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Marcus Johnson (00:00):

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(00:24):

Hey gang, it's Wednesday, August 20th. Suzy, Brian, and listeners, welcome to Reimagining Retail, an eMarketer podcast made possible by Awin. I'm Marcus, your host for today and joining me for the conversation we have two folks, both living in New York. Our VP of content heading up our retail desk based here in the city is Suzy Davidkhanian.

Suzy Davidkhanian (00:44):

Hey Marcus, thanks for having me.

Marcus Johnson (00:46):

Of course. And we're also joined by the founder and CEO of Mack Weldon, Brian Berger. Brian, welcome to the show.

Brian Berger (00:53):

Thanks so much, Marcus. Great to be here.

Marcus Johnson (00:55):

Yes, sir. Today's topic, retail partnerships. Today we are talking all about retail partnerships and we wanted to start off by talking about one that's been in the news quite recently. It's Warby Parker and Target. So Warby Parker opening five mini stores within Target shops this year in Illinois, Minnesota, New Jersey, Ohio, and Pennsylvania as well, and will be available on Target's website. You can buy Warby Parker things, the glasses people, on Target's website, as well as in their stores, a couple of them at least. Brian, what, to you, are the right conditions for a successful store-in-store relationship? Because we've seen these before, what makes them work versus crashing and burning?

Brian Berger (01:41):

[inaudible 00:01:41] that one plus one makes three is the ideal situation, where both parties bring something to the table that the customer values and as a result, both businesses and brands benefit. So I think that's a great illustration of a case where Target bringing in Warby's value proposition and customer experience into their environment is something that is absolutely a net positive for Target and their consumers. And for Warby Parker as a brand, they've done a great job opening up their own direct retail stores, but certainly the reach and scale of Target is pretty significant and so this opens up a whole new array of customers for Warby Parker and Warby Parker's brand as well.

Marcus Johnson (02:30):

Yeah, Suzy, Rachel Wolf agrees entirely with Brian here. She writes for our retail briefing, saying, "The Warby Parker-Target partnership is a win-win for both. Warby Parker gets the benefit of Target's much larger audience as well as the chance to quickly ramp up its brick and mortar footprints should the shop-in-shop model prove successful. Meanwhile, the association with a cool brand like Warby Parker could boost Target's customer appeal and help drive a sales recovery." What do you think?

Suzy Davidkhanian (02:54):

I mean, it's leaning a little bit on the definitely mutually beneficial is key when you're thinking about partnerships, and I think, I mean we're talking about shop-in-shop, so like a partnership to broaden your distribution, but there are lots of different types of partnerships. And maybe we'll circle back to just even thinking about what is a partnership and what are all the different flavors and variations? In this particular instance today, I would say it is a big, big win for Target to lean on the cool factor from Warby Parker. I understand that Target has many more stores and it's easier to do pop-up stores or shop-in-shops than it is to do your own stores. But given all of the less [inaudible 00:03:40] branding that's happening right now, it'll be interesting to see What happens. Critical, I think, is around aligning consumers, your vision, your mission statements, and making sure that it's mutually beneficial. So there was a day I could have seen it as a home run. Today, I'm a little bit less sure.

Marcus Johnson (03:58):

Yeah, I want to talk about how you decide who to partner with, but to your point, Suzy, there are a lot of different flavors. What are some of those flavors of partnerships?

Suzy Davidkhanian (04:05):

Well, I think it depends. If you start with a question of what you're trying to achieve, and so I'm going to talk about it in a more theoretical and then Brian's going to talk about it in a more tactical way. But once you know what you're trying to achieve, whether it's higher sales volume, maybe new customer acquisition, maybe you just need to do brand awareness. Maybe you're going into an adjacent category that you don't have a lot of legitimacy or authenticity and you need to partner with an influencer who can help you. So once you know what you're trying to achieve, then I think it comes to that point, which I still love from the lead and think about it all the time, the one plus one equals three, when Brian and I were talking about partnerships then. So I think you have to start with that.

Marcus Johnson (04:45):

True synergy. Yeah. Brian, how about for you? How do you decide who to partner with?

Brian Berger (04:51):

Yeah, I think Suzy's thoughts are spot on. I mean, it starts with what is the strategy and what's the objective? And we are typically, when we're looking at our marketing calendar, we're thinking about those things. For example, we have a new product launch happening in Q1. It's a performance underwear style. We're thinking about that product launch and how can we amplify it beyond just our own owned marketing channels. So we partner with Mile High Run Club, we get some of their athletes who are also influencers, some of their instructors who are also, in and of themselves, influencers with decent and social media platforms, to effectively endorse the product, both from the standpoint of communicating about it, but also wearing it and speaking about it from a first person basis.

(05:43):

That's an example of our being thoughtful about the partnership we want to do and what it's going to serve for us. And there are other examples like that. Summertime, this summer, leading into summer, we partnered with a swim brand called Bather. It's a Canadian brand that makes all of its product locally, in Vancouver. So it enabled us to come together and collaborate on a product using their category cache, but enabling us to put a little bit more of our DNA into the product and then do more of a capsule thing to kick off summer. So those are two examples and there's many more I can provide that serve different needs.

Suzy Davidkhanian (06:28):

And I think one of the critical things to remember as a brand is the size of the audience of the partner doesn't necessarily matter as much if you have the right alignment. And I think it's really important to think about the audience composition of your partner more than its size. If you are looking to target a niche group, you don't necessarily need to have the biggest audience, you need to have the right audience. And so partnering with the Mile High Running Club is a great way to help showcase performance in a really authentic way. So as brands are thinking about partnerships, I think that's a critical point.

Marcus Johnson (07:07):

Yeah.

Brian Berger (07:07):

And I would just add to that you may want, we always try and punch above our weight with these things, but it doesn't always work out. You could spend your entire life chasing the big holy grail of partner and it may never come just because they're trying to do the same thing, punch above their weight. Maybe the Warby-Target example is a good example of that. So the key is to not psych yourself out. You need to get experience doing these things. You need to understand what works, and I think that also begets more opportunities. The more you can show up to a perspective larger partner with, "Hey, we did these three or four things," or if you're a brand that's known to execute partnerships or collaborations really well, I think it's more likely that you'll get attention from somebody who's perhaps bigger than you and maybe less inclined to essentially take your call.

Marcus Johnson (08:09):

Yeah. So you mentioned that a recent partnership in summer, you said you've got one coming up in Q1. Do you have one, Brian, that's one of your most memorable partnerships?

Brian Berger (08:21):

It's hard to say most memorable, but I guess if I had to answer that question, I would say that our launch, business brand launch partnership with Equinox Fitness in the early, early days, so it's going back 12 or 13 years ago. One of the objectives that we have when we launched the business was we need to bring the brand to life in real life. And since we are a digital brand, it's going to be important that consumers can run into the product in the real world. But at the same time, we were trying to avoid being a traditional wholesale brand, and so Equinox gave us the ability to really check a bunch of boxes.

(09:09):

It was perceived to be a really big deal by the outside world, whomever that was, consumers, investors, partners, employees, the press, there was a revenue stream associated with it. They were buying products from us and we were generating a little bit of revenue there, and it was a great, great customer acquisition channel for us that also checked the brand box. The main reason guys go into Equinox to buy anything, it's usually headphones, socks, and underwear. And so the fact that we're able to be the brand that shows up for them when they're in need was really also checking like a utility box for us, which was really important in the early days of the brand. We're doing it better, we're helping you, we're making shopping experience easier, that kind of thing.

Marcus Johnson (09:53):

Yeah, I love that example. Bringing the brand to life right off the bat. Suzy, have there been any partnerships that you've seen from afar that you've been particularly impressed with?

Suzy Davidkhanian (10:03):

I mean, I'm constantly impressed by them and I think some of the things I look for are the fit and the surprise and delight is bigger than the hype. So while there was a lot of hype around the Dunkin' Donut-Kahlua tie-up I think it was extremely cleverly done. It's similar markets, a similar flavor profile. Similar markets in terms of adults that drink coffee may also like the taste of coffee alcohol. Having that tie-up, it's not meant to be at all a volume driver.

(10:39):

So back to thinking about what your objectives are so that you can measure success in a critically correct way, really helped. So for me, that was a really interesting one. Another recent one that I was in love with was Corona. Everybody knows Corona as the beach drink, and so they partnered with a swimwear brand to do a quick drop of swimsuits with Corona branding. It was a small assortment, not a lot of SKUs. It was a short-lived thing, but it was to celebrate their birthday, a very special anniversary, and it had a wow factor, but it wasn't like, oh, I have to really give it some thought as to why these two brands go well together. It just made sense.

Marcus Johnson (11:20):

Yeah, some of them make too much sense. When it happens, you're like, why hasn't this happened sooner? Something like Starbucks being in Barnes and Noble. Coffee and books go extremely well together. Other partnerships come out of left field, but they can still work just as well, if not better. Brian, have there been any partnerships that you've seen from afar that you've been particularly impressed with?

Brian Berger (11:43):

I'm loving all of these random food collaborations that are happening with flavors of things, but one that I saw recently that I loved was a brand that we know and respect a lot called Tecovas. They make cowboy boots. They're a disruptor of that very important category of products if you look leather goods, but their primary origin is really in cowboy boots. And they did a collaboration with Chili's, the restaurant Chili's and it's a colorway and an insole of their shoe. And again, it's probably not a huge, massive revenue driver for them, but definitely very buzzworthy, definitely very creative, and I think just the brand cred alone of seeing that show up and you're like, oh, that really makes a lot of sense. That was one that I saw recently that I thought was great.

Suzy Davidkhanian (12:41):

That's so fun. If you think about the halo effect too, in terms of all of a sudden you have influencers talking about you. You have regular everyday people who are at the restaurant that are posting pictures and maybe tagging you that you can reuse as creative. I mean, the storytelling piece can have such long legs and then the PR and all the other buzz that's earned, in addition to whatever it is that you're going to pay for buzz, I think is that other important thing to think about. How do you reuse assets?

Marcus Johnson (13:13):

Yeah. Suzy, I want to talk about something that you said earlier, which was the collaboration you were talking about, you said it was short-term. And there was a question that I'd seen you'd ask, I believe it was in the panel at an event before, and it was talking about how long-term partnerships look versus one-off collaborations. Brian, I'm wondering, for you at Mack Weldon, how do you approach long-term partnerships versus one-off collaborations and what goes into those decisions?

Brian Berger (13:40):

Yeah, I think long-term partnerships need to, a key part of it is that there's an aspect of it that is fundamental to the business, or mutually fundamental, and maybe the Equinox is a good example of that. That partnership served their needs, served our needs, and was rooted in something that was fundamental to how they operate. They have buyers that go out and figure out the merchandising strategy for the stores. We're a part of that. They buy product from us. The economic deal is clear, so it didn't really require a lot of maintenance once it was initiated.

(14:21):

Obviously we're always trying to grow it and figure out ways to maybe sell in or augment with other products. We did a couple of what I would call bolt-ons, where we launched some new product with Equinox. We launched our AIRKNITx underwear program, which is also a microfiber. Not necessarily made for sport, but tends to lean more performance. And so we did a whole thing with their trainers in their locker room. We did a shoot there, and so that was on top of the base program where we were effectively their chosen underwear brand in store.

(15:02):

So I guess that's just a long way of saying there has to be fundamentals that do not require constant maintenance from both sides, and that needs to be able to be delivering on the value proposition for both sides on somewhat perpetual basis. Otherwise, it just doesn't work. It just starts out really good, because everyone's focused on it and then it peters out and it just becomes not so great and everyone's frustrated by it. So there needs to be an ongoing benefit.

Marcus Johnson (15:35):

Yeah. Suzy, what's your take on the approaches to long-term partnerships versus the one-off collabs?

Suzy Davidkhanian (15:39):

I couldn't agree more, and I think one of the things we forget sometimes is that distribution centers, as a wholesaler, the retailer that you end up in is also a partner. And so those are the longer collaborations, if you will, the longer partnerships where, to Brian's point, there has to be mutual value. You have to have the same brand, culture, the same missions, the same willingness to put in effort, so that you share some of those expenses, potentially, that you are ensuring that you're delivering a strong customer experience in the store or online or at any touch point, really, that means the same thing to both of your brands. When I was at eTail, I was on stage with Samsonite and he was telling us a little bit more about how they choose their retailers to be in line with some of these things, and they consider them wholeheartedly as partners. So I feel like it's one flavor of partnerships and those are the ones that last the longest.

Marcus Johnson (16:38):

Yeah. When you were just talking just then, I was thinking of the episode we talk about retail partnerships, but the way you were describing it, especially with regards to the effort put in on both sides, it is a retail relationship in a lot of respects. And you've got to pick the right one, but you've got to work at it whilst you're in it. Brian, let's end with this. What, to you, would be one lesson learned from a past collaboration that has shaped how you approach partnerships today?

Brian Berger (17:01):

What I would say that is most important is that you are really clear on how you're going to measure success, and that does not mean that the partnership needs to deliver revenue or some sort of specific ROI that you might judge your other marketing investments by. Whatever the criteria is, I think the more clear and specific you are about that upfront, the more successful the partnership will be. This is an area where you can waste a lot of time, a lot of effort, and a lot of money. So if you are not clear, then you are at risk of having a very poorly performing partnership strategy. So for us, one of the big learnings is making sure that we identify all [inaudible 00:17:50].

Marcus Johnson (17:50):

And by measurement, are you talking about the metrics by which you would measure this or where on that scale we are going to say we achieved success?

Brian Berger (17:59):

I think it's both, but I would start with the former, which is just, okay, we're doing this partnership and our objectives are we want to see sales of this collaborative product. We want to see social media impressions or engagement levels of this. We want our partners to promote the campaign in these ways, on these channels. Just as specific as you can be about what those are, the better off you'll be, and at least you'll know whether or not you've hit the mark. And then within those, I think over time you can say, "Okay, this is what good, medium and bad looks like," from a social media engagement perspective or a sales perspective, once you get a little bit more experience under your belt. But at the beginning it's really just make sure why you're investing time, effort and money in something like this.

Marcus Johnson (18:54):

Yeah. Suzy, your best practices to end on?

Suzy Davidkhanian (18:56):

I mean I, as a watcher, because at Macy's I didn't necessarily work on the partnership piece, but as a watcher I would say, you don't round hole, square peg. Not every brands that are amazing should be working together, and that if you try and wedge a partnership together, whether it's long-term or short-term, and there is no reason for being, even if that's to create a little bit of tension, right? Sometimes I think people try and create tension to get buzz and hype. So if you don't think through, like Brian was saying, not only just the KPIs, but also the reason for being, then I think it's going to be a miss. And don't just say yes to every request because you think it's going to do well.

Marcus Johnson (19:42):

Yeah. Excellent note to end on. Thank you so much to my guests for being on today. Thank you first to Suzy ...

Suzy Davidkhanian (19:47):

Thanks for having me.

Marcus Johnson (19:48):

And of course to Brian.

Brian Berger (19:50):

Thank you so much, partners.

Marcus Johnson (19:51):

Thank you, sir. And thanks to the whole editing crew and to everyone for listening in to Reimagining Retail, an eMarket podcast made possible by Awin. I hope to see you on Friday's Behind the Numbers show, where we'll be making some predictions about the future of digital.