Building from a theoretical foundation of active learning, this article describes how using a retail laboratory in an educational curriculum can benefit both students and strategic partners. Students work alongside strategic partners, and the retail laboratory enables them to probe and design novel retailing strategies, such as launching new merchandise and designing store formats and layouts. This innovative approach to teaching marketing and retailing helps instructors focus the overall learning process, achieved through experiential learning. The empirical results affirm its effectiveness for maintaining student satisfaction and motivation, increasing student learning interest and learning value, and promoting skills required by recruiters. That is, engaging students in real-life projects helps them build business capabilities, including critical thinking and analytical and decision-making skills.