Ask a consultant

  • Updated: March 2, 2008 - 10:14 PM

Q With all the issues facing retailers large and small, why have they not entertained the true coalition model prevalent in most all other major economies?

MICHAEL C. BANN

BANN FORMS TECHNOLOGY

PRESIDENT, CVC DISTRIBUTION

A Retailers in general, and American retailers in particular, prefer to operate independently rather than cooperatively.

This is partly because retailers prefer control and permanence, but also because retailers' skill sets and strategies are highly individualized and are therefore not easy to blend together in a true coalition.

Coalitions in manufacturing, finance and real estate are more common because they involve specific opportunities requiring specialized expertise, huge resources, shared risk taking and large scope.

When retailers form coalitions, it's usually only temporary and occurs when participating parties can do something they couldn't do alone. Joint ventures, instead of coalitions, may be more likely to occur. One example would be Wal-Mart's investment in and later acquisition of Cifra in Mexico. Franchising, retailer and wholesaler co-ops and buying groups are other types of cooperative ventures.

Finally, it's important to realize that government regulation also limits coalitions. The U.S. Federal Trade Commission and the European Commission on Competition were set up to promote competition and protect consumers rather than unite businesses.

DAVE BRENNAN, PH.D.

PROFESSOR OF MARKETING AND CO-DIRECTOR

INSTITUTE FOR RETAILING EXCELLENCE

UNIVERSITY OF ST. THOMAS

OPUS COLLEGE OF BUSINESS

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