Executive Briefings

Why Kohl's Next CEO Is Not Afraid of Bringing Amazon Into Stores

If you think Kohl's upcoming partnerships with Amazon.com are akin to bringing the fox into retail's henhouse, you're thinking in an outdated way, according to Kohl's incoming CEO.

Why Kohl's Next CEO Is Not Afraid of Bringing Amazon Into Stores

This month, Kohl's will start handling returns of merchandise bought on Amazon at 10 of what will soon be 82 of its stores in Los Angeles and Chicago. The chain is also debuting the first of its Amazon smart home boutiques within Kohl's stores. The dual partnerships, when announced last month, were met with a certain amount of bewilderment by retail commentators, many of whom questioned whether Kohl’s was bringing an enemy into stores and risk market share erosion. One only has to think of the steep price defunct bookseller paid for having Amazon run its web site for years, or how much bigger Target’s would be if it hadn’t waited until 2011 to take back oversight of its e-commerce from Amazon to understand the skittishness.

Kohl’s Chief Merchandising and Customer Officer Michelle Gass, set to become CEO in May, tells Fortune that’s the wrong way to look at it at a time of fundamental change in retail and of wobbly shopper traffic at many of the chain’s 1,160 stores.

“We’re going through one of, if not the, most transformational times in retail, and we have to really think differently,” says Gass. “The retail market is big so there is plenty of room for Amazon and Kohl’s to co-exist.” And Kohl’s is hardly the only retailer to come to this conclusion: Sears recently said it will sell Kenmore appliances on Amazon, while Best Buy is also giving space in its stores to Amazon.)

While Kohl’s business has held steadier than the likes of J.C. Penney and Macy’s in recent quarters, its top line is roughly where it was six years ago, a big contrast to the retailer’s torrid growth for decades prior to that. One of the biggest culprits has been a drop in the number of visits by customers, according to Kohl’s CEO Kevin Mansell, who told us last month “the biggest priority is solving the traffic problem.”

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This month, Kohl's will start handling returns of merchandise bought on Amazon at 10 of what will soon be 82 of its stores in Los Angeles and Chicago. The chain is also debuting the first of its Amazon smart home boutiques within Kohl's stores. The dual partnerships, when announced last month, were met with a certain amount of bewilderment by retail commentators, many of whom questioned whether Kohl’s was bringing an enemy into stores and risk market share erosion. One only has to think of the steep price defunct bookseller paid for having Amazon run its web site for years, or how much bigger Target’s would be if it hadn’t waited until 2011 to take back oversight of its e-commerce from Amazon to understand the skittishness.

Kohl’s Chief Merchandising and Customer Officer Michelle Gass, set to become CEO in May, tells Fortune that’s the wrong way to look at it at a time of fundamental change in retail and of wobbly shopper traffic at many of the chain’s 1,160 stores.

“We’re going through one of, if not the, most transformational times in retail, and we have to really think differently,” says Gass. “The retail market is big so there is plenty of room for Amazon and Kohl’s to co-exist.” And Kohl’s is hardly the only retailer to come to this conclusion: Sears recently said it will sell Kenmore appliances on Amazon, while Best Buy is also giving space in its stores to Amazon.)

While Kohl’s business has held steadier than the likes of J.C. Penney and Macy’s in recent quarters, its top line is roughly where it was six years ago, a big contrast to the retailer’s torrid growth for decades prior to that. One of the biggest culprits has been a drop in the number of visits by customers, according to Kohl’s CEO Kevin Mansell, who told us last month “the biggest priority is solving the traffic problem.”

Read Full Article

Why Kohl's Next CEO Is Not Afraid of Bringing Amazon Into Stores