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Collaboration

Are Collaborations Worth It?

May 15, 2014. Leave a Comment

Nicki Minaj’s collaboration with KMart (shown above and below) was shot at the chain’s location in New York City a couple days ago. It is now priced at buy-one-get-one-free, which is considered to be the rock bottom of sale pricing in retail. The  collection was supposed to launch initially in November 2013 so what is shown here may be  spring product.

Looking at the amount of merchandise still unsold and the sale pricing, one has to guess that Kmart won’t view this collaboration as a success. Minaj, however, may have a different viewpoint. Depending on her contract, it might just be she received a check in exchange for putting her name on the goods and do some level of promotional support.

One might argued that Minaj damaged her name by attaching it to a retailer with a reputation for low quality products, but then again, the time in which a pop star can capitalize on her/his name is limited so it might make sense to capitalize on all opportunities even if the partnership isn’t ideal.

Whether or not Kmart hurts Minaj or vice versa is still an unknown in large part because collaborations are still a fairly new way of conducting business and everyone involved is still trying to figure it out. As well, involved parties are almost always very secretive about terms involved in the collaborative contract and the success or failure of the partnership. Kanye West very loudly complaining about the details of his deal with Nike was shocking in large part because it had never been done before.

Athletic sponsorship and custom made product built for retailers by manufacturers (known in the business as special makeup or SMU) set the groundwork for the concept but it wasn’t until the ’00s that pioneering companies like Nike reached out to individuals and retailers to co-brand product. In the early days and even in some cases now, companies like Nike and Adidas, collaborated with individuals and independent retailers in exchange for product, the thinking being that the association with a quality brand with an international reputation was payment enough.

The concept of collaborating has grown much more sophisticated with individuals and companies picking and choosing who they partner with much more carefully. Though the ultimate goal is to grow sales, marketing is at the root of almost all collaborations with all parties hoping to improve their reputation in the market place.

Outside of an individual receiving a check or a retailer showing better sales around a collaborative event, it is tough to figure out the exact near and long-term cost benefit of a collaboration. And even when a person, like Minaj for example, receives payment, it is difficult if not impossible to calculate whether the partnership hurt her reputation enough so that it cut into her longevity and ability to sell herself as a musician.

In the case of the upcoming collaboration between H&M and Alexander Wang, one has to guess the retailer is planning on a same-store-sales boost, and while Alexander Wang may be on the receiving end of a payment, the company also may have seen the partnership as a way to grow the brand’s name internationally. Despite benefits, it is certain Alexander Wang considered the hits its reputation may take from its high-end retail accounts and customers for rubbing shoulders with a value retailer known for churning out low-quality, disposable apparel.

However complicated the cost benefit formula of collaborations may be, it’s a sure bet that companies like Nike, H&M and Target are doing their best to create models that do just that despite a constantly changing environment and a dearth of information with involved parties often staying tight lipped on outcomes.

Collaborations will continue to be a way business is conducted but the salad days of people, brands and retailers jumping in without thought, much less a poured over contract are probably behind us. One thing for certain, whether or not any given collaboration is still worth it is still an open ended question whose answer is still in the process of being written.

Campaign Celebrity Collaboration Music Retail Adidas Alexander Wang H&M KMart Nicki Minaj Nike

Words by Lois Sakany

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