Published on: May 17, 2018
This commentary is available as both text and video; enjoy both or either ... they are similar, but not exactly the same. To see past FaceTime commentaries, go to the MNB Channel on YouTube.
Hi, Kevin Coupe here and this is FaceTime with the Content Guy.
Bloomberg had the story the other day about how “traditional brick-and mortar chains are starting to strike some innovative partnerships with their arch-competitor, turning to unconventional arrangements in the hopes of getting more shoppers back into their stores. If executed properly, there's a good chance these once-unthinkable alliances end up being a rare win-win scenario, with both the legacy retailer and Amazon getting something they need to unlock new growth.”
The companies doing so include Sears (which will install tires bought on Amazon), Kohl’s (taking Amazon returns), Best Buy (which is selling the next generation of Amazon Fire TVs in its stores, as well as selling merchandise via Amazon), and Chico’s (which is now selling its own-label apparel on Amazon).
I get the rationale behind these moves.
At Chico’s, CEO Shelley Broader - an old friend of mine - suggested to CNBC the other day that she’s hoping to use Amazon to drive customers to its stores. "Finding alternative channels to introduce our products to new customers is what 2018 is all about for us," she said. ”When you have so many Prime members — we all know the number now — who better to partner with ... to gain those new customers for us?"
At Kohl’s and Best Buy, while they have different situations to deal with, the goal is the same - drive traffic, and hopefully drive sales and profits.
And at Sears … well, let’s face it, they’re going to make any deal that will stave off total extinction for another day. (They’ve already achieved irrelevance and obsolescence. Not many mountains for Sears left to climb.)
While I can imagine that maybe the Amazon relationship might lead to me actually walking into these stores - especially Best Buy - I also think that they’re playing with fire.
Amazon is omnivorous. It knows that there are certain things that physical stores do better than virtual stores, and so they’re happy to establish alliances that work in its favor.
But that’s the key phrase, I think: “Its favor.”
A friend of mine likes to say that “you can do business on Amazon, but you can’t do business with Amazon.”
At the end of the day, Amazon wants to build its brand and its ecosystem. I think it is dangerous to give it a variety of platforms from which it can learn, experiment, and grow … and from which it is likely to take steps to compete with and perhaps destroy the very retailers with which it is doing business.
It won’t happen immediately. It will be like the old Ernest Hemingway line from “The Sun Also Rises:”
“How did we go bankrupt? Two ways. Slowly, and then all of a sudden.”
Just like every retail brand, the retailers creating new and “innovative partnerships” with Amazon have to be careful to protect their brand equity at all costs.
Because if they don’t, the sun will go down on their brands, and won’t rise again.
That’s what is on my mind this morning, and, as always, I want to hear what is on your mind.
- KC's View: