We’ve written before about the retail sector’s reaction to the ‘Big Bad’ that is Amazon and how that reaction can manifest itself in various ways. Will it be the ‘rabbit in the headlights’ approach? The ‘everything has to be online so that we’re just like Amazon’ delusion? Or will it be a pragmatic acceptance that it’s possible to work with Amazon to your own benefit?
That final option is one that Kohl’s took last year and it appears to be paying off in terms of pulling in punters through the US retailer's store front doors.
To recap, after an initial low-key pilot phase, Kohl’s has opened up Amazon return centers in its 1,155 stores around the US. Anyone who needs to send something back to Amazon and has a Kohl’s store nearby can just pop in and leave the goods. No more packaging up the unwanted items and traipsing to the post office.
The intention was always to drive traffic into the stores and according to CEO Michelle Gass that’s been happening with a reported 24% increase in footfall in-store since the partnership kicked off:
Our unique partnership with Amazon leverages our collective strength. Our strong nationwide off-mile store footprint and best-in-class omni-channel capabilities and Amazon’s expensive customer reach and world-class digital capabilities. Importantly, it perfectly aligns with our top strategy of driving traffic. The overarching goal of this program is to convert the traffic that comes into our stores into loyal Kohl's shoppers over time.
Nationwide roll-out of the returns program was completed early last month with promising traffic uptick, she adds:
While it’s only been in place for six weeks, we’re highly encouraged with the initial results. Traffic coming into our stores is meeting our expectations and skewing towards off peak times. We are seeing a mixture of existing customers and new younger customers using the service. We began supporting the program in mid-July with a robust marketing plan, including print, digital, and national broadcast TV. We’re focused on optimizing sales and driving conversion to ensure that we fully capitalize on the traffic coming into our stores.
To date, we’re seeing conversion consistent with our pilot stores, and are particularly encouraged with how our customers are engaging with our proprietary brands. So, while it’s early, we’re pleased with the initial results and remain confident in our ability to drive the intended benefit of this program over the long-term.
The long term point is an important proviso. While Gass expects the partnership to make “a positive contribution” to the bottom line this year, the harsh reality at present is still that Kohl’s is still a sickly beast. The firm’s latest quarterly numbers, which cover the period before the nationwide returns program was live, saw same store sales fall 3.4% year-on-year. Whether the boost from Amazon-related footfall can fix that in the second half of the year will be something to track.
That said, the firm is doing well in tapping into the demand for Buy Online, Pick-up In Store (BOPIS) and Buy Online, Ship from Store (BOSS). This now accounts for a fifth of all digital revenues, with some 40% of digital orders now fulfiled by the stores. Again, getting customers through the front doors is a priority here.
The Amazon tie-up isn’t the only omni-channel partnership that Kohl’s will be working on for the rest of the year. Coming up in the Fall is Curated by Kohl’s, pitched by Gass as a platform to “showcase emerging digitally native brands” in partnership with Facebook:
Starting in approximately 50 Kohl's stores and online beginning in October. We will begin by offering six brands and then rotate brands in and out to create a constant flow of newness and sense of discovery for current and new Kohl's customers.
We are in a unique position to support customers’ curiosity for new brands and interesting products by leveraging our formidable store footprint far-reaching digital assets and large and loyal customer base. This platform is also a way for us to find, test, and gain important insight on emerging brands with long-term growth potential.
Facebook will help us bring Curated by Kohl’s to live through social marketing efforts and they will also help identify brands that are creating a following on both their Facebook and Instagram platform.
She adds that Kohl’s will be bringing its own strengths into play with this alliance:
First and foremost, the marketing will be largely driven digitally, and then in particular through social and that's where a lot of these brands are both birthed and marketed. We’ll of course leverage our own assets. We have 35 million+ people that we engage with on things like e-mail. We have personalization capabilities, so we’ll take advantage to that, and we’ll leverage all of our channels.
This is an exciting experiment and launch for us, so we’re really looking forward to see how the customer responds, but I'm pretty confident it's going to work…as a new platform for the company.
The introduction of Curated by Kohl’s will come at a crucial time in the retail calendar as firms gear up for the all-important Holidays season. This will also be a testing period for the Amazon partnership. As Gass observes:
We’re ramping the Amazon Returns programs, so as we think about entering the holiday season, that should be driving new traffic and new customers into our Kohl's stores. This is a key selling period for us and Kohl's shows up really well during the holidays, so I’m excited to introduce a lot of new customers that are leveraging the Amazon Returns service and they are being introduced to Kohl's in some cases for the first time.
Certainly a lot of attention will be paid by other retailers as to how successful Kohl’s is in meeting Gass’s expectations. This will be an interesting litmus test, the success or failure of which may well influence what remains stronger in retail circles in 2020 and beyond - Amazon Envy or Amazon-phobia?