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The Kohl’s-Amazon partnership is great news for Kohl’s—and even better news for Amazon

Sangeeta Singh-Kurtz
Kohl's stores will accept Amazon returns.

Kohl’s is officially in bed with Amazon. The American department store chain announced yesterday (April 23) that it would start accepting returns on behalf of the e-commerce giant at its 1,150-plus locations beginning in July. Kohl’s shares, which have struggled alongside other American department stores in the past several years, ticked up 12% on the news.

Per a Kohl’s press release, the service will allow customers to return “eligible Amazon items” for a refund, no box or mail-label necessary. The companies didn’t specify what would be deemed ineligible, although the Verge speculates it means “no oversized items or other illogical things to push onto a store” or products from third-party Amazon sellers.

The Kohl’s-Amazon partnership began in 2017, when the department store started selling Amazon-branded knick-knacks like the Fire TV and Echo Dot in some stores. It also handled returns in 80 locations, a program that recently expanded to 100, and is now selling Amazon products in 200 stores.

Kohl’s CEO Michelle Gass told CNBC that the partnership is part of the company’s bigger plan to “drive traffic” into stores and “bring more relevance” to shoppers. Indeed, Kohl’s, alongside other bastions of the retail industry, have struggled to compete with e-commerce companies (aka Amazon) and direct-to-consumer businesses. While Kohl’s has fared better than former behemoths like Bon-Ton and Sears, which have filed for bankruptcy, it too has shuttered some locations.

But Amazon might be getting the sweeter deal here. The e-commerce giant, which announced last month that it would shutter all of its pop-up shops, isn’t giving up on its physical retail presence, and seems to be doubling down on it by partnering with a store that “80% of America lives within 10 miles of,” Gass says.

But in addition to its returns service, the Kohl’s-Amazon partnership could go even deeper. Kohl’s stores tend to be standalone or located in strip malls, which means they have more flexibility in terms of how they use free space than if they were in traditional malls. Last year, former Kohl’s CEO Kevin Mansell told CNBC it planned to rent out excess store space to “well-capitalized companies… preferably ones that have high traffic in grocery and convenience.”

Amazon, it seems, would be a good candidate. In addition to its Whole Foods division and its cashier-less Go Technology, which is now out of beta and in 11 brick-and-mortar locations across the US, it was revealed last month that the company plans to open dozens of grocery stores across the US. Launching as early as next year, the stores would serve shoppers at a lower price point than Whole Foods, the Wall Street Journal reports (paywall). Its locations are yet unknown.

At this point, a Kohl’s-Amazon grocery play is speculation, as neither company has mentioned that particular strategy. That said, if Amazon were to roll out low-cost (perhaps checkout-free) grocery locations in Kohl’s locations, it’d be fulfilling a years-long initiative to expand its physical grocery presence.

 

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