Business Alliances and Collaborative Commerce … the Neiman Marcus and Target Example

Recently I wrote a couple of articles entitled Thoughts on Collaborative Commerce … Elephants Can Dance and Utilize Business Alliances for your Growth Strategy. The premise of these articles was how businesses can avoid being shackled to their past by utilizing business alliances and collaborative commerce.

Discussions with many companies led us to these conclusions. Ask most companies and they will tell you why they’ve given up trying to do everything themselves. It has to do with decision making speed, speed to market, faster expertise, business growth and expansion, and risk reduction. Today we will use these premises to analyze the Neiman Marcus — Target retail alliance.

Back in July 2015, the luxury retail chain Neiman Marcus said it will put together a limited collection from 24 American designers this holiday season with an unlikely partner … discounter Target Corp.

Items from fashion houses including Diane Von Furstenberg, Derek Lam, Rodarte, and Tory Burch will range from $7.99 to $499.99 and average $60. Each chain will offer the same items, ranging from stationery to sporting goods, at the same price. The label will have both the Target bulls-eye logo and the Neiman Marcus logo. Each designer created one to three items for the collection and all 50+ pieces will be priced between $7.99 and $500, although most will retail for under $60.

The Target + Neiman Marcus Holiday Collection includes a mix of more than 50 limited-edition products, which range in price from $7.99 to $499.99 from 24 well-known designers. The total line of more than 50 products will include clothing and accessories, some involving difficult manufacturing using hand-blown glass, fine leather, and 18 karat gold.

For Target, the benefits of the tie-up are clear. The discounter needs exclusive lines to keep shoppers in its stores, and it gets to bask in the glow of Neiman Marcus. Signing so many designers would probably not have been possible without adding the Neiman’s draw. So Target’s benefit … designer buzz.

For Neiman, the benefit is a little more difficult to see. It said it needed Target’s extensive supply chain to produce the goods in bulk. But it already carries designer labels — at true designer prices with far fatter profit margins. What it needs is a way to draw in people who otherwise might not have the motivation to be drawn into the store. So Neiman’s benefit … more and wider range of customers.

The partnership is the latest example of business collaboration with both partners seeking business growth … but these are very different and unlikely dance partners. Let’s examine this collaborative alliance in more detail.

As we described in the earlier article, there are three kinds of business alliances …channel changers, market enablers, and symbiotic relationships. All of these are in play with this collaboration:

Channel Changers … give you additional ways to access your customers or as in this case, new customers for each business. They usually involve integrating your products or services with those of supply chain partners and are almost always mutually beneficial … certainly works here.

Market Enablers … market enabler alliances give partners a capability they don’t already have. In this case, access to high-end designers for Target and volume quality manufacturing for Neiman Marcus.

Symbiotic Relationships …perhaps the easiest, but still quite fruitful, potential alliances are built on symbiotic business relationships. Look for businesses around you that could benefit from what your business offers and vice versa. In this case, Target gets more access to higher end designers as well as customers and Neiman gets access to the lower end market to draw more customers into its stores … a great symbiotic win-win example. Such examples can be found all around in many, many markets.

Who else is in on the collaboration for ultimate good … the designers, of course. Lela Rose, one of the designers in the project, suspects some of her customers are Target shoppers. Ms. Rose produces bridal fashion and women’s dresses that average $1K apiece.

Her core customers are affluent women between 35 to 60 years old who typically shop at Neiman, her biggest buyer. But she figures they shop for other goods at Target, where the median household income of shoppers is $64,000 a year.

The dress and shirt she’s making for the holiday collection aren’t made with fabrics she would normally use, but she said the aesthetics are comparable to her regular product. Most important, the line will give her exposure to new customers.

Mike Schoultz is a digital marketing and customer service expert. With 48 years of business experience, he consults on and writes about topics to help improve the performance of small business. You can find him and his writing on G+, Facebook, Twitter, Digital Spark Marketing, Pinterest, and LinkedIn.