’t just patrons of a business—they have valuable insights, skills or perhaps businesses of their own. Small-to-medium and local businesses in particular stand to benefit from the expanded networking opportunities implicit in a partnership.

Tactics for a profitable partnership

We’ve broken down the what and why—let’s explore how retail businesses can use the partnership concept to create exciting offers or experiences for retail customers.

Cohost an event

Retail businesses can all host exciting brick-and-mortar, fully online and hybrid events with partner businesses to bring in new sales, raise brand awareness or introduce upcoming collaborative endeavors. For instance:

  • Partners could host a physical pop-up shop, a gallery event or an in-person product showcase. An in-person event might be especially lucrative if at least one collaborating brand has experience managing traditional foot traffic (i.e., converting window shoppers).
  • A hybrid in-person and virtual event (like a live-streamed auction, fashion show or educational event) could attract both local, in-person customers and e-commerce shoppers—a tactic that might be particularly effective if one partner runs an exclusively online brand.
  • A digital pop-up shop, online- or app-only product drop (à la Nike’s SNKRS drops) or shoppable live video could channel the exclusivity of a live event while potentially reaching a larger audience.

Joint events could showcase each individual business’s products, promote an exclusive collaborative offer or both.

Team up on marketing

Even if brands don’t plan on creating a joint product or experience, they could still team up for a collaborative retail marketing campaign.

Implementing a retail TikTok strategy could be a great place to start. If two retail brands decided to collaborate on a TikTok marketing campaign, they could:

  • Optimize their creative efforts by brainstorming, writing and filming video content together.
  • Split the cost of props, costumes and video editing (or brainstorm other cost-saving tactics together).
  • Share the content on both of their accounts to increase their reach and engagement.

While partners would have to engage in some level of collaborative marketing to promote a joint offer, they could also combine their marketing efforts to broaden their total audience size.

Run a shared promotion

Retail partners looking for a low-cost, low-risk collaborative strategy can consider running a shared promotion. That could look like:

  • A “bundle” – Retailers could create an exclusive combination of each partner’s products that customers could purchase in one transaction (perhaps at a discount).
  • A sale – One retailer could offer customers a discount code or coupon for their partner’s business, and vice versa.
  • A giveaway – Perhaps in tandem with a joint digital marketing campaign, partners could offer a social media giveaway for customers who tag both brands, tag their friends in the comments section or use a hashtag.

A shared promotion could increase brand awareness, bring in new customers and even lead to increased sales. Oftentimes this is possible with a limited up-front investment.

Co-brand a new product or retail experience

We’ve touched on a few collaborative products throughout this article, but let’s look at a few more examples of ways retail brands can collaborate in big ways.

In retail partnerships, brands have a unique opportunity to create an exclusive product that combines the best of both brands. That product could:

  • Be tailored specifically for a shared market segment.
  • Introduce an exclusive design or product line to appear in future products.
  • Accompany other products from each partner’s existing line.

For example, a clothing-only retailer and a running shoe brand (that only sells shoes) could co-create a limited edition pair of socks that:

  • Includes motifs from the clothing retailer’s athletic wear line.
  • Are designed specifically to be worn with the shoe brand’s top-selling model.
  • Showcase an exclusive fabric pattern that will be used in future joint products.

Forging a profitable path

After retail partners complete their first collaboration, what’s next? Before starting their next project, collaborating businesses should reflect on:

  • The turn-out – How many customers participated in the collaborative effort—bought a product, shared a social media post or signed up for SMS updates—compared to each partner’s goal?
  • ROI – When all was said and done, what was the ratio of cost to revenue? How can the partnership spend less and make more next time—or spend more and make significantly more?
  • The overall team sentiment – Was this a fun, creatively stimulating opportunity for every partner? Even if the venture exceeded expectations, do you expect to work together again?

One of the keys to ongoing, profitable partnerships is open dialogue. Even if partners don’t want to collaborate again right away, communicating candidly can lay the groundwork for a stronger alliance and more successful future projects.

Grow your brand through Q2 and beyond

Retail partnerships can offer exciting growth opportunities for brands of all sizes, particularly when it comes to reaching new customers and developing new revenue streams.

In 2023, businesses looking to grow need to offer something unique and valuable to the market while leveraging powerful opportunities and digital tools.

At Power Digital, we’re helping today’s brands embrace the growth opportunities that will take their businesses—their revenues, their audiences and their digital assets—to the next level. We’re a tech-enabled digital marketing agency empowering brands with the data and expertise they need to thrive.

 

If you’re ready to make your mark and blueprint your ideal retail partnership project, reach out to us today.

 

Sources:

  1. Forbes. Nostalgia-Fueled Brand Collaborations Bring Back ‘90s & Y2K Aesthetics. https://www.forbes.com/sites/kaleighmoore/2022/11/17/nostalgia-fueled-brand-collaborations-bring-back-90s–y2k-aesthetics/?sh=2ea6f8a1485f
  2. Forbes. The Secrets of Successful Brand Collaborations. https://www.forbes.com/sites/sboyd/2022/05/24/the-secrets-of-successful-brand-collaborations/?sh=336e63e27e2d
  3. Business Insider. Why Business Alliances Are a Triple-Win for Your Company, Partner, and Customers. https://www.businessinsider.com/sc/how-to-improve-your-business-with-a-strategic-partnership
  4. Forbes. The Impact of Influencer and Word-Of-Mouth Marketing. https://www.forbes.com/sites/jiawertz/2022/05/30/the-impact-of-influencer-and-word-of-mouth-marketing/?sh=6a449631482a