Well, this definitely resonates! My top retail trajectory for the last couple of years has been “buy, build, or bridge.” It’s a big question for retailers. The most successful retailers are employing all three strategies and reserving the right to shift between them. Buying is frequently triggered by a desire to acquire user or customer bases or to fully own data. More recently, I’ve noted an uptick on the bridge side of the equation (partnerships). It’s often the most agile choice and can serve as a runway for future building or buying. Partnerships allow retailers to test the waters prior to acquisition or to learn the ropes before building solutions internally. Those who provide bridge solutions to retailers would be wise to factor in these possibilities.

For nearly all retail applications, buy or partner strategies are usually the most economical. Most retail applications solve common business or customer problems and a vendor-built solution is a smart choice. While vendor solutions may need some customizations for some unique retailer-specific processes, hopefully 80 percent can be covered by the core solution. The build strategy is typically the best approach for large retailers that have the IT resources to handle the development or instances where the application is so unique that no vendor has developed the application for other retailers.

Given its scale, Albertsons is right to focus on building its own capability in core functions like online fulfillment. However when it comes to speedy meal solutions, it makes perfect sense to partner with DoorDash. For Albertsons to build such a nimble solution for a (relative to overall grocery) low volume category makes no sense and would not be profitable. This blended, agnostic approach is the right one and it is one that more and more retailers are adopting.

Many technology leaders believe that their value comes from building something unique – this comes from hubris or ignorance. And they try to build in-house, instead of focusing their efforts on architecture and integrating stuff. In nearly every case, those tech initiatives becomes millstone and drag the entire business.

Most leaders believe that their business is truly unique or there is no product out there that does what they need to do. The critical question is – is it driving a competitive advantage? And is the advantage sustainable if it takes six to 12 months or more to build?

In our experience of over 25 years of developing technology for this industry – the track record for building internally versus buying is not good. Working with technology partners allows the retailer to get “best in class” thinking, experience, strategy and plan to implement new technology or new ways of working that have a much better chance of success. We’ve seen technology initiatives where the decision was to build rather than buy. After two years of internal development and money spent, the internally developed tech rarely met the needs or specific use case the business needed. This often leads to engaging with an outside partner that had the solution the business identified in the first place. Technology changes too fast for the retailer not to partner with those that have a good track record and keep up with the latest technology. The key is careful planning and collaboration with the retailer, and not just on the technology solution itself, but in making sure the retailer’s staff is upskilled with deploying and maintaining it. Changing the… Read more »

Buying or partnering makes the most sense most of the time. It’s quicker, cheaper, and allows the company to focus on its core mission. Trying to build requires more resources and takes more time – neither is useful as stores strive to keep up.

it depends on the retailer and its specific needs and capabilities and, no, most retailers don’t have the infrastructure or internal expertise to make the right call without good external advice. One caveat about build; if that’s the route a retailer chooses – and it often could be the right answer – it should be built with open source tools. Proprietary systems look good, but let’s remember that Kmart was once the leader in retail tech and look where that got them.

Let’s ask ourselves, what is the likelihood of Albertsons or another major retailer developing a better system than a software company whose lifeblood is based on creating the best performing and most innovative product?

Generally, grocers and all retailers should use the following criteria to build, buy or partner:

• Build for competitive advantage and achieve best fit to the grocer’s processes;
• Buy for a theoretically faster implementation and lower internal resources, as compared to the former;
• Partner to realize lower costs via partner’s economies of scale and expertise, allowing grocers to focus on their core business.

If you build, then you must maintain. If you partner, you must manage relationships. If you buy, you must know what you’re buying and do so at the right price. Control is a good tool in assessing the buy/build/partner decision. However when combined with a dynamic risk assessment framework unique to the strategy and situation, retailers can make more informed decisions that withstand the test of time.

I love that they’re firing on all cylinders to create a harmonious shopping experience. The build piece is especially smart in my opinion – leveraging internal employees, who are closest to the customer, to drive omnichannel efficiencies is key. They took out a lot of friction for shoppers by doing this.

It depends on the retailer. Those with sufficient technical expertise can build their own solutions, but there are not many of those companies. For most, and for more sophisticated solutions, partnering makes the most sense.

Build, Buy or Partner is a solid framework for implementing new technologies. Where many retailers may be overly ambitious is thinking that they can or should build everything. There is certainly value in proprietary IP, but building is not always the most efficient route. Often the most efficient and effective path to digital transformation is acknowledging and accepting someone else’s expertise rather than trying to craft your own every time.

It seems we’ve reached a point where either buying or relying on an outside partner is “best practice.” Yet in situations like these, we need always be aware we might outsource our profits or end up dependent on a vendor whose vision changes and leaves us weaker.

To determine whether to build, buy or partner for retailers is a multifaceted question. In general, partnering will be the fastest to market, but has the downside that the retailer is dependent on the partner’s service level and there may be restrictions to accessing customer data. Buying technology eliminates the service and ownership issues, but may require extensive modifications to pre-existing processes and formats of the technology that is purchased. If the underlying processes are too substantially different from the retailer’s, the buy decision could end up actually taking longer and costing more than building from scratch. I agree with Albertsons that building custom applications should be used when the process itself is highly custom.

There is in fact a middle road. We have often found the purchasing and configuring components rather than purchasing entire software applications allows us the flexibility to mix-and-match and gain the benefits of buying with the flexibility and customization of building your own.

New tech solutions continue to be a challenge for retail, especially retailers focused more on retail than tech applications. In many cases, 3rd party SI partners are doing the legwork of evaluating tech solutions. However, prioritization of tech is a full time function and options to build, buy, or partner will vary and more important, remain dynamic, i.e. changing with the times. For example, certain tech such as touchless self-checkout may have become even more valuable after the pandemic than pre-pandemic. Prioritization still falls into the broader organization strategy — whether it’s focused on growth, immediate returns, long-term customer acquisition, or overall customer experience. Build, Buy, and Partner will cater differently in each case and with the different technologies. In Albertsons’s case, the internal tech effort for picking has seen direct results with immediate returns. The purchase of the recipe solution had potential long term localized value and fits within the ecosystem. Which one is the better option? Which one is a good investment? The criteria will vary based on the retailer, and the decision… Read more »