Keep your friends close and your enemies closer … I guess. This is a perplexing decision on the part of Kohl’s. On the one hand, opening smart home experience shops is trendy and unique. On the other hand, it’s Amazon! Offering cool smart home solutions is an interesting move and if it were anyone’s products other than Amazon, I would say it’s a great move. Opening Amazon smart home shops inside Kohl’s is tantamount to opening Target or Walmart boutiques inside of Kohl’s — why would you make it easy for your customers to buy from your competitors?

While I’m sure Kohl’s management believes the move demonstrates confidence in their business and forward thinking — strategically I don’t think it’s the smartest thing they’ve ever done.

A 10-store test in an 1,100-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 is worth watching.

This is a very intriguing and interesting development. The store-within-a-store concept has been around for a long time, and historically it has worked well for both sides. Potentially, this could be an interesting partnership between Amazon and Kohl’s. The most interesting aspect of this is that Amazon is a direct competitor in many of the Kohl’s product categories. However experience shops are the rage today, and this transformation and partnership may provide long-term dividends.

Kohl’s is very wise to take a crawl-walk-run approach with this Amazon partnership, particularly as it’s only in 10 of their 1,100 stores. The results, consumer insights, incremental revenue, margin and foot traffic results could be easier quantified before making any significant investments into this partnership.

Ultimately, Amazon is gaining another brick-and-mortar footprint with minimal risk and investment on their side. Let’s see how this plays out!

This is not a bad move, but neither is it one that will transform Kohl’s — mainly because Amazon devices are now so ubiquitous and sold all over the place.

That said, there is nothing wrong with Kohl’s partnering with Amazon. People are going to buy these devices anyway, so Kohl’s has nothing to lose. Indeed, it has too much space in some of its stores so this move arguably helps productivity.

As for aiding a competitor, I’m not sure I agree. This arises from the mindset that Amazon is an apocalyptic threat to all in retail. It isn’t. There is plenty of room for Amazon and many, many other good retailers.

Absolute mistake. I brought this point to bear in my article shared on RetailWire: Are retailers selling their souls and giving away customers to Amazon? In the full article, I stated “There is no sound logic that can justify why these stores are traveling down this road. The net revenue from selling these devices is paltry. The win is all Amazon.” I stand by that. This is a desperate move on the part of Kohl’s looking for traffic and revenue by “dancing with the devil.” The “if you can’t beat them, join them” logic is misguided for Kohl’s and others. Short-term Kohl’s gains a little, long-term they lose. Slowly Kohl’s is shaping Amazon’s strategy of making Amazon a trusted/needed source in wider and wider demographics. It’s slow and immeasurable, but the shift in consumer mindset is where future decisions to just go to amazon.com or ask Alexa are formed. And it will be those choices over hopping in the car and driving to Kohl’s for what is largely an uninspiring shopping experience that will make… Read more »

Let’s look at this from a different angle. Does Kohl’s have a smart home assortment/offering for their customers? Might they believe that this category will be a hit with their customer base? Is there a way to associate the Kohl’s brand with this new category with immediate credibility and trust?

The answers to those questions (no, yes, yes) suggest that Kohl’s decision is more rational than not and recognizes that value will accrue if you put the customer at the center of your strategy and partnerships. Significant advances in business do not happen by following the generally accepted operations. I applaud Kohl’s for expanding their decision horizon (and learnings) with this deliberate step.

The pilot is extremely limited but expectations and implications are certainly outsized. Low risk (really), high payoff strategy!

Unless Kohl’s is making a competing smart home system in secret labs across Wisconsin, there’s no reason they wouldn’t benefit from offering Alexa-enabled devices in their stores.

Instead of focusing on the fact that Amazon is competition for traditional retailers, focus on this: if customers are going to Kohl’s to try out smart home appliances, they aren’t shopping online with Amazon.

This seems like a great way for Kohl’s to rustle up some more foot traffic for their stores, and to modernize their image in the process.

It is difficult for me to see this alliance having a positive long-term outcome for Kohl’s unless Kohl’s management is setting themselves up to become the next “Whole Foods” type acquisition of Amazon. Kohl’s may be thinking that they’re entering the gates of the empire and joining the action instead of camping outside and watching marketshare and brand value dwindle over time.

I think this strategy works for both companies. Kohl’s will get more brand awareness and customer visits being associated with and carrying some Amazon products. Amazon will get brand awareness as a local retailer. This shows that retail store outlets are still in demand, and stores are not going away any time soon.

Kohl’s will let customers order directly from Amazon because what is behind the strategy is driving consumers into the stores, not the small impact these product sales will have on Kohl’s total sales. Kohl’s is betting that the additional traffic driven by Amazon products will generate incremental sales for Kohl’s items while the consumer is in the store.

This is bound to become an all-time classic RetailWire discussions/debates. Here’s my more-or-less objective view of the situation in 5 points: 1) It’s a 10-store test out of 1100 stores. That’s far from a commitment by Kohl’s. It’s clearly a test. The question is, what is Kohl’s trying to test/evaluate? 2) Kohl’s (and other dept stores) for all practical purposes long ago abandoned pure consumer electronics departments outside of home appliances. This may be Kohl’s attempting to test having more consumer electronics in the highly fashionable smart home category by associating with the Amazon name — which just happens to be a popular brand in the smart home space. 3) Amazon has been using pop-up kiosks in malls to showcase their electronics for a while now. Similar to what you will get at these 10 Kohl’s stores you could try before you buy (direct from Amazon) and get help/consultation on how to implement your smart home with Alexa. For Amazon, this provides yet another outlet to reach new customers for these products. 4) Kohl’s probably… Read more »

I love everything about this move on both ends. It’s counterintuitive for a few seconds, but I love the fact that it breaks a lot of old rules and starts to write some new rules.

Amazon is stealing customers anyway, and that’s not going to abate any time soon. So aligning with Amazon and getting their customers to come into your store sounds brilliant. Amazon is stealing your foot traffic so you use them to help build it back up. And yeah, then the competition kicks in. This is a bold move on Kohl’s part — new thinking, new rules. Potentially a great combination of B&M and internet shopping.