The Gap, Coach Inc. & Pizza Hut: Retailers Can Compete with Cooperation

I attended a business meeting this week which was focused on the topic of competitition versus cooperation. The featured speaker was Berny Dohrmann, founder of a company called CEO Space. Berny holds the belief that more success can be generated from a paradigm of cooperation than from the current model of competition used by most capitalistic enterprises. The economic disasters of this past week certainly encouraged those of us in the audience to be open to a new approach to free enterprise.

At a human level, cooperating your way to success certainly feels like less of a struggle. Even I have to admit, though, that while I love the thought of cooperation, as I listened to Berny speak passionately about it, the notion seemed impossibly idealistic and highly impractical, particularly in a fiercely competititve retail industry. It's hard to imagine that the spirit of cooperation is going to overtake the free enterprise system any time soon. However, it's not a completely foreign idea in the retail industry. Evidence of cooperative strategies are becoming more evident throughout the world of retailing every day.

Just today The Gap announced that it is partnering with retail chain Distribuidora Liverpool to open "store within a store" Gap franchises throughout Mexico. Perhaps this is a partnership of necessity due to government regulations, but nonetheless, there is a seed of cooperation in it. There is obviously some advantage for both companies to sell under the same roof rather than compete head to head. These kinds of mutually beneficial alliances could not be found without a willingness to look at cooperation as a viable retail strategy.

Manufacturers have been embracing a cooperative co-branding strategy for years. Should I buy cookies or ice cream? I don't have to choose one over the other when I can have both in Dreyer's ice cream loaded with Netle Toll House cookie dough. Stylish shoes or functional footwear? Since Nine West and New Balance announced this summer that they are partnering together to give me both, I may not need to engage in the great shoe debate for much longer. Would a new Lexus or a new Coach accessory bolster my image? A Lexus with Coach leather upholstery and a bonus Coach leather weekend bag gives me double the status and double the fun.

Cooperation amongst those who are creating the products seems logical and savvy. Cooperation amongst those who are trying to sell the products seems quixotic. Yet, consider that it took Wing Street five years to open 1,000 stores, but only three years to add 4,000 points of access to its poultry products when it forged a cooperative agreement with Pizza Hut. Before the idea for this kind of partnership could ever be born, somebody had to stop asking how to compete for the fast food dollar, and start asking instead how they could cooperate more effectively to enhance their expansion.

"What do you do, and how can I help you?" This was the simple question we were challenged to ask in an unconventional power networking session during the "competition versus cooperation" business meeting. The pitch I got from the other end of that question was not much different than I would have received in any other networking setting, but the way I heard it and how I responded to it were entirely different. As a result of that question, I have hooked up an inventor with a business plan consultant, an international bank with a national women's networking website, and a local chiropractor with a regional green dry cleaner.

My new conclusion this week is that cooperation is a much more viable business strategy than most retailers think. Those retailers who are willing to suspend competitive strategizing in order to explore cooperative possibilities will likely find novel alliances and unique offerings that differentiate them from their competitors. So in a practical sense, cooperation is nothing more than a different kind of competitive strategy. It's just a strategy that feels a whole lot better when you're using it.