Posts Tagged 'Kohl’s'

Another Amazon/Kohl’s tie-up

To follow up on my comment on “smart home” shops at Kohl’s, now comes word that Kohl’s will test Amazon processing locations (pickup and return) in several markets. I agree with most fellow RetailWire panelists that it will drive traffic to Kohl’s but is an even better deal for Amazon as it fills in its physical footprint:

Omnichannel initiatives like BOPIS already put strain on existing store operations, as panelists just discussed in the context of holiday hiring. So Kohl’s ability to process Amazon returns (even unpackaged ones) without affecting their other operating standards will be something to watch. Without payroll support from Amazon, this could be a heavy lift.

As to who comes out ahead in this collaboration, I understand that this will drive even more traffic to Kohl’s stores. (And my usual disclosure that I worked there from 1982 to 2006.) But Amazon picks up as many as 1100 more brick-and-mortar locations (if it rolls chainwide), with the eventual ability to add pickup lockers and even an ordering kiosk if they play their cards right. So it looks like Amazon is the biggest potential winner in this deal.

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Amazon and Kohl’s in a “smart home” alliance

Amazon and Kohl’s announced jointly that they are setting up “smart home” shops in 10 test stores in Chicago and Los Angeles this fall, using 1000 square feet to promote items like Echo along with related devices and the home services to set them up. Reportedly (according to RetailWire) the shops will be staffed by Amazon and the revenue will accrue to them. Here’s my comment:

A ten-store test in an 1100-store chain is not significant in the short term, but it’s an interesting alliance. (My usual full disclosure: I worked for Kohl’s between 1982 and 2006.) It’s curious that the sales revenue goes straight to Amazon (with a presumed piece of the action to Kohl’s), compared to the traditional model where somebody walks into the store and uses his/her Kohl’s card to buy an Echo Dot. It’s also a recognition that the “smart home” business needs more hands-on salesmanship.

Amazon look like the winner in this deal, because it potentially leads to another brick-and-mortar tie-up with a much bigger store footprint than Whole Foods, without the cost of a flat-out acquisition. Meanwhile, Kohl’s benefits from increased traffic and a meaningful use of space at a time when it is “right-sizing” about half of its stores. This bears watching.

Second quarter sales show a pulse

The stock market did not react well to most stores’ second quarter earnings, but there were hints of improvement from most retailers. My comment below (from RetailWire) focuses on Nordstrom in particular but several other stores show signs of figuring out omnichannel too:

The results of Nordstrom’s Anniversary Sale (and the “less bad” sales reports from Macy’s and Kohl’s) may point toward a stronger second half than expected. It’s too early to tell if we’re seeing a full-fledged revival of women’s apparel sales (still reported as a weak spot on Kohl’s earnings call), but the Nordstrom numbers are encouraging.

I shopped the Anniversary Sale in a couple of markets, and you’d be hard pressed to find a robust sale offering in men’s or women’s — so there must have been some traffic-driven regular-price selling in the mix. Hats off to Nordstrom for sticking to its promotional discipline, and for continuing to ride the success of its Rack and e-commerce businesses.

Can JCP be a player in toys?

JCPenney recently announced an expansion of its toy business, in time for holiday 2017 selling. RetailWire panelists weighed in on the topic, and here’s my take:

Toys are a double-edged sword for softlines retailers like Penney and Kohl’s who want to strengthen their children’s offerings. It’s hard to avoid carrying toys, but it’s also hard to compete against the dominant space of the discounters and big-box stores. (Not to mention the low margins.) Customers have come to expect the best selection and prices from market leaders like Amazon, Walmart and Target.

The broader risk to JCP is that it becomes a “bunch of stuff” with the addition of new categories (from appliances to toys, from bikes to electronics). Just because the store has square footage to burn doesn’t mean that overassortment is a winning long-term play.

Is Amazon Prime Wardrobe another disruptive move?

Amazon is introducing a new feature for Prime members: Risk-free trial of several apparel items with the ability to return what you don’t like. (And price incentives to keep more of what you chose.) RetailWire panelists mostly see this as another Amazon “game changer,” but I view it a bit differently as their response to the lack of physical stores:

If Amazon aspires to be the top seller of apparel in the U.S. (and it’s already getting close), it needs to add a “try before you buy” feature to keep driving more Prime memberships. It’s responding to the challenge of concepts like Trunk Club — but it’s also acknowledging its lack of a physical footprint. Think about it — stores like Kohl’s and Macy’s already have huge numbers of brick-and-mortar locations where you can return unwanted clothing that you bought online. This may be a rare case where Amazon responds to a competitive weakness in its formula.

Does Gordmans have a future as an off-pricer?

Stage Stores bought the Gordmans Midwest-based chain out of bankruptcy earlier this year, and announced plans to convert it from a promotional department store to an off-pricer. I commented on a RetailWire panel discussion about the game plan along with Stage Stores’ decision to maintain multiple nameplates:

From my recollection shoppoing a few Gordmans stores in the past, they were a Kohl’s wannabe without the geographic footprint to be sustainable. Now they are aiming to be a TJ Maxx wannabe but will still be saddled with the same problems. It’s tough to enter an increasingly crowded sector without the physical footprint or the buying power to compete against TJX, Ross Store and now Backstage.

Stage Stores is trying to maintain multiple concepts and brands (Peebles, Goodys, Bealls and now Gordman). Why not operate one concept under one brand-name umbrella? It’s the “Bon Ton syndrome” where none of the individual brand names is strong enough to overcome the lack of scale.

Thoughts on Macy’s self-service shoe and cosmetics departments

RetailWire panelists just took on the subject of a new test at Macy’s, in which its shoe and cosmetics departments are being converted to “assisted self-service” instead of the traditional associate-driven model. In the case of shoes, Macy’s is getting more of its inventory out of the stockroom and bulked out on the floor, with apparent early success. I’m raising a caution flag, however:

It’s hard to tell whether the reconfigured shoe department is meant to be a sales driver or an expense saver. JCP recently reconfigured a store that I visited to mass out its shoe inventory — DSW-style — instead of depending on salepeople to find the right size in the back. (And these associates are often paid a commission, just like cosmetics salespeople.) But it gets to the heart of what Macy’s wants to be. As Art put it, are they trying to be JCP or Kohl’s? Are they finding the hidden costs of “omnichannel” (BOPIS and so forth) to be unsustainable for a traditional department store?

And one more issue: By abandoning the Nordstrom model (where the salesperson is trained to bring out three pairs of shoes when the customer asks to look at one), Macy’s may in the long run walk away from the sales and margin potential of “upselling” that shoe and cosmetics departments should be known for. A declaration of victory may be premature.