Kohl’s is betting that Amazon returns will help to drive its sales

It says volumes about the challenges facing brickandmortar stores that the “single biggest initiative” out of Kohl’s this year, according to the national retailer’s chief executive, is that it will now accept and process unwanted orders from Amazon.

Kohl’s said Monday that it was now accepting Amazon returns at its more than 1,100 stores after running a pilot program in 100 locations. The retailer, which will pack, label and ship the returns for free, expects the program to benefit millions of shoppers along with bringing more people into their stores, Michelle Gass, the company’s chief executive, said in a statement.

The retailer, based in Menomonee Falls, Wis., tested the program, which has been closely watched by the industry and has elevated Gass’ profile, for about 18 months. It timed its national rollout to the backtoschool shopping season.

“It’s an interesting marriage because what Kohl’s needs is store traffic, and what Amazon needs is to make customers happier with a place to return their items,” said Oliver Chen, a retail analyst at Cowen. “The dream is that it’s a fair but attractive split where that shopper will come in and purchase other items.”

National chains have been devising a plethora of ways to accommodate new digital shopping habits, particularly of younger consumers, beyond simply managing their own online pickups and returns at stores. Nordstrom recently established an urban chain of stores, called Nordstrom Local, that do not carry any merchandise. The locations, which are about the size of a Lululemon or Dunkin’ Donuts, are mainly hubs for online pickups and returns, and have attracted a younger crowd compared with Nordstrom’s average shoppers.

Retailers are also looking to accelerate the delivery of items to consumers. Walmart, in its own competition with Amazon, shared plans in May to expand nextday delivery to 75% of the United States this year.

Kohl’s is unique in embracing Amazon, the nation’s ecommerce behemoth. The chain, which has tested its Amazon return strategy in Chicago, Los Angeles and Milwaukee, has also been increasing the number of its stores that carry Amazon products like smart home devices.

While Kohl’s has shared little about how the partnership works, it said on a May earnings call that it expected its expenses to increase because of store staffing and logistics for the returns program.

Gass, who took the reins at Kohl’s just more than a year ago, emphasized on the call that working with Amazon was a “longterm bet” and beneficial for both companies.

“What’s really key and what our data would suggest is that we’re also bringing in a new customer and we’re bringing in a younger customer,” she said. “That is significant.”