Kohl's will take, package and ship Amazon returns at its stores in the Chicago and Los Angeles areas.

Kohl’s Corp. is adding an unusual service to some of its stores: Amazon return center.

The retail chain will allow Amazon customers to return their online orders, and Kohl’s will pack and ship those returns, free of charge to Amazon.com Inc. return centers, Kohl’s said Tuesday. The service will be be available at 82 Kohl’s stores in the Chicago and Los Angeles areas starting next month. Shoppers do not need to have their Amazon orders in the original packaging in order to complete a return, says Kohl’s, No. 18 in the Internet Retailer 2017 Top 500.

 

“This is a great example of how Kohl’s and Amazon are leveraging each other’s strengths—the power of Kohl’s store portfolio and omnichannel capabilities combined with the power of Amazon’s reach and loyal customer base,” says Rick Schepp, Kohl’s chief administrative officer. Neither retailer has detailed the extent of the agreement, such as what it cost or the logistics of how returned products will be processed.

A Kohl’s spokeswoman declined to say where Amazon return centers will be located within stores or whether there would be a separate area to process Amazon returns, however Kohl’s will set aside dedicated parking spots near store entrances for Amazon shoppers making returns.

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“Teaming up with Kohl’s provides an incredible opportunity to pair our world-class return experience with a great shopping experience,” says Shivi Shankaran, Amazon’s director of worldwide customer returns.

The arrangement has the potential to increase foot traffic and sales in Kohl’s stores: 28% of Kohl’s shoppers who pick up an online order in a store make a purchase of some kind while in the store, a Kohl’s spokeswoman says. Amazon customers may also be tempted to browse and buy while inside the store making a return.

Kohl’s, which ships online orders from its more than 1,100 stores, has the capability to process online orders from its stores. The Kohl’s spokeswoman says the retailer has no additional expansion plans just yet.

Retail experts say Kohl’s accepting Amazon returns stands to benefit both retailers in distinct ways.

Data from Slice Intelligence shows that only 10.6% of Amazon shoppers also shopped at a Kohl’s store location over the past 12 months, meaning neither is running the risk of cannibalizing business through this partnership.

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“Amazon’s key goal in 2017 seems to be reinforcing its weak flank: its lack of brick and mortar stores,” says Ken Cassar, principal analyst at Slice Intelligence.

“For Kohl’s, this likely means more in-store traffic and in-store sales as customers who visit the store are apt to shop and complete a purchase while making an in-store return,” adds Scott Macon, president of Bizrate Insights. “These may also be different customers than would normally visit a Kohl’s store. For Amazon, this is similar to the Whole Foods acquisition in that they are creating a brick-and-mortar presence, plus added customer convenience, without having to invest in additional real estate.”

The arrangement plays off the two retailers’ strengths, says Guru Hariharan, CEO of retail and e-commerce pricing analytics firm Boomerang Commerce.

“This partnership between Kohl’s and Amazon is a great example of a modern customer-centric approach and the death of the channel-focused models that separated store and online experiences,” he says. “By allowing for returns of Amazon-purchased products, Kohl’s can drive more store footfall, including store traffic from new customers, including millennials who may have never been in a Kohl’s store before.”

Such a deal was only a matter of time given Amazon’s reach in the retail industry and the fact that some store-based retailers may have too real estate, Ryan Craver, a former Hudson’s Bay Co. (No. 81) vice president, writes in a post on his personal blog.

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“With legacy retailers facing overinflated store bases, declining comp sales and online sales that are expensive to attain, it was only a matter of time before one tied up with Amazon,” writes Craver, now the chief digital officer at apparel company Lamour Group. “By partnering with Amazon, Kohl’s gains that first-mover advantage as the first brick-and-mortar retailer in the apparel space to partner with what is soon to be the largest apparel retailer. Call it unconventional, call it crazy, but Kohl’s is setting itself up for a partnership that will lead to many more opportunities than threats.”

Earlier this month, Kohl’s announced it would sell Amazon products, including voice-activated Echo devices and Amazon Fire TV sticks, at 10 of its stores in Chicago and Los Angeles.