Why Amazon and Kohl’s Need Each Other

Amazon and Kohl’s are expanding a relationship that appears to be working for the two frenemies. As announced recently, all 1,150 Kohl’s stores across the United States will accept Amazon returns, thus expanding a program the two companies began to pilot in 2017. Kohl’s will accept eligible Amazon items (without a box or label) and return them for customers for free. As a result, Kohl’s becomes a product return center for Amazon. 

How Amazon Returns Work at Kohl’s

In early 2018, I visited a Kohl’s location in Woodridge, Illinois, shortly after the store began accepting Amazon returns. A giant banner at the front of the store made it clear that Amazon returns were welcomed. The designated Amazon returns station was set up near the entrance. I asked a sales associate why the Amazon returns center was at the front of the store. Wouldn’t it be better to place the center in the back, which would generate more foot traffic throughout the store? She replied that Kohl’s already operated its own returns counter at the back of the store, and having an Amazon returns counter at the same area was confusing to customers. But to encourage foot traffic, Kohl’s gave Amazon customers coupons with discounts for in-store purchases.

In April 2019, I visited the same store. I noticed that the Amazon returns desk had been moved to the back to an all-purpose service counter for customers of Amazon and Kohl’s (for both online pickup and returns). Signs throughout the store directed Amazon customers to the consolidated returns center.

Each person at the service counter accepted all returns, whether from Kohl’s or Amazon. It was clear that the associates had been trained to fulfill both types of returns based on how quickly they managed the process. An associate also confirmed that Kohl’s continues to provide coupons (with a one-week expiration date) to encourage Amazon customers to stay in the store and shop for Kohl’s merchandise. Someone at Kohl’s must have gotten the message: when you see an opportunity to get customers walking through your store, you take it. With the passage of time and the assistance of clear signage, customers will figure out where to take their returns.

In addition, near the entrance, an Amazon-branded pop-up store offered a wide range of Amazon products, including different Echo speakers and Fire products. Here was an attempt to make Kohl’s a distributor for Amazon as well via a pop-up store. But apparently the attempt failed to take root. Amazon recently announced the discontinuation of pop-up locations including those at Kohl’s stores. It should be noted, however, that Kohl’s will stock Amazon products, just not in an Amazon-branded space. So Kohl’s has become a retail outlet for Amazon after all. Why bother with a pop-up store if Kohl’s will stock your merchandise, anyway?

Does the Strategy Work?

Data from Earnest Research suggests that the partnership is paying off for Kohl’s. After Chicago stores began accepting Amazon returns in 2017, “Chicago sales, transactions, and customer growth all outpace the same metrics nationwide for 2018,” according to Earnest.

And the relationship certainly makes sense for Amazon even if the pop-up stores have failed. Having Kohl’s as fulfillment partner attacks one of the headaches of buying online: ease of returns. And Amazon enjoys the services of a returns counter without having to own a brick-and-mortar store. Of all Amazon’s services, such as retail, advertising, cloud computing, retail remains particularly costly. It behooves Amazon to find better ways to contain expenses (which the company is doing based on its latest quarterly earnings report). Even the mighty Amazon needs partners 

Meanwhile Kohl’s is maximizing the value of its floor space in other ways, such as by leasing locations to Planet Fitness. And Kohl’s is not the only retailer leasing floor space. Macy’s has been leasing space to retailers such as Sunglass Hut and LensCrafters

What’s Next?

It will be interesting to see how this relationship unfolds. Will Amazon lean on Kohl’s to sell more of its products, such as its fast-growing stable of house brands? In fact, Motley Fool speculates that Amazon could buy Kohl’s outright. The notion isn’t that far-fetched (see Amazon’s acquisition of Whole Foods). Retail apocalypse or opportunity? Stay tuned.

Black Friday breaks loose

Black Friday has turned a corner. The traditional start of the holiday shopping season has become a cultural phenomenon that spans days, and even weeks. While Black Friday naysayers criticize stores for pushing the opening of the day into Thanksgiving evening, American consumers simply shrug their shoulders, shop, and engage in a ritual that seems to transcend any economic condition. And I don’t see any signs of the Black Friday momentum slowing down.

In past years, I have waken up in the middle of the night, stood in frigid lines with Black Friday shoppers, and studied the shopping phenomenon in places ranging from the Chicago suburbs to a small town in the Wisconsin northwoods. This year, I was already suffering from a serious case of Black Friday fatigue by the time the most famous shopping day of the season arrived on November 25. By then, I had already been inundated with Black Friday promotions from retailers such as Amazon, whose “countdown to Black Friday” sale hit my email in-box on November 13. And you couldn’t do any last-minute Thanksgiving errands at Target without encountering a Black Friday war zone, as Target’s pre-Thanksgiving 4-day sale resulted in aisles saturated with merchandise at door-buster prices. USA Today reported that retailers ranging from Sears to RadioShack were using social media to promote Black Friday deals in a run-up to the day.

For Black Friday 2011, I didn’t even need to wake up in the wee hours to visit Kohl’s and Target for 5:00 a.m. openings. So many stores were open at midnight that I simply hopped in my car and continued my Thanksgiving evening once the dinner and movie-watching festivities at my house had subsided.

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Black Friday in a hardscrabble town

Black Friday is like any other day in Phillips, Wisconsin.

Nestled between the lakes and northwoods birch trees, Phillips is a hardscrabble town of 1,675 souls who by on summer tourism, winter hunting, and a lot of grit — the kind of people you meet in the songs of Bruce Springsteen and Bob Seger. My family and I arrived here Thanksgiving day and holed up in an ice-bound cabin that evoked inevitable comparisons to The Shining. As my wife and daughter built snowmen near a frozen lake, the consumerist in me wondered how this quiet little town treats the holiday shopping rush while the rest of the nation wallows in 3:00 a.m. store openings, eager mobs, and extreme door buster sales. Here is what I found out.

Thursday, November 25

We arrive on a bitter cold afternoon, the sky a brilliant blue. Downtown consists of a dead strip of diners, taverns, general stores, and gas stations. Most everyone is either out hunting deer or at home eating Thanksgiving dinner. At the north end of town, the low slung Skyline motel, deserted and dark, looks like the kind of place an outlaw in a Coen brothers movie would stay. At the Copps grocery store, I spot a blond woman in a sweat shirt and jeans thumbing through the town newspaper, The Bee.

“See any Black Friday sales advertised in The Bee?” I ask.

She glances up and places a few ads in my hands. “Not much,” she laughs. “Maybe Ace Hardware. You can have these ads. They’re free.”

They’re free. Words to live by. For Phillips is a thrifty town with not much money to spare. Ask someone here what you do for a living, and the answers aren’t always simple. You might hear, “I work at the plastics plant and I fix boats” or “I run a snow plow, I clean motors, and I am a carpenter.” People do what they need to do to get by.

No Walmart here

I thank the woman for the free circulars and drive to our cabin, passing many “Hunters Welcome” signs hung in front of restaurants and shops. For deer hunting season is in full swing here.

I am to learn that during Thanksgiving week, it is the deer hunter, not the Black Friday shopper, who captures the town’s loyalty and interest. The deer hunters in their orange caps live in the woods all day and give to the town’s economy in the evening and early morning. They eat the town’s food, stay in the motels and cabins, and spend money on supplies and gasoline for their trucks. Hunters welcome — you got that right.

So far the only sign of Black Friday is a hastily made sign in front of Troy’s Appliances on Highway 13, which reads “All Week Black Friday Prices.” The sign, written in black marker on orange cardboard, is in sharp contrast to the TV ads we watch in our cabin advertising “sale, sale, sale!” at Kohl’s and JCPenney stores in neighboring counties to the south, and the advertisements from Amazon,com, eBay, DeepDiscount, PetSmart, and many other merchants flooding my email in-box. The ads call to me like sirens, but my family and I resist them as the afternoon turns to dusk and we join more family for a warm dinner, movie, playing in the snow, and reading books.

Will the pace in town pick up on the Friday after Thanksgiving, the busiest shopping day of the year? The ads in The Bee, now tucked away in our cabin, don’t promise much. Ace proudly announces that its doors will open at 7:00 a.m. and offers doorbuster sales like a Char-Broil Patio Bistro Infrared Grill for $99.99 or a Craftsman 12″ tool bag for $9.99.

And that’s about it. In 2007 and 2008, I joined suburban Chicago shoppers at 3:00 a.m. on Black Friday as I blogged about the day. I get the feeling I won’t need to be up at 3:00 a.m. this time.

Friday, November 26

It is 14 degrees outside and snowy when I leave our cabin at just before 7:00 a.m. to make sure I’m at Ace for the doorbuster sale. I sometimes forget that in weather like this you have to give yourself extra time just to get around — time to secure your gloves and hat, time to brew a cup of hot coffee, and time to warm up the car. I’m not sure what I’ll find at Ace — maybe a parking lot full of cars idling in the cold?

At first I think Ace is closed when I arrive. The sign by the highway is dark, and the parking lot is empty save for two 4×4 pick-ups. But I notice a dull yellow glow coming from the store and detect movement inside. So I walk in.

Not much here. Smaller doorbuster items protrude from a bin. Shop-vacs and sleds crowd the walls. I am outnumbered by four employees, two of whom stand waiting at check-out counters, and another two in the back who putter around and curse the cold and wind. You know it’s cold when the locals complain about it.

The clerks nod in my direction in a friendly sort of way, but otherwise everyone here seems resigned to a lonely morning of checking inventory and straightening shelves. When I leave, the parking lot remains a lonely, desolate place.

Black Friday 2010 in Phillips, Wisconsin

I head downtown, where hunters in their orange caps and overalls cluster around parked cars and trucks, dented and rusty. This is their country, and their time. The modest little diners have been plying them with coffee and eggs since earlier this morning before the hunters earn their keep in the frozen woods.

Downtown Phillips, Wisconsin

And not all of them make it back. The Bee carries a cryptic story about a 71-year-old man found November 22 by police officers dead in his tree stand. The cause of death is under investigation. The Bee also displays a front-page picture of a 14-year-old boy covered head to toe in orange camoflage. He smiles proudly as he holds the seven-point buck he claimed on opening weekend. His face is the picture of happiness.

The downtown stores don’t open any earlier than they normally do, but they attract at least a few shoppers poking around. One of my favorite stores in town is Northern Merchandise, which is like a dry good store from the Old West. Here, you can get anything from candy to a “Layin’ Around” chicken egg holder. A wall full of play dolls shares one end of the floor with a pile of table runners, stack of “no hunting” signs, and a George Foreman Grill.

Northern Merchandise window display

At Northern Merchandise, you may find dolls . . .

. . . skulls . . .

. . . and plenty of hot sauce

The clerk is a matronly looking woman in a black turtleneck who speaks with a thick, vaguely Eastern European accent. She eyeballs me while I wander around, decides I’m probably harmless, and putters around behind the counter.

The Northern Merchandise has existed for as long as we’ve been visiting over the years, maybe since the dawn of time. It’s always quiet and nearly empty when I’m here. I sometimes wonder how this place stay in business. The answer probably has to do with the fact that the nearest Walmart is too far away for regular shopping.

I try to snap a few photos of town, but taking my gloves off to operate my camera is about as enjoyable as sticking your hand in an bucket of cold ice in a blizzard. I decide it’s time for a warm-up in Bonnie’s Diner on the south end of town near Copps.

When I walk into the place, I notice eight men clustered in chairs around formica tables. Immediately, eight heads turn and eight faces look my way — tough, crusty, old faces creased with lines, but not hostile. They have the look of regulars having their morning coffee and shooting the breeze. A few wear orange caps.

From behind a bar, I hear a cheerful “Good morning!” and a woman with silvery hair, a black sweater, and blue jeans waves at me. I claim a spot on a ripped plastic bar stool and order a coffee. She has an approachable face.

“So . . . what does everyone do here for Black Friday?” I ask.

Here?” she replies. Nothing.”

She slides a copy of The Bee to me. “Check this out,” she says. “You might find some sales in here, but this is a sleepy town. You here visiting?”

I briefly tell her our story: we’ve been visiting with family for years, and my in-laws have considered Phillips a second home since the 1920s. I tell her I still mourn the closing of the Foytek bakery many years ago.

She smiles and seems pleased that I remember the Foytek bakery. She points behind her. “Mrs. Foytek’s daughter is working in the kitchen here right now.”

A man with a buzz cut who vaguely resembles John Candy stands up to pay for his coffee.

“Hey,” he says to me. “You might want to try Ace.”

Bonnie’s is a small, simple, but clean place that you might expect to find in a northwoods town — besides the formica tables, there are paintings of bear and elk on the white walls and a Bunn coffee machine behind the counter. Bonnie’s is famous for its food and carry-out pies (that northwoods flexibility again). You can pay for one cup of coffee and hang out for as long as you want. On a morning like this, it is not uncommon for customers to leave their cars running to keep warm while their owners relax inside.

The old men lean back in their chairs, and the women hang out on bar stools where they can trade gossip with the waitress who greeted me. The talk is of the best bait for ice fishing, the difficulty of operating a Cat in the heavy snow, and the pros and cons of bow-and-arrow hunting. An off duty waitress reminisces about her childhood adventure with northwoods moonshine (“Strong enough to burn the hair off a wooden leg”).

Happy hunters in Phillips, Wisconsin, 2010

The woman who greeted men obviously knows everyone. She asks a wiry man with wispy grey hair if he still likes to hunt for deer.

“Gave it up,” he replies.

“No!” she says.

“Oh, I never got tired of the hunting,” he says. “It was dragging the poor bastard home, skinning it, cutting it, and plucking all the stray hair out that got pretty annoying.”

He pays his fare, winks at me, and leaves.

One hunter has an update on the 71-year-old who was found dead Monday. Word on the street is that he had expired of a heart attack.

“Best way to go,” he says to no one in particular. “Doing something you love.”

Refuge for hunters

A car accident south of town Wednesday night is also a popular discussion topic. No one knows the entire story. Instead, each of the old men contribute a detail of their own to the mosaic that forms their collective report: two cars on Highway 13 hit head on. A woman was seriously injured. How was she rescued? Oh, the Jaws of Life. Is she OK? Looks like it. And damn, wouldn’t you know that accident closed the highway for a half hour.

Winter harvest in Phillips, Wisconsin, 2010

I realize that I don’t need to go anywhere else today to blog about Black Friday in Phillips. At Bonnie’s, I experience more camaraderie than I ever did hanging out with shoppers in the Chicago suburbs. This is a place where people don’t compare notes on where to find the cheapest flat screen TV. Bonnie’s is a place for growing old together.

In a town where economic hard times are a fact of life, Black Friday is little more than a somewhat amusing joke. Ironically, the residents of Phillips could benefit more than anyone else from the low-priced priced door busters and discounted clothing advertised at Kohl’s. But this part of the northwoods is beyond the reach of larger cities where a critical mass of shopping establishments provides the more well-to-do choices they don’t need.

In Phillips, Wisconsin, people don’t have a lot of material things on Black Friday, but they have each other.