Kohl's expands Amazon partnership, accepting online retailer's returns at 21 southeastern Wisconsin stores

Rick Romell | Milwaukee Journal Sentinel

Kohl’s Corp. has set up Amazon return stations in stores across the Milwaukee area, marking a significant expansion of the department store chain’s partnership with the online retail giant.

The rollout across southeastern Wisconsin also signals that Kohl’s 11-month-old alliance with Amazon, which originally was greeted with sleeping-with-the-devil skepticism, is in fact working, two analysts said Wednesday.

Kohl’s quietly opened Amazon return centers at 21 stores across the region in late July. The move brings to just over 100 the number of Kohl’s locations now accepting Amazon returns. The Menomonee Falls-based retailer operates about 1,150 department stores.

Kohl’s confirmed the development, but would say little else about the growing Amazon experiment. It may be, though, that Kohl’s wants to further test the project in an area where it can easily monitor results first-hand.

“This expansion will allow Kohl's to continue to test and learn in the market where Kohl's headquarters is located,” Jen Johnson, senior vice president of communications, said in a statement. “Amazon Returns allows customers to bring their eligible packaged or unpackaged Amazon.com merchandise to Kohl’s for a free, convenient return.”

Last fall, Kohl’s established Amazon return centers in 82 stores in the Chicago and Los Angeles areas. Ten of the stores also have Amazon “smart home” shops selling such devices as the online retailer’s Echo voice-activated virtual assistants, Fire tablets and Kindle readers.

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The unexpected partnership raised eyebrows among some industry observers, who questioned the wisdom of an alliance with the company most responsible for undercutting sales at traditional brick-and-mortar retailers.

But Kohl’s executives have spoken positively – if vaguely – about the early results of the Amazon pilot, and some outside analysts have said the returns centers have brought increased traffic to Kohl’s stores.

Now, the experiment is widely viewed as a success, and Kohl’s is winning applause for its willingness to try innovative steps in a still-challenging retail environment.

While Kohl's hasn't said much about the collaboration with Amazon, “actions speak louder than words,” Mark Altschwager, an analyst with Robert W. Baird & Co., said Wednesday by email. “Further expansion of the partnership is a clear indication (in our view) that it must be having the desired effect of driving profitable traffic to stores.”

Also positive was Gordon Haskett Research Advisors analyst Chuck Grom.

Grom made news in May when he reported that his monitoring of traffic at 13 Chicago-area Kohl’s stores through geolocation data found that locations offering Amazon returns experienced an 8.5 percent boost in traffic.

Since then, the increase has gotten even bigger, reaching 13.5 percent in July, Grom said in a research note Wednesday.

The expansion of the returns program to southeastern Wisconsin suggests that both Kohl’s and Amazon are happy with the initiative, Grom wrote.

Amazon gains an easy way for customers to return goods, he said, while “the upside for Kohl’s is that it serves as an outside the box way to drive frequency into its stores.”