Did the Earth stop when Ulta walked into Target?
Many high-profile retail partnerships, like celebrity couple Ben Affleck and Jennifer Lopez (“Bennifer”), are proving that they, too, are meant to be. Dozens of merchants, including Target and Ulta, Lowe’s and Petco, Kohl’s and Sephora, and Nordstrom
One of the main energy benefits: These co-branded arrangements offer significant intrigue and convenience to consumers, resulting in larger shopping baskets. There may also be deeper and more lasting benefits to be derived not only from associations, but also from the purchase data they generate.
Yes share and analyze data effectively.
One plus one equals $$ million
Major retailers and brands fall in love for the same reason people fall in love; they are compatible. But in practical terms, long-term relationships also require security. In retail, that means financial security, and these partnerships seem to provide it:
- Kohl’swhich installed 200 Sephora stores in its stores in 2021 and now operates close to 600, projects the beauty brand will add $2 billion in annual sales by 2025, due in large part to new customers. “Even amidst a very challenging environment, our transformed stores with Sephora are outperforming the chain,” the company said in its statement. quarterly report, adding that Sephora is their “number 1 initiative.” Almost half of all their customers who buy Sephora products also buy other Kohl’s categories.
- Of the objective The partnership with Ulta, also kicked off in 2021, is contributing to “high single digit” growth in the beauty category, Target executives reported in their second quarter earnings call17 of August. Ulta reported that its sales increased by almost 17%, $2.3 billion, out of $2 billion in the second quarter of 2021. Target and the beauty chain plan to operate 250 Ulta Beauty at Target locations by the end of 2022. The ultimate goal is 800 stores in stores.
- Nordstrom in May reported that “alternative partnership models,” such as that of British fashion brand Asos, represented 12% of the total value of your merchandise in the first quarter of 2022. Around the same time, Nordstrom announced a agreement with online sustainable footwear brand Allbirds sell through 14 of its stores, a sign that the 12% figure will rise. The Asos brand, meanwhile, reported double-digit sales growth in the USaccording to Seeking Alpha, thanks in part to Nordstrom.
- hy-veewhich opened DSW centers in six locations in 2020, also partners with fashion outlet fresh joe and in 2021 reached an agreement with online retailer Pair Eyewear to place kiosks in selected stores. In early 2022, the employee-owned chain said it planned to enter several new statesincluding Kentucky, Indiana, Tennessee and Alabama, according to Grocery Dive.
Data is at the heart of ‘Bennifer’ retail success: 3 roles
Several of these retailers have cleverly encouraged their customers to use their rewards program memberships to earn additional points and rewards. Target and Ulta shoppers, for example, can link their Target Circle and Ultamate Rewards accounts to multiply rewards with both merchants. Visitors to the Hy-Vee website can enroll in DSW’s VIP Rewards program.
Here are some more in-depth ways these associations can combine their shoppers’ data to deliver a more relevant overall experience. I call them the data PDAs.
- Price perfection. Overlapping data from a retailer’s shoppers and its brand partners’ loyalty programs can reveal clues about which items shoppers might be willing to spend a little more on, and where discounts might justify higher prices. For example, for some Nordstrom shoppers, a reduction in the price of tights might help them rationalize paying full price for a pair of Allbirds. Hy-Vee may find that customers visiting its DSW centers are more likely to splurge on gourmet snacks, so it can send app offers in real time.
- Designer stores. Shared customer insights track shopper paths within the retailer’s stores and partner locations. These more comprehensive behavior patterns can help retailers plan floor layouts and offerings accordingly. If, in some markets, Lowe’s customers always buy Petco dog food but rarely visit an independent Petco, it could suggest a convenience issue. Perhaps that’s why Petco has begun offering pet clinics in Lowe’s parking lots, as executives described in an august teleconference.
- Hallways, stylish. A store within a store can cause shopping disruptions in other areas. Grab an Ulta at Kohl’s. It could cause cannibalization in Kohl’s beauty aisles, or it could inspire more purchases: depending on how the data informs the promotions in the store. By comparing shopping data from co-branded stores to non-co-branded stores, retailers can spot shifts in shopping carts early in their courtship. They can then use that knowledge to proactively manage the selection.
All’s Fair in Love and Retail – Be Open to Future Partnerships
Ultimately, the power of coupled consumer insights can attract the interests of other potential partners who attract different types of buyers and generate new data insights. Target, Macy’s, CVS and other retailers have been exploring alignments with Apple.
The key is to maintain harmony and ensure that brands complement, not compromise, other store categories and associations. Throwing off that balance could cause pricing, format, and inventory errors, not the storybook results fans of the brand expect.