In the last few months, it seems that more retailers than ever are declaring bankruptcy and shutting stores. Maybe it was the demise of my local Radio Shack, which seemed to be suffering from a long and drawn out terminal illness, that made the pain so much worse. Maybe it’s just hearing that brands from my childhood could no longer hack it – Payless, Wet Seal and The Limited. In the first three months of 2017, nine national retailers filed for bankruptcy – the total number for ALL of 2016.
If you have visited a mall recently, this shouldn’t come as a total surprise. First, the supply of physical stores outweighs shopper demand. Secondly, consumers continue to shift spending more online and prefer to spend more of their extra income on experiences such as travel. So with that being said, why aren’t retailers providing what consumers actually want? If marketers focused more on activations that match consumer interests, maybe it would drive up merchandise sales.
For example, we know of a major women’s retailer who is struggling to keep stores open. Sales are strong but it is a challenge to drive traffic into all of its locations except on holidays. Our advice: try something different. Partner with an upscale travel provider and offer a sweepstakes for a big-ticket exotic adventure such as an African safari. You can only enter if you purchase an exclusive BOGO product. You get entered twice if you purchase that product in-store. You get entered three times if you use the retailer’s credit card to make the purchase. You get the idea.
All too often the rationale for avoiding this type of campaign is that “marketing partnerships are too expensive”. They aren’t. Not if you look at partnerships through the right lens. Partnerships are not sponsorships. You shouldn’t always pay someone to partner with you - especially if you are a high profile brand with lots of traffic and consumer eyeballs. If you aren’t monetizing your reach, you are missing out on a possible opportunity. Some smaller brands race at the opportunity to just walk next to you, not to mention get promoted alongside of your brand. Don’t want to pay for a sweepstakes? The right partner might just GIVE the prize to you. That’s right. At no cost. Why? Because the cost of doing business with you is worth the investment. The potential awareness it will bring to their brand is worth it. If a brand has any sort of media budget, a promotion like this is equivalent to one spend (for example an advertisement in Travel & Leisure) so it is worth a test run. And this doesn’t just apply to small prize but large-scale offerings like cars, international travel and big ticket consumer electronics items.
The second obstacle is often not financial – it’s emotional. Mostly it is because brands suffer from either ‘breakup phobia’ or ‘I can do it myself’ syndrome. Approaching a brand for a partnership is easy. You say you love them, they say they love you. You say you want to work together and then months go by and nothing happens. Brands are sometimes afraid to fess up and tell you directly that this might not be the right fit. So you do a song and dance and get nowhere. Here is where an intermediary, such as a BrandAgent, can help. It is much easier for a brand to deliver the bad news that this partnership won’t work when someone else has to deliver the news. Or, conversely, to properly explore any concerns so you can identify the positives for both partners and get to yes.
The 'I can do it myself' syndrome is also something we often see. Some brands don’t want to hire an agency to act on their behalf because they think they can save the money and do it themselves. They won't. Why? First, it can take an excruciating amount of energy and effort to pitch and construct a partnership – even more if you don’t have the expertise. Second, brands often don’t like to negotiate with other brands. This goes back to the fear of being completely honest and actually initiating the break up. They would rather string you along or put a large obstacle in your way.
Here is a great anecdote. We had a retail client that wanted to partner with a luxury automotive brand and run a sweepstakes. They wanted to partner with Brand A, who wasn’t interested without a financial commitment, but Brand B was equally as interested but slightly less ‘desirable’ to the marketing department. Here is where a compromise might be worthwhile and where an intermediary can help negotiate deal points in your favor. Brand B was willing to do just about anything to make a partnership happen, including donate a car (worth about $40K) and provide access to their customer database. But the retailer wanted Brand A. So to make a deal happen, they purchased the car from Brand A (over a $40K cost), executed the sweepstakes themselves and weren’t able to take advantage of Brand A’s customer list either. So what exactly did the partnership provide them with? Maybe some more foot traffic but did the ROI match the investment? No. That being said, brand-match can be very important and there are times when the tradeoff is worth it.
My point is that the retail environment is very challenging. Brands need to think outside the box in order to keep the doors open to successful partnerships. Sometimes this may mean stepping outside the comfort zone and partnering with brands that will help meet the end goal of driving sales. All brands should retain a standard but it doesn’t always have to be so rigid, especially when you can get it done for free and find ways to keep the partnership a little under the radar. And when retailers are struggling to keep the doors open, can you really argue with this?
Regatta is The Original BrandAgent, singularly focused on Partnership Marketing. Sam Kaufman is the founder and Chief BrandAgent.