Kohl’s seeks return of shoppers to stores
The chain plans to attract customers in Houston through its partnership with Amazon to send back packages
Kohl’s recent announcement that it would start accepting Amazon returns in its Houston-area locations was widely seen as a smart move for the department store chain, which has struggled to drive foot traffic to its stores
amid the rise of e-commerce.
A steady stream of Amazon shoppers stopped by the Kohl’s store in Meyerland on a recent Wednesday, dropping off more than a dozen Amazon-branded packages over the course of an hour. After processing each return, a Kohl’s employee handed shoppers a 25 percent off coupon to use inside the department store.
Carol Hall, 58, was one of several shoppers who took advantage of the coupon right away, making a beeline for a rack of striped jumpsuits behind the orange Amazon return kiosk set up at the front of the store. The downtown Houston resident and frequent online shopper visited a Kohl’s for the first time in about a year to return some ill-fitting jeans that she bought online for her son.
“This is super smart of
Kohl’s,” Hall said. “I wouldn’t be here if it weren’t for the return.”
Kohl’s and Amazon, once fierce competitors in the cutthroat retail industry, are betting their unusual partnership will be mutually beneficial. The Seattle ecommerce giant wants to make it easier for online shoppers to return purchases, while the Wisconsinbased, brick-and-mortar retailer wants to draw more shoppers — particularly millennials — into its stores to boost lagging sales.
“They say you should keep your friends close, but your enemies closer,” said Venky Shankar, research director for Texas A&M University’s Center for Retailing Studies. “In this case, the enemies have become frenemies. It’s a win-win for both.”
Expanded presence
Kohl’s began accepting Amazon returns 18 months ago in 100 stores across Los Angeles, Chicago and Milwaukee. Consumers using Amazon’s app select a nearby Kohl’s store as their preferred drop-off location and present a QR code on their phone to a Kohl’s customer service representative to return their Amazon purchase. Kohl’s will package, label and ship the return back to Amazon — at no charge.
Kohl’s CEO Michelle Gass told Wall Street analysts in May its pilot stores saw a “pretty significant lift in traffic” from offering Amazon returns but declined to share specifics. A study from Gordon Haskett Research Advisors found Kohl’s participating stores in Chicago saw an 8.5 percent traffic bump, with more than half being new or infrequent customers.
Kohl’s is now expanding Amazon returns to more than 1,100 stores nationwide, including 21 in the Houston area. The rollout is the “single-biggest initiative of the year,” Gass said.
“We are incredibly excited about the nationwide rollout of the Amazon Returns program, which we expect to be a significant traffic driver to our stores,” Gass said in May. “We’re expecting growth to resume in the second half of the year, driven by an incremental lift in sales related to the Amazon returns program.”
Kohl’s reported $62 million in net income on nearly $4.1 billion in revenue during its first quarter that ended May 4. Profits fell 17 percent
while revenues fell 2.9 percent, compared to a year earlier. Same-store sales fell 3.4 percent year over year.
Kohl’s has projected administrative expenses would rise 1.5 percent to 2.5 percent this year as a result of additional store labor and logistics costs to process Amazon returns. The company declined to say how many Amazon packages it expected to handle nationwide, nor how many of those Amazon shoppers it hopes to convert to Kohl’s shoppers. The retailer has also carved out space in 10 of its stores in Los Angeles and Chicago to sell Amazon-branded smart home products.
Big returns
Experts said Amazon returns at Kohl’s could prove to be popular.
Surveys show most Americans prefer returning their online purchases to a physical store rather than deal with the hassle and cost of shipping it back. And shoppers tend to return a lot of online purchases.
Consumers returned an estimated $385 billion worth of online purchases in 2017, according to Optoro, a logistics company specializing in retail returns. Shoppers typically return 18 to 35 percent of their online purchases, depending on the product category, higher than the 10 to 11 percent return rate for brick-andmortar purchases.
“If Amazon makes returns more convenient, they’ll get more sticky customers,” said Shankar, the Texas A&M retail professor. “Amazon has already taken the friction out of shopping with two-day, one-day and same-day shipping. Now they’re trying to solve the friction in returns.”
Kelley Powell, 53, visited the Kohl’s in Meyerland to return a pair of work boots she ordered for her son that didn’t fit. The West University resident said she shops at Amazon about six or seven times a month, but had never shopped at Kohl’s before. With the easy Amazon return and a 25 percent off Kohl’s coupon in her hand, she’s now considering it.
“I had no idea this Kohl’s was here,” Powell said, rushing out the door to run another errand. “If I had more time right now, I’d look around.”