Co-Retailing. Opportunities in a growing trend for small retail business

What is co-retailing and how does it work

Co-retailing is the practice of combining two or more businesses under one roof. This can be done in a number of ways, but the most common is to have one business act as the anchor store and other businesses as tenants. Co-retailing has become increasingly popular in recent years as retailers look for new and innovative ways to grow. Another form of co-retailing is consignment selling which benefits both consignee and consignor. Co-retailing can also take different forms such as pop-up shops, kiosks, or even online stores.

The benefits of co-retailing for businesses

The cost-benefit of co-retailing is clear. Not only do businesses save on rent and utilities by sharing a space, but co-retailers also benefit from increased foot traffic. This is because co-retailers offer their customers a one-stop shopping experience. Offering customers complimentary services or goods together under one roof improves convenience and encourages shoppers to spend more time in-store.

Co-retailing is becoming increasingly more popular among small businesses, as it allows them to share the cost of setting up and running a physical store. And as co-retailers grow, they can also benefit from economies of scale. This means that as the co-retailing business they can grow in a more cost-effective manner.

Larger retailers have co-retailing with success with examples such as J.Crew and Target, which offer different brands in their co-retail locations. J.Crew offers Madewell clothing within their stores, and Target has partnerships with companies such as Chipotle, Nike, and Sony.

But co-retailing doesn't have to be limited to large businesses. Small businesses can also form co-retail partnerships under various models.

“Co-retailing typically involves a more dominant brand bringing in a sub-brand as opposed to two brands partnering. Though that partnership concept has potential advantages for small businesses, too.“We're going to see more of it, but it has not caught up on the independent retailer side yet," says Angel Cicerone, president of Tenant Mentorship

Co-retailing is also a great way to trial new product lines. By working with a co-retailer, businesses can get their products in front of more consumers and test the waters before committing to larger-scale distribution.

So what does the future hold for co-retailing? It's clear that co-retailing is a growing trend we've already seen with larger businesses combining brands in the same location. However, co-retailing is not just for the big guys. SMBs can also benefit from co-retailing by partnering with like-minded businesses, sharing resources, and co-marketing. co-retailing offers a ton of benefits for businesses of all sizes, including:

1. Access to new markets

1. Increased foot traffic

1. A larger customer base

1. Shared resources (e.g., storage, manpower, etc.)

1. Opportunities to cross-promote products and services

1. More capital to invest in other areas of your business

Co-retailing is a great way for businesses to save money while also growing their customer base. By partnering with like-minded Brands, they can co-market their products and services, sharing resources and co-investing in each other's success. This symbiotic relationship is a great way for SMBs to save money while also establishing a larger presence in the retail landscape. co-retailing can be a cost-effective way to grow your business.

In a 2020 Deloitte Report, we see one of their top 4 recommendations is to "embrace partnerships"

“While the overall economy might be losing its shine in 2020, it presents retailers an opportunity to review their playbook for riding out a downturn. To strengthen their preparedness, retailers should focus on four factors critical to success:

• Determine why they matter

• Build a war chest to invest in growth

• Embrace technology and automation to better leverage growth 

• Look outside their four walls to embrace partnerships”

2020 Retail Industry Trends | Deloitte US dated 5/4/2020 

https://www2.deloitte.com/us/en/pages/consumer-business/articles/retail-distribution-industry-outlook.html

One of the best things about co-retailing is that it can help businesses tap into new markets. By partnering with a brand that has a presence in a different geographic area, you can gain access to new consumers without having to expend the time or money to build that presence yourself. This can be a great way to grow your business without the resources otherwise required to enter that area.

For E-commerce brands that are seeking a physical space without a huge investment, co-retailing can offer a low-risk trial space. This can help them try new markets more easily. One mechanism that can help is consignment selling. Offering your products on consignment rather than paying a rental fee removes all the overhead of renting a space.

For the store that offers consignment selling, this can be a great way to diversify inventory without extensive capital outlays. In co-retailing, a retailer will partner with a manufacturer or distributor to sell their products in the store. This can be beneficial for both parties involved. The retailer gets to offer a wider range of products to their customers, and the supplier gets to increase their reach without having to invest in physical space or marketing.

One of the advantages of consignment selling is that a retailer can test products for a shorter period to test their appeal to customers. If the product is not selling, the retailer can easily remove it from their inventory without any significant losses.

Co-retailing is definitely becoming an important trend and we see it growing in the near future in a neighborhood near you. So if you see one, go in. Check it out and see what the future of your shopping experience may look like.

April 21, 2022