DISCUSSION
Retailers finding answers in-house, through partnerships and acquisitions
Written by Carol Spieckerman
Photo: Walmart
Through a special arrangement, presented here for discussion is a summary of a current article from the Spieckerman Retail blog.
Amazon's acquisition of Whole Foods, Walmart's portfolio-building plays, J.C. Penney's appliance ramp-up and a host of other forays — retailers are opting for diversification as their growth engine and departing from their cores as never before. The looming question now becomes "buy, build or bridge?" and new motives are driving retailers’ choices.
Why buy?
Remember the pre-digital days when a retailer would merge with another company (usually another retailer) and everyone would brace for the layoffs to follow? Now, acquisitions are a powerful tactic for winning the retail talent wars, and retention is all the rage. In this regard, Walmart stands out as a leading-edge example. Following the 2016 acquisition of Jet.com, CEO Marc Lore was added to Walmart's executive team and the Jet team kept intact and unmoved (in Hoboken, NJ) rather than folded into Walmart HQ. Multiple brand acquisitions have followed this satellite operating model, with some acquired talent assuming leadership roles within Walmart's corporate staff.
Why build?
Although it can seem as though retailers are abandoning self-created solutions in droves, new tech options are providing new reasons to take things in house. Open-source tools allow smaller retailers to keep up with the big guys and large retailers to craft their own concepts. Lack of scalability, prohibitive licensing fees and some inflexible external solutions are among the reasons retailers may take a pass on partnerships. One retailer tech exec said, "Our scrappy tools are more agile and targeted to specific needs."
Why bridge?
The quest for agility has driven retailers to explore partnerships with third-party platforms. Companies like Curbside and Instacart augment retailers’ customer convenience arsenals, for example. Now, delivery companies are hot acquisition targets among retailers like Target, Walmart and, most recently, H-E-B, as bridge solutions become runways toward building or buying.
Striking the right balance of acquired assets, homegrown solutions and increasingly precarious partnerships will be a constant conundrum for retailers (and a moving target for suppliers). The need to employ all three will intensify as retailers seek next-gen talent, greater security and faster ramp-ups — all at the same time.