Reaping with the Enemy: Kohl’s Tests Amazon In-Store Boutiques

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Amazon Smarthome Experience at Kohl's

Milwaukee has made a long-shot bid to attract Amazon’s “HQ2,” competing with dozens of other cities and regions in North America to attract a facility that Amazon says will pour at least $5 billion into the lucky locale and employ 50,000 workers at $100,000 each.

Amazon Smarthome Experience at Kohl's

In the meantime, one of Milwaukee’s existing leading corporate citizens, Kohl’s, would settle for cooperation with Amazon on a much lower level.

Struggling with other retailers to figure out its path in an era being transformed by e-commerce in general and Amazon in particular, the Menomonee Falls, Wis.-based Kohl’s is hoping to boost traffic and curiosity by providing an Amazon store-within-a-store experience at select neighborhood Kohl’s stores, a branded in-store presence it’s calling the Amazon Smart Home Experience at Kohl’s.

As the photos shown here from the retail concept in Bucktown in Chicago’s Wicker Park neighborhood, the Kohl’s Amazon boutique displays Echoes, Fires and Kindles, a physical foothold for Amazon’s increasingly popular electronic and smart home devices.

Amazon Smart Home shops are now opening in ten Kohl’s stores in Chicago and Los Angeles. Each one about 1,000 square feet in size, they’re stocked with Amazon devices such as the Alexa voice-recognition-based Echo.

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Kohl’s calls the branded retail partnershipa win/win: “The Kohl’s and Amazon collaboration leverages the strengths of both brands—Kohl’s store portfolio and omnichannel capabilities combined with the power of Amazon’s reach and loyal customer base.”

Shoppers are invited to interact with the Amazon devices. Amazon employees are staffing the shops, where prices are identical to those posted on Amazon.com. The boutiques will even accept returns for the online retailer.

Amazon Smarthome Experience at Kohl's

Though presumably Kohl’s shoppers could purchase Amazon devices and start shopping more at Amazon, especially if they become Prime subscribers, the new leadership of Kohl’s thinks it’s worth the risk to try co-opitition instead of competition in order to learn.

“We believe in the power of our store portfolio and know that our future as a best-in-class omnichannel retailer will be driven by how inventive, compelling and unique we can make our store experience,” said Michelle Gass, Kohl’s chief merchandising and customer officer, in a press release. “Kohl’s and Amazon share a customer obsession and we’ve joined together to leverage each other’s strengths and deliver a great experience customers can only find at Kohl’s.”

“We are thrilled to offer a unique new way for customers to try out our lineup of Alexa-enabled Amazon devices, learn more about our smart home services from Amazon experts and then buy those items directly from Amazon—all within Kohl’s stores,” added Dave Zimmer, vice president, sales and marketing, Amazon Devices. “Teaming up with Kohl’s provides an incredible opportunity to pair world-class customer and shopping experiences.”

Amazon Smarthome Experience at Kohl's

“The whole retail industry is going through a massive transformation,” Gass, who is soon to become its CEO, told the Milwaukee Journal-Sentinel. “Those who ultimately are going to survive and thrive through this period are going to think differently.”

It may seem risky for Kohl’s to be lending prime real estate in its bricks-and-mortar stores to provide a physical presence for the company that is doing more virtually to kill traditional retailers like Kohl’s than anyone else—but Gass insists the experiment is worth the gamble. It can provide more traffic and set Kohl’s apart from more cautious retailers.

“In terms of staying relevant and interesting, surprising, engaging, it’s doing things like this, so that in the end we can take market share and win over (the) long term, she said.

The 10 Kohl’s stores also will begin accepting and processing returns of other Amazon merchandise, with another 72 stores in those two metro markets set to begin taking returns soon.

Kohl’s has about 1,150 stores across the U.S., having grown over the last quarter-century from a small regional mid-price-apparel retailer into a pace-setting brand that redefined the segment and stunted competitors such as J.C. Penney.

As CNBC points out, Kohl’s and Amazon have been quietly working together since the spring. Kohl’s is testing other new initiatives, including a partnership with Under Armour to sell the sports apparel company’s merchandise. After some concerns about discounting, management said on a conference call in August that it’s beginning to see benefits from inventory management and cost-cutting efforts.

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