Amazon.com Inc. casts a wide shadow across the retail landscape. The retail giant, No. 1 in the Internet Retailer 2019 Top 1000, accounted for roughly 36.8% of U.S. online retail sales, and 55.4% of ecommerce gains in the United States last year, according to Internet Retailer estimates. Or, put in a broader context, Amazon accounted for 5.2% of the $3.632 trillion U.S. consumers spent on retail goods last year and 24.7% of total retail sales growth.
Because of Amazon’s outsized role within retail, Kohl’s Corp. in 2017 began experimenting with a program in which it accepts Amazon returns in select stores. The retailer since expanded the program to all stores this July.
Similarly, Stein Mart Inc. in June began installing Amazon Hub Lockers in nearly 200 of its 283 stores (the lockers are secure, self-service kiosks where consumers can pick up or return their Amazon packages). Kohl’s is No. 24 and Stein Mart is No. 551 in the Top 1000. Both retailers’ programs have the stated objective to drive traffic into their physical stores and, based on Kohl’s second quarter results, the program is starting to generate the desired results by attracting a mix of existing customers and younger shoppers who don’t typically frequent Kohl’s stores. And when Kohl’s tested the service it found that stores offering Amazon returns had a 9% increase in new customers while other locations that didn’t accept Amazon returns only generated a 1% increase in new customers, according to Earnest Research.
Once it gets shoppers into its stores, Kohl’s aims to convert them into “loyal Kohl’s shoppers over time,” said Kohl’s CEO Michelle Gass on Tuesday during a conference call with analysts. While it is still early days for nationwide rollout, the retailer is “highly encouraged” with its initial results, she said, noting the traffic coming into the retailer’s stores is “meeting our expectations and skewing toward off-peak times.”
The move wasn’t Kohl’s first tie-in with Amazon. The retailer also hosted 30 Amazon electronics-focused pop-up stores in its retail stores. Those pop-ups closed earlier this year when Amazon shuttered all of its pop-up stores, which were also located inside shopping malls and Whole Foods Market locations.
Stein Mart, which reported its earnings on Wednesday, also intends to introduce Amazon customers to its stores and drive foot traffic to its stores, said Stein Mart CEO Hunt Hawkins when he announced the locker rollout. The program is one piece of a broader effort to appeal to consumers who are increasingly looking for a mix of online and offline services. For example, the retailer this week launched its buy online pick up in store service, or BOPIS. And by the end of October, it plans to make its new fine jewelry product line available online, as well as in more than 50 of its 284 stores.
The efforts by the two retailers aim to turn around their lackluster sales. Kohl’s, for example, reported that its total revenue fell 3.1% to $4.43 billion in the second quarter and its sales declined 3.3% to $4.17 billion. Stein Mart’s sales during the quarter fell 6.0% to $292.4 million. Neither retailer breaks out online sales.
Even so, the retailer’s are optimistic that their relationships with Amazon will help boost sales in the remainder of the year.
“We are off to a good start with the back-to-school season and are confident that our upcoming brand launches, program expansions, and increased traffic from the Amazon returns program will incrementally contribute to our performance during the balance of the year and beyond,” Kohl’s Gass said.Favorite