The New Era of Omni-Channel Co-opetition in Retail
Tuesday, November 28, 2017

Categories: Retail Markets

Co-opetition in Retail: New Era for Omni-channel?

Co-opetition in retail is when two competitors come together to co-operate on a project, or area of work. A common everyday example of this is a shopping mall. Here, many retailers come together in close contact to sell their goods. Seemingly, you would think that it is better for each retailer to be in isolated locations, far from any similar competitor. However, the cluster of similar and diverse merchants in a concentrated mall, attracts a large audience of shoppers. Despite the close competitive environment, the large drawing of shoppers makes the mall a good example of where co-opetition works. Here retailers are both competing with one another, yet co-operating in their agreement to open shop in such close proximity. Okay, sure. It works for a mall, but is there room for omni-channel co-opetition in retail?

No Need: Pace is Too FastYou would think that retailers should stay isolated. However,co-opetition could benefit all retailers involved.

As an industry, retail is a hypercompetitive. No revelation here. Things happen fast. Individual consumers are very fickle. Short attention spans mean retailers have to continually innovate to maintain consumer attention. That doesn’t even speak to the fast changeover of the merchandise itself. Be it the speed of the electronics and computers, fast-fashion, fresh produce, or footwear seasonality; the pace is fast and unrelenting. So there really isn’t much room for error. Also there is definitely no time to think about co-operating with competitors, beyond the mall. Plus omni-channel retail for most markets is too new to even think about this weird twist.

Enter Kohl’s & Amazon

If you missed the announcement, Kohl’s and Amazon are co-operating in-store! We have all heard of bricks and mortar retailers opening up an online shop, and even participating on the eBay, Amazon and other marketplaces (again a good example of co-opetition). Frankly, for the retailers, this has been a smart move to capture shoppers who frequent those online marketplaces. Then Kohl’s announced it will open Amazon smart home experience shops inside 10 locations in the Los Angeles and Chicago areas.  This means that, in these stores consumers can purchase goods directly from Amazon, while in-store.

Facing Reality

You could be a facetious reader, pointing out that all shoppers have smartphones. In effect, Amazon, eBay, Kijiji and other online only marketplaces have already been in the bricks and mortar stores for years. It has always been there in the consumer’s pockets. Yes, occasionally they even pull out the phone to do some comparison pricing. Maybe those fickle consumers even purchased from Amazon while checking out the model they wanted – called Showrooming.  However, the Kohl’s and Amazon announcement is a direct intentional example of omni-channel co-opetition in retail, at its best. In a way, it is Kohl’s facing the reality of online directly encroaching on the store experience, and making the best of the situation.


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Co-opetition for Retailers

Bring it back to your own retail environment. Never mind these two industry titans. Is there room for other medium and large retailers to make a move? Could the ideal option be pushing the omni-channel boundary?

What if one retailers co-operated with a second to create an extended in-store pickup network? A shopper could purchase online at their favored brand, yet pick up their merchandise at a co-opetitor’s locations? Not only could this extend both retailer’s perceived geographic footprint, it would make it more convenient for the shopper. This step could overcome some geographic hesitations. As a shopper, I have a few favorite brands, but may not purchase from them because going to try something on is just too inconvenient because of location. Co-opetition on the pickup front, means extending your own footprint by leveraging a partner’s stores.

Naturally this move would have to be a mutual agreement, and beneficial to both retailers. However, the benefits to both would be increased foot traffic in their stores. Remember that 58% of in-store pickups will result in additional sales. That means a net benefit to the store, picked up from their co-opetitor’s customer base.

If the arrangement were one sided, like the Kohl’s deal, then there may be a fee for the service. Without a doubt, Amazon is paying a hefty price to be in these Kohl’s physical marketplaces.

Omni-channel Co-opetition in Retail – Controversial?

As counterintuitive as it seems, omni-channel co-opetition in retail could become a new norm. In one way, this is not a new idea. Amazon is in every store in the form of the smartphone in every shopper’s pocket. However, the broader question of whether this is a major paradigm shift that triggers a tipping point, is interesting. Omni-channel co-opetition in retail could become a new norm. Today, this is hugely controversial. RetailWire’s article breaking this news included many opinions among the commenting braintrust. Beyond that, each respected trustee’s comments were both liked, and disliked by many readers, showing a clear and strong division among readers in the industry.

Controversial, yes. However, where there is an intensity of competing views as smoke, there is probably the fire of a core concept that may change retail. Therefore, retailers need to think about how to grow their own footprint physically, and in offer seamless services to the customer. Co-opetition may help in this case. Controversial or not, this counterintuitive maneuver may be a strategy that retailers want to try.

Could we be entering a brave new world of omni-channel retail? Only time will tell.



Charles Dimov - Director Marketing OrderDynamics


Charles Dimov is Director of Marketing at OrderDynamics. Charles has 21+ years experience in Marketing, Sales and Management across various IT and Technology businesses. Previous roles include Chief of Staff, Director Product Marketing, and Director Sales. Charles has held roles in brand name firms like IBM, Ericsson, HP, ADP, and OrderDynamics.




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